<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1997
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
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MOLECULAR SIMULATIONS INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7372 04-2829510
(STATE OR JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
9685 SCRANTON ROAD
SAN DIEGO, CALIFORNIA 92121
(619) 458-9990
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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MICHAEL J. SAVAGE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MOLECULAR SIMULATIONS INCORPORATED
9685 SCRANTON ROAD
SAN DIEGO, CALIFORNIA 92121-3752
(619) 458-9990
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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Copies to:
<TABLE>
<S> <C>
M. WAINWRIGHT FISHBURN, ESQ. BROOKS STOUGH, ESQ.
THOMAS A. COLL, ESQ. BENNETT L. YEE, ESQ.
CHRISTOPHER J. KEARNS, ESQ. ANTHONY J. MCCUSKER, ESQ.
COOLEY GODWARD LLP GUNDERSON DETTMER STOUGH
4365 EXECUTIVE DRIVE, SUITE 1100 VILLENEUVE FRANKLIN & HACHIGIAN, LLP
SAN DIEGO, CA 92121 155 CONSTITUTION DRIVE
(619) 550-6000 MENLO PARK, CA 94025
(415) 321-2400
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
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 of
1933, 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, please 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 of 1933, 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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<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER UNIT PRICE(2) FEE
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Common Stock, $.001 par value........... 2,875,000 $13.00 $37,375,000 $11,330
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</TABLE>
(1) Includes 375,000 shares that the Underwriters have the option to purchase
solely to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(a) under the Securities Act of
1933.
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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 THAT 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 COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 10, 1997
PROSPECTUS
----------------
2,500,000 SHARES
COMMON STOCK
Of the 2,500,000 shares of Common Stock offered hereby, 1,435,000 shares
are being sold by the Company and 1,065,000 shares are being sold by the Selling
Stockholders. The Company will not receive any proceeds from the sale of shares
by the Selling Stockholders. See "Principal and Selling Stockholders."
Prior to this offering, there has been no public market for the Common
Stock of the Company. It is currently estimated that the initial public offering
price will be between $11.00 and $13.00 per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price. The Company has applied for quotation of the Common Stock on the
Nasdaq National Market under the symbol MSIM.
------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 6.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
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<S> <C> <C> <C> <C>
Per Share............... $ $ $ $
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Total(3)................ $ $ $ $
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</TABLE>
(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $650,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 375,000 additional shares of Common Stock solely to cover
over-allotments, if any. If all such shares are purchased, the total Price
to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
------------------
The shares of Common Stock are offered by the several Underwriters subject
to prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about April , 1997 at the office of the agent of Hambrecht
& Quist LLC in New York, New York.
HAMBRECHT & QUIST
VOLPE, WELTY & COMPANY LLC
ADAMS, HARKNESS & HILL, INC.
, 1997
MSI LOGO
<PAGE> 3
[ARTWORK]
Target Definition via Structure Determination
and Prediction
Understanding the 3-Dimensional Structure of
a protein is an important step in
structure-based drug design. MSI offers
a range of expert products to address this application
X-Ray NMR Homology
Crystallography Spectroscopy Modeling
Using WebLab
The results of this effort can be rapidly
communicated to other scientists for incorporation
into reports or for further investigation.
WebLab's OLE-2 WebLab Gene Explorer
compatibility is being designed to
is being designed provide Web-based access
to allow dynamic to MSI's homology modeling
integration of methods, allowing molecular
computational results biologists to analyze
into reports and related protein sequences
presentations and simulate their
3-Dimensional structures.
<PAGE> 4
<PAGE> 5
[ARTWORK]
These graphical representations illustrate components of
MSI's integrated platform for pharmaceutical research & develelopment
Define Lead Define Target
Structure-Based Drug Design Bioinformatics - Genomics
Analog-Based Drug Design Homology Modeling
Database Mining (3D Search) Biomolecular Structure Determination
De Novo Drug Design
Combinatorial Libraries
DRUG
DISCOVERY AND
DEVELOPMENT
CYCLE
Optimize Lead
Detailed Simulations
QSAR, Activity Estimation
Combinatorial Strategies
Refine, Formulate Lead
Structure-Toxicity Relationships
*Current Software Domains Crystal Morphology and Polymorph Prediction
*Developing Software Domains Transport Modeling
[MSI Logo]
<PAGE> 6
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
Catalyst, Cerius, Discover, Insight and QUANTA and are registered
trademarks of the Company, and Cerius(2), Felix, Gene Explorer, Insight II and
WebLab are trademarks of the Company. CHARMm and X-PLOR are registered
trademarks of Harvard University licensed to the Company. All other trade names
or trademarks appearing in this Prospectus are the property of their respective
holders.
2
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and the financial statements and notes
thereto appearing elsewhere in this Prospectus. The discussion in this
Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" as well as those discussed elsewhere in this
Prospectus.
THE COMPANY
Molecular Simulations Incorporated ("MSI" or the "Company") is the leading
provider of molecular modeling and simulation software. The Company designs,
develops, markets and supports software that facilitates the discovery and
development of new products and processes in the pharmaceutical, biotechnology,
chemical, petrochemical and materials industries. Using the Company's products,
researchers are able to increase the speed and efficiency of the research and
development cycle, thereby reducing product development costs and shortening the
time to market for new product introductions and process improvements. The
Company's customers comprise leading commercial, governmental and academic
organizations, including many of the largest pharmaceutical, biotechnology,
chemical, petroleum and semiconductor companies worldwide.
The Company has a comprehensive product suite consisting of over 100
application modules based on proprietary technologies that employ fundamental
scientific principles, advanced computer visualization, molecular modeling
techniques and computational chemistry. The Company's application products allow
scientists to perform molecular level computations of chemical, biological and
physical properties, to simulate, visualize and analyze chemical and biological
systems, and to communicate the results to other scientists. The Company's
products are based upon advanced software architectures that facilitate the
development, integration and deployment of new software products. The Company
also offers open access to its core software development environment, within
which customers and third-party licensees can develop, integrate and distribute
their own software applications for computational chemistry, biology and
materials research. The Company markets its products and services worldwide,
principally through its direct sales force based in the United States and Europe
and through its distribution network in the Asia/Pacific region.
The Company has assembled its proprietary product suite through internal
development, licensing of technologies from third parties and acquisitions of
other companies. In August 1995, the Company acquired Biosym Technologies, Inc.
("Biosym"), a leading provider of molecular modeling and simulation software and
a wholly owned subsidiary of Corning Incorporated ("Corning"). The acquisition
of Biosym allowed the Company to achieve several important strategic objectives,
including the addition of key technologies and personnel; the addition of
complementary products; a significant expansion of the Company's customer base;
penetration into new markets; improved cost efficiencies; and broader research
and development, marketing and sales capabilities.
The Company plans to continue enhancing its product and service offerings
for simulation specialists, who are the principal users of the Company's
products. In addition, the Company plans to broaden significantly its user base
to include the much larger population of experimentalists-- laboratory
scientists and engineers that engage in experimental activities. The Company has
packaged its core simulation technologies into solutions-oriented applications
known as computational instruments. These products are easier to use than
traditional simulation products and perform specific functions analogous to
typical laboratory procedures. Recently, the Company has begun to develop its
WebLab family of products -- computational instruments accessible over corporate
intranets. A key component of the Company's strategy is to create a "virtual
laboratory" of computational instruments and other products for use on desktop
computers by a broad range of scientists to perform computational chemistry,
biology and materials experiments.
3
<PAGE> 8
The Company intends to remain at the forefront of simulation technology in
order to offer a broad range of product solutions across diverse industries. The
Company has access to a high degree of scientific expertise in molecular
simulation through its employee base, academic collaborations and participation
in industry partnerships. As of December 31, 1996, the Company had 268
employees, approximately half of whom hold Ph.D. degrees. The Company currently
manages five industrial consortia, which are focused groups of industrial users,
academic experts and MSI personnel, that collaborate to create new simulation
software solutions for industrial research and development. The consortia allow
the Company to accelerate the development of new technologies, share development
costs, obtain customer guidance on product development and secure early
validation of the Company's products.
The Company was incorporated in Delaware in June 1984. The Company's
principal executive offices are located at 9685 Scranton Road, San Diego,
California 92121. Its telephone number is (619) 458-9990. Its e-mail address is
[email protected].
THE OFFERING
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<S> <C>
Common Stock offered by the Company........... 1,435,000 shares
Common Stock offered by the Selling
Stockholders................................ 1,065,000 shares
Common Stock to be outstanding after the
offering.................................... 8,045,952 shares(1)
Use of proceeds............................... Working capital and other general corporate
purposes, primarily in the areas of research and
development, sales, marketing and customer
support. See "Use of Proceeds."
Proposed Nasdaq National Market symbol........ MSIM
</TABLE>
- ------------------------------
(1) Based on shares outstanding as of December 31, 1996. Excludes (i) 1,567,912
shares of Common Stock issuable upon exercise of options outstanding as of
December 31, 1996 at a weighted average exercise price of $1.93 per share;
(ii) 368,497 additional shares of Common Stock reserved for future issuance
under the Company's stock option plans existing as of such date; and (iii)
75,000 additional shares of Common Stock reserved for issuance under the
Company's Non-Employee Directors' Stock Option Plan and Employee Stock
Purchase Plan. See "Management."
4
<PAGE> 9
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1992 1993 1994(1) 1995(1) 1996
------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue................................... $19,602 $15,268 $15,372 $ 30,120 $47,261
Gross profit.............................. 15,927 12,959 12,484 23,511 39,502
Acquisition-related charges(2)............ 944 -- -- 12,161 --
Operating income (loss)................... 582 (2,533) (2,699) (11,639) 3,700
Net income (loss)......................... $ 224 $(2,781) $(2,928) $(11,880) $ 2,597
Net income (loss) per share(3)............ $ 0.20 $ (2.37) $ (2.25) $ (4.56) $ 0.34
Weighted average shares outstanding(3).... 1,096 1,175 1,302 2,603 7,580
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------
ACTUAL AS ADJUSTED(4)
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<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents......................................... $14,509 $ 29,874
Working capital................................................... 4,280 19,645
Total assets...................................................... 41,265 56,630
Note payable and other long-term obligations, less current
portion........................................................ 2,982 2,982
Total stockholders' equity........................................ 7,388 22,753
</TABLE>
- ------------------------------
(1) The financial information set forth above excludes financial information for
Biosym prior to August 16, 1995, the effective date of the Biosym
acquisition. Pro forma revenue, operating loss and net loss for 1994 are
$48.8 million, $6.7 million and $8.0 million, respectively, and for 1995 are
$46.8 million, $15.2 million and $16.4 million, respectively. These amounts
do not purport to be indicative of the results of operations that actually
would have resulted had the acquisition been in effect as of January 1 of
such years. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Notes 3 and 4 of Notes to MSI Consolidated
Financial Statements for a discussion of the Biosym acquisition and its
effects.
(2) The 1992 amount represents restructuring costs incurred in connection with
the merger between Molecular Simulations, Inc. and Polygen Corporation. The
1995 amount includes a $6.5 million write-off of acquired in-process
research and development, $4.5 million in restructuring costs and a $1.1
million write-off of capitalized software, all in connection with the
acquisition of Biosym.
(3) See Note 2 of Notes to MSI Consolidated Financial Statements for a
description of the computation of the net income (loss) per share and the
number of shares used in the per share calculation.
(4) As adjusted to give effect to the sale of 1,435,000 shares of Common Stock
to be offered by the Company hereby at an assumed initial public offering
price of $12.00 per share and after deducting the underwriting discount and
estimated offering expenses. See "Use of Proceeds" and "Capitalization."
- ------------------------------
Except as otherwise indicated, the information contained in this Prospectus
(i) assumes no exercise of the Underwriters' over-allotment option, (ii)
reflects a one-for-two reverse stock split of the Common Stock effected in
February 1997, and (iii) reflects the conversion of all outstanding shares of
Series A convertible preferred stock ("Preferred Stock") and Class B convertible
nonvoting common stock (the "Class B Common") into 1,764,832 shares of Common
Stock, which will occur upon the closing of the offering. See "Description of
Capital Stock" and "Underwriting."
5
<PAGE> 10
RISK FACTORS
In addition to other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of the Common Stock offered hereby. This
Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" as well as those discussed elsewhere in
this Prospectus.
Fluctuations in Future Operating Results; Seasonality; Lengthy Sales
Cycles. The Company's operating results have fluctuated significantly because
of seasonal and other factors and the Company expects that future operating
results will be subject to similar fluctuations. A significant portion of the
Company's total revenue has been derived from relatively large orders and from
service and maintenance arrangements. The timing of such orders has caused and
will continue to cause material fluctuations in the Company's operating results,
particularly on a quarterly basis. The Company's operating results may fluctuate
significantly from quarter to quarter or on an annual basis as a result of a
number of other factors, including but not limited to: the size and timing of
customer orders; changes in the Company's customer and user bases; changes in
license renewal rates; changes in pricing terms and billing methods, including
changes associated with the Company's Web-based products and services under
development; changes in revenue recognition; the mix of the Company's
commercial, governmental and academic customers; the market success of the
Company's services offerings; the timely development, introduction and marketing
of new products and product enhancements; market acceptance of the Company's
products, particularly Web-based products under development; deferrals of
customer orders in anticipation of new products or product enhancements; the
Company's ability to control cost, including the need for, and degree of use of,
third-party contractors and the hiring of new employees; political instability
in, or trade embargoes with respect to, foreign markets; changes in the
Company's management team; acquisitions of technologies or other companies and
fluctuating economic conditions. Consequently, there can be no assurance that
the Company will be able to accurately predict the levels of future operating
results. The Company believes that as a result of these and other factors,
period-to-period comparisons of its historical results of operations are not
necessarily meaningful and should not be relied upon as indications of future
performance. Finally, it is likely that in some future periods the Company's
operating results will be below the expectations of public market analysts and
investors. In such event, the price of the Company's Common Stock would likely
be materially adversely affected.
The Company's operating results have fluctuated significantly from quarter
to quarter because of seasonal and other factors and the Company expects that
future operating results will be subject to similar fluctuations. The Company
has typically earned a significant portion of its quarterly revenue late in the
quarter. The Company in the past has recognized its highest revenue in the
fourth quarter followed by lower revenue in the first quarter. In addition,
MSI's sales to Teijin Molecular Simulations Incorporated ("TMSI"), the Company's
joint venture with Teijin Limited ("Teijin"), in the past have been higher in
the Company's first quarter, in part because the fiscal year of most Japanese
companies ends on March 31, and have declined sharply in the second quarter.
Furthermore, the Company's operating expenses have generally increased beginning
in its second quarter due to implementation of annual wage increases and
increased hiring. The decline in Japanese sales combined with increased
operating expenses has caused the Company's results of operations to be lowest
in the second quarter. The Company also has experienced quarterly variability in
service and other revenue. Finally, the Company has experienced decreased
European sales in its third quarter. Consistent with these seasonal trends, the
Company expects that its revenues and results of operations will be lower in the
first quarter of 1997 as compared to the fourth quarter of 1996, and that its
results of operations will decrease in the second quarter of 1997 as compared to
the first quarter of 1997. The failure to achieve expected revenue during any
individual quarter will have a material adverse effect on the Company's
financial condition and results of operations, and the adverse effect may be
magnified by the
6
<PAGE> 11
Company's inability to adjust spending in a timely manner to compensate for any
revenue shortfall. See "--Risks Associated with International Operations."
The sales cycles for the Company's products can be lengthy and are subject
to a number of significant risks over which the Company has little or no
control. The sales cycles for the Company's products typically last six months
and can exceed 12 months. In addition, purchases of the Company's products
generally involve significant commitments of capital, and delays frequently
occur due to the authorization procedures for substantial capital expenditures
within large organizations. Because the Company generally ships orders as
received and as a result typically has little or no backlog, any significant
delay in an anticipated order would likely cause material fluctuations to the
Company's operating results. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business--Sales and
Marketing."
History of Losses; No Assurance of Continued Profitability. The Company
incurred a net loss in each of its three fiscal years prior to 1996. As of
December 31, 1996, the Company's accumulated deficit was $31.5 million. The
Company's net losses increased substantially in 1995 compared to 1994 primarily
as a result of approximately $12.2 million in charges associated with the
Company's acquisition of Biosym. Much of the Company's revenue growth has been
the result of the acquisition of Biosym. In addition, the Company's revenue and
profitability were adversely affected in 1996 by a strategic shift to annual
software licenses from long-term (ten years or perpetual) licenses traditionally
sold by the Company. Compared to long-term licenses, annual licenses generate
lower revenue in the initial year of the license but will generate incremental
revenue each time the license is renewed. For these and other reasons, there can
be no assurance that the Company's revenue will grow or be sustained in future
periods or that the Company will be profitable in any future period. See "--Need
to Achieve Greater Market Penetration," "--Increasing Dependence on License
Renewals" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Need to Achieve Greater Market Penetration. The ability of the Company to
increase revenue from the license of its products is dependent upon increased
market acceptance of the Company's software products and services. The Company's
products are used primarily by simulation specialists. The Company's strategy is
to expand usage of its products and services by marketing and distributing its
software, in part through its Web-based products under development, to
experimentalists. If the Company cannot expand its customer base to include
experimentalists, or if the Company otherwise cannot successfully market and
sell its Web-based products under development and related services, the Company
may not be able to increase its revenue, or its revenue may decline. In general,
increased market acceptance and greater market penetration of the Company's
products depend upon several factors, including the overall product performance,
ease of implementation and use, accuracy of simulation, breadth and integration
of product offerings and the extent to which users achieve the intended research
and development benefits from their use of the Company's products and services.
There can be no assurance that the Company's products and services will achieve
increased market acceptance or penetration in the Company's target industries or
other industries. Failure to increase market acceptance or penetration would
restrict substantially the future growth of the Company and would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Industry Background" and "--Strategy."
Increasing Dependence on License Renewals. The Company derives a
significant portion of its total revenue from the renewal of license, service,
maintenance and consortia agreements with existing customers. The Company is
pursuing a shift in the mix of new customer agreements away from long-term
licenses toward annual, renewable licenses. As a result, the Company's total
revenue in the future will be increasingly dependent on the renewal of annual
licenses. The Company's ability to secure renewals may be adversely affected by
ownership or management changes within customer organizations, including
acquisitions of customers by other companies; the Company's inability to deliver
consistent, high-quality and timely services or product enhancements; customer
budget constraints; the introduction of competing products by third parties;
political or economic instability; and other factors, many of which may be
beyond the control of the Company. There can be no assurance that the
7
<PAGE> 12
Company will be able to generate and maintain sufficient license renewals,
particularly given the Company's shift from long-term to annual licenses, and
failure to do so would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Dependence on Technologies Licensed from or Developed by Third
Parties. Certain of the Company's technologies have been acquired or licensed
from third parties, or have been developed in connection with one of the
Company's consortia. Changes in certain third-party license agreements and
relationships, or termination thereof, could materially affect the Company's
ability to continue to develop and market its current products or new products.
From time to time, the Company experiences disruptions in its relationships with
third parties from whom the Company obtains technology. As a result of these
disruptions, the Company has on occasion experienced delays in distribution of
products and product enhancements and has otherwise had difficulties developing,
distributing or licensing, in a timely manner, third-party products based on
such technology. There can be no assurance that the Company will be able to
successfully acquire or develop, alone or as part of consortia, new
technologies. Furthermore, there can be no assurance that such technologies, if
acquired, can be successfully integrated and commercialized by the Company.
Inability to license, maintain, upgrade or integrate new technologies could have
a material adverse effect on the Company's business, financial condition and
results of operations. There also can be no assurance that there will be no
disruptions in the Company's relationships with third parties from whom the
Company obtains technology, or that any disruptions that do arise will be
resolved in a timely and cost-effective manner, if at all. Any such disruptions
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Acquisition-Related Risks; Need to Integrate Acquired Technologies. The
Company has a history of acquiring or otherwise combining with other companies
that have similar and different products. As a result of such acquisitions and
combinations, the Company has experienced overlapping product features,
inconsistent product standards and unintended concentrations of employees,
management and distributors. In connection with the acquisition of Biosym in
1995, the Company recorded a $4.5 million restructuring charge, a $6.5 million
write-off of acquired in-process research and development, and a $1.1 million
write-off of capitalized software. There can be no assurance that the Biosym
acquisition will be successful in the long term. Following the acquisition of
Biosym, the Company and Corning each received informal inquiries from the
Antitrust Division of the United States Department of Justice concerning the
acquisition. The Antitrust Division requested and was provided certain
information concerning the Company's business and the markets for the Company's
and Biosym's products. No Civil Investigative Demand was issued and neither the
Company nor Corning has received any further contact from the Antitrust Division
since December 1995. However, there can be no assurance that the Antitrust
Division will not request additional information or pursue an investigation,
which could have a material adverse effect on the Company's business. In
general, there can be no assurance that the Company will be successful in
cost-effectively integrating the operations and personnel of acquired businesses
into its business; incorporating new products and any other acquired
technologies into its product lines; deriving future revenue from acquired
technologies or products; establishing and maintaining uniform standards,
controls, procedures and policies; avoiding the impairment of relationships with
employees and customers; or overcoming other problems that may be encountered in
connection with the Company's integration efforts. To the extent that the
Company is unable to accomplish the foregoing, the Company's business, financial
condition and results of operations would be materially adversely affected.
Further, there can be no assurance that future acquisitions will not result in
charges which could have a material, adverse effect on the Company's business,
financial condition and results of operations. Future acquisitions by the
Company may also result in dilutive issuances of equity securities or the
incurrence of debt and amortization expenses related to goodwill and other
intangible assets. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Notes 3 and 4 of MSI Consolidated
Financial Statements.
8
<PAGE> 13
Concentration of Revenue from Certain Industries. The Company derives a
substantial portion of its total revenue from sales of products and services to
companies in the pharmaceutical, biotechnology and chemical industries, all of
which can be highly cyclical. Accordingly, the Company's future success is
dependent upon the continued demand for simulation software by companies in
those industries. The Company believes its customers' cost containment measures
have led to delays and reductions in certain research and development, capital
and operating expenditures by many of such companies in the past, and such
delays or reductions could recur in the future. In addition, certain of the
Company's customers in these industries are subject to regulatory and economic
changes, and such changes could also lead to delays or reductions in research
and development and capital expenditures. The Company experienced a decline in
revenue in 1993 and essentially flat revenue in 1994, due in part to the
reluctance of the pharmaceutical and biotechnology industries to make research
and development investments following the announcement of the Clinton health
care initiative as well as the worldwide recession in the chemical industry
during this period. Any such delays, reductions or fluctuations could have a
material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the Company's products or
product enhancements targeting other industries, if ever introduced, will reduce
the Company's risk of industry concentration. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Risks Associated with International Operations. During 1996, approximately
54% of the Company's total revenue was derived from customers outside the United
States. Approximately 28% of the Company's revenue was derived from operations
in Europe and approximately 26% was derived from export sales to the
Asia/Pacific region, primarily from sales through TMSI. The Company anticipates
that international revenue will continue to account for a significant percentage
of revenue in the future. In particular, the Company expects to continue to
generate substantial revenue from sales by its European subsidiaries and TMSI.
The Company's international operations are subject to risks inherent in the
conduct of international business, including unexpected changes in regulatory
requirements, longer payment cycles, exchange rate fluctuations, export license
requirements, tariffs and other barriers, political and economic instability,
limited intellectual property protection, difficulties in collecting trade
receivables, difficulties in managing distributors or representatives,
difficulties in staffing and managing foreign subsidiary or joint venture
operations, and potentially adverse tax consequences. There can be no assurance
that the Company will be able to sustain or increase international revenue from
licenses or from service or maintenance arrangements, and there can be no
assurance that any of the foregoing factors will not have a material adverse
effect on the Company's international operations, and therefore its business,
financial condition and results of operations. The Company's direct
international sales generally are denominated in local currencies, and the
impact of future exchange rate fluctuations on the Company's operating results
and financial condition cannot be accurately predicted. The Company does not
currently engage in currency exchange rate hedging transactions, and there can
be no assurance that fluctuations in currency exchange rates in the future will
not have a material adverse impact on revenue from international sales, and thus
the Company's business, financial condition and results of operations. The
Company may engage in hedging in the future; however, there can be no assurance
that any currency hedging policies implemented by the Company in the future will
be successful. See "--Fluctuations in Future Operating Results; Seasonality;
Lengthy Sales Cycles" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Management of Growth. Following the Company's merger with Biosym in August
1995, management and other personnel focused a significant amount of attention
on the integration of Biosym with the Company. Future acquisitions of companies
or technologies, expansion of the Company's product lines or additional product
development and product introductions, when added to the day-to-day activities
of the Company, will place a strain on the Company's resources and personnel. In
addition, although the Company is currently investing, and plans to continue to
invest, significant resources to expand its sales force and to develop
additional distribution relationships, the Company has at times experienced and
continues to experience difficulty in recruiting and retaining qualified sales
personnel
9
<PAGE> 14
and in establishing necessary sales representative relationships. There can be
no assurance that the Company will be successful in attracting and retaining the
necessary personnel. If Company management is unable to effectively manage
growth, the Company's business, financial condition and results of operations
will be materially and adversely affected. See "--Dependence on Technologies
Licensed from or Developed by Third Parties," and "Business--Sales and
Marketing."
Dependence upon Product Development; Rapid Technological Change. The market
in which the Company competes is subject to rapid technological change, frequent
product introductions, changes in customer demand and evolving industry
standards. The introduction of products embodying new technologies and the
emergence of new industry standards can render existing products obsolete and
unmarketable. It will also be important for the Company to address the
increasingly sophisticated needs of its customers by supporting existing and
emerging hardware, software, database and networking platforms, including
Web-based technology. Substantially all of the Company's current products
operate in the UNIX operating system. In the event that another operating
system, such as Windows NT, were to achieve broad acceptance in the simulation
software industry, the Company would be required to port its products to such an
operating system which would be costly and time consuming and could have a
material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the Company will be
successful in developing and marketing enhancements that respond to
technological change, evolving industry standards or customer product and
service requirements; that the Company will not experience difficulties that
could delay or prevent the successful development, introduction and sale of such
enhancements or services; or that such enhancements or services will adequately
meet the requirements of the marketplace and achieve market acceptance. From
time to time, the Company experiences delays in the release dates of
enhancements to certain of its products. If release dates of any significant new
products or product enhancements are delayed or if such products or enhancements
fail to achieve market acceptance, the Company's business, financial condition
and results of operations would be materially adversely affected. In addition,
the introduction or announcement of new product offerings or enhancements or
services by the Company or the Company's competitors may cause customers to
defer or forego purchases of current versions of the Company's products or
services, which could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Product
Development."
Proprietary Rights; Risks of Infringement. The Company relies primarily on
a combination of copyright, trademark and trade secret laws, confidentiality
procedures and contractual provisions to protect its proprietary rights. The
Company also has two United States patents. The Company also believes that
factors such as the technological and creative skills of its personnel, new
product development, frequent product enhancements, name recognition and
reliable product maintenance are essential to establishing and maintaining a
technical leadership position. The Company seeks to protect its software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection. Further, there can be no assurance that
the Company's patents or trademarks will offer any protection or that they will
not be challenged, invalidated or circumvented. Furthermore, there can be no
assurance that others will not develop technologies that are similar or superior
to the Company's technology. Despite the Company's efforts to protect its
proprietary rights, unauthorized parties may attempt to copy aspects of the
Company's products or to obtain and use information that the Company regards as
proprietary. In limited instances, the Company has released source codes of
certain products to customers or collaborators. Policing unauthorized use of the
Company's products therefore may be difficult. In addition, the laws of some
foreign countries do not protect proprietary rights as fully as do the laws of
the United States. There can be no assurance that the Company's means of
protecting its proprietary rights in the United States or abroad will be
adequate or that competition will not independently develop similar technology.
There can be no assurance that third parties will not claim infringement by
the Company of their intellectual property rights. From time to time the Company
receives letters from third parties claiming or suggesting that its products may
infringe patents or other intellectual property rights. In
10
<PAGE> 15
particular, the Company has received letters from Tripos, Inc. and Immunex
Corporation stating that the Company's products may be relevant to patents held
by them. The Company has investigated these matters and believes that they are
without merit or immaterial. There can be no assurance, however, that the
Company's products do not infringe upon the patent or other intellectual
property rights of these or other third parties, that the Company will not be
required to seek licenses for or otherwise acquire rights to technology as a
result of claims of infringement or that these or other companies will not bring
infringement suits against the Company. The Company expects in general that
simulation software product developers will increasingly be subject to
infringement claims as the number of products and competitors in the Company's
industry segments grows and the functionality of products in different industry
segments overlaps. Any such claims, with or without merit, could be time
consuming to defend, result in costly litigation, divert management's attention
and resources, cause product shipment delays or require the Company to enter
into royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the Company, if at all. In
the event of a successful claim of product infringement against the Company, the
failure or inability of the Company to license or design around the infringed
technology would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Intellectual
Property and Other Proprietary Rights."
Dependence on Distributors. The Company is dependent in part upon
distributors for its European sales, and upon TMSI as its sole distributor in
the Asia/Pacific region. The Company believes that its success in penetrating
markets for its products depends in large part on its ability to maintain these
relationships and to cultivate additional distribution relationships. There can
be no assurance that any distributor will not discontinue its relationship with
the Company or form competing arrangements with the Company's competitors.
Further, relationships with distributors may create channel conflicts with the
Company's own direct sales force. In addition, the Company's distributors other
than TMSI generally offer other products and are involved in other ventures, and
they may give higher priority to such other activities. The loss of, or a
significant reduction in revenue from, the distributors through which the
Company sells its products could have a material adverse effect on the Company's
business, financial condition and results of operations. See "--Risks Associated
with International Operations."
Competition. The market for the Company's products is intensely
competitive, subject to rapid change and significantly affected by new product
introductions and other market activities of industry participants. The
Company's competitors offer a variety of products and services to address this
market. The Company believes that the principal competitive factors in this
market are product quality, flexibility, ease-of-use, scientific validation and
performance, functionality and features, open architecture, quality of support
and service, reputation and price. Competition currently comes from five
principal sources: other molecular simulation software packages; desktop
software applications, including chemical drawing, molecular modeling and
analytical data simulation applications; consulting and outsourcing services;
other types of simulation software provided to engineers; and firms supplying
databases, such as chemical information databases, and information technology.
In addition, certain of the Company's licenses grant the right to sublicense the
Company's software. As a result, the Company's customers and third-party
licensees could develop specific simulation applications using the Company's
software developer's kit and compete with the Company by distributing such
programs to potential customers of the Company. Customers or licensees could
also develop their own simulation technology and cease using the Company's
products and services.
Certain of MSI's competitors and potential competitors have longer
operating histories than the Company and have greater financial, technical,
marketing and other resources. Further, many of the Company's competitors offer
products and services directed at more specific markets than those targeted by
the Company, enabling these competitors to focus a greater proportion of their
efforts on such markets. There can be no assurance that the Company's current or
potential competitors will not develop products or services comparable or
superior to those developed by the Company or that they will not adapt more
quickly than the Company to new technologies and new customer demands, thereby
increasing their market share relative to that of the Company. Any significant
decrease in the
11
<PAGE> 16
demand for the Company's products would have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Competition."
Dependence upon Key Personnel. The Company's future performance depends in
significant part upon the continued service of its key technical, sales and
senior management personnel. The loss of the services of one or more of the
Company's executive officers or key technical or sales personnel could have a
material adverse effect on the Company's business, financial condition and
results of operations. Competition for qualified technical, sales and managerial
personnel is intense, and there can be no assurance that the Company can retain
its key employees or that it can attract, assimilate or retain other highly
qualified personnel in the future. See "Management."
Product Liability; Product Defects. The Company's sales and license
agreements with its customers typically contain provisions designed to limit the
Company's exposure to potential product liability claims. It is possible,
however, that the limitation of liability provisions contained in the Company's
agreements may not be effective as a result of existing or future federal, state
or local laws or ordinances or unfavorable judicial decisions. The sale and
support of the Company's simulation software may entail the risk of product
liability claims, which are likely to be substantial in light of the
applications in which the Company's products are used. The Company maintains
insurance against claims associated with the use of its products, but there can
be no assurance that its insurance coverage would adequately cover any claim
asserted against the Company. A successful product liability claim brought
against the Company in excess of its insurance coverage or outside the scope of
such coverage would have a material adverse effect upon the Company's business,
financial condition and results of operation.
Software and other products as complex as those offered by the Company
frequently contain errors or failures, especially when first introduced or when
new versions are released. Also, new products or enhancements may contain
undetected errors or performance problems that, despite testing, are discovered
only after a product has been installed and used by customers. Such errors or
performance problems may cause delays in product introductions and shipments or
require design modifications that could materially and adversely affect the
Company's competitive position and operating results. There can be no assurance
that, despite testing by the Company and its current and potential customers,
and despite the Company's attempts to collaborate with its customers during the
development process, errors will not be found in new products or releases after
commencement of commercial shipments, resulting in loss of revenue or delay in
market acceptance, diversion of development resources, damage to the Company's
reputation or increased service and warranty costs, any of which would have a
material adverse effect upon the Company's business, financial condition and
results of operations. See "Business--Product Development."
Influence of Existing Stockholders. Upon completion of this offering, the
Company's executive officers, directors and affiliated entities, including
Corning, together will beneficially own approximately 47.5% of the outstanding
shares of Common Stock (45.5% if the Underwriters over-allotment option is
exercised in full). Corning will beneficially own approximately 40.5% of the
outstanding shares of Common Stock (38.7% if the Underwriters over-allotment
option is exercised in full) after selling 362,219 shares of Common Stock in
this offering. As a result, these stockholders may as a group be able to
exercise control over matters requiring stockholder approval, including the
election of directors or an acquisition of or by the Company. See "Principal and
Selling Stockholders."
No Prior Public Market for Common Stock; Possible Volatility of Stock
Price. Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active public market for the Common
Stock will develop or be sustained after the offering. The initial public
offering price will be determined by negotiations between the Company, the
representatives of the Selling Stockholders and the representatives of the
Underwriters. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price. The trading price
of the Company's Common Stock could be subject to significant fluctuations in
response to variations in quarterly operating results, the gain or loss of
significant orders, changes in earning estimates by analysts, announcements of
technological innovations or new products by the Company or its
12
<PAGE> 17
competitors, general conditions in the software and computer industries and
other events or factors. In addition, the stock market in general has
experienced extreme price and volume fluctuations that have affected the market
price for many companies in industries similar or related to that of the Company
and that have been unrelated to the operating performance of these companies.
These market fluctuations may materially and adversely affect the market price
of the Company's Common Stock. In the past, volatility in the market price of
securities has occasionally resulted in class action lawsuits. There can be no
assurance that such litigation will not occur in the future with respect to the
Company. Such litigation could result in substantial costs and a diversion of
management's attention and resources, which would have a material adverse effect
in the Company's business, financial condition and results of operations.
Shares Eligible for Future Sale; Registration Rights. Sales of substantial
numbers of shares of Common Stock in the public market following this offering
could adversely affect the market price for the Common Stock. Upon completion of
this offering, the Company will have outstanding an aggregate of 8,045,952
shares of Common Stock, assuming no exercise of the Underwriters over-allotment
option and no exercise of outstanding options. Of these shares, 2,500,000 shares
sold in this offering will be freely tradable without restriction or further
registration under the Securities Act of 1933, as amended (the "Securities
Act"), unless such shares are purchased by "affiliates" of the Company, as that
term is defined in Rule 144 under the Securities Act. The remaining 5,525,635
shares of Common Stock held by existing stockholders are "restricted securities"
as that term is defined in Rule 144 under the Securities Act (the "Restricted
Shares"). Restricted Shares may be sold in the public market only if registered
or if they qualify for an exemption from registration under Rules 144, 144(k),
145 or 701 promulgated under the Securities Act. Holders of an aggregate of
5,335,276 of the Restricted Shares agreed that they will not, without the
consent of Hambrecht & Quist LLC, directly or indirectly, sell, offer, contract
to sell, transfer the economic risk of ownership in, make any short sale, pledge
or otherwise dispose of any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for or any other rights to purchase or
acquire shares of Common Stock owned by them during the 180-day period
commencing on the date of this Prospectus. However, Hambrecht & Quist LLC may,
in its sole discretion and at any time without notice, release all or any
portion of the securities subject to lockup agreements. Any such release could
have a material adverse effect on the market price of the Common Stock. With
respect to the shares not subject to such lock-up agreements, upon the closing
of this offering 695,924 shares will be eligible for sale without restriction
pursuant to Rule 144(k), 1,571,199 shares will be eligible for sale pursuant to
Rule 144, and 93,611 shares will be eligible for sale 90 days after this
offering pursuant to Rule 701. Upon expiration of the lock-up period,
approximately 695,924 shares of Common Stock held by existing stockholders will
be eligible for sale without restriction pursuant to Rule 144(k) or Rule 701,
and approximately 1,571,199 shares held by existing stockholders will be
eligible for sale subject to the volume and other restrictions of Rule 144. In
addition, as of December 31, 1996, 1,567,912 shares were subject to outstanding
options. Substantially all of these shares are subject to the lock-up agreements
described above. Upon the expiration of such lock-up agreements, approximately
1,014,700 shares subject to such options will be vested. Following the
completion of this offering, 2,263,053 of the shares outstanding will be
entitled to registration rights with respect to such shares upon termination of
lock-up agreements. The number of shares sold in the public market could
increase if registration rights are exercised. See "Description of Capital
Stock" and "Shares Eligible for Future Sale."
Immediate and Substantial Dilution. Investors participating in this
offering will incur immediate, substantial dilution of $9.56 per share. To the
extent outstanding options to purchase the Company's Common Stock are exercised,
there will be further dilution. If the net proceeds of this offering, together
with available funds and cash generated from operations, are insufficient to
satisfy the Company's cash needs, the Company may be required to sell additional
equity or convertible debt securities. The sale of additional equity or
convertible debt securities could result in additional dilution to the Company's
stockholders. See "Dilution" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
13
<PAGE> 18
Forward-Looking Statements. This Prospectus contains forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934. Such forward-looking statements may
be deemed to include the Company's plans to expand its user base, expand into
new markets, become the industry standard, leverage its core technology and
maintain its technology leadership, leverage its relationships with simulation
specialists and promote strategic technology relationships. Actual results could
differ from those projected in any forward-looking statements for the reasons
detailed in the other sections of this "Risk Factors" portion of the Prospectus,
or elsewhere in this Prospectus.
14
<PAGE> 19
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,435,000 shares of
Common Stock offered by the Company hereby at an assumed public offering price
of $12.00 per share, after deducting the underwriting discounts and estimated
offering expenses payable by the Company, are estimated to be $15,364,600
($19,549,600 if the Underwriters' overallotment option is exercised in full).
The Company will not receive any proceeds from the sale of the shares being sold
by the Selling Stockholders. See "Principal and Selling Stockholders."
The Company intends to use the net proceeds of this offering primarily for
additional working capital and other general corporate purposes, including
research and development, sales, marketing and customer support to accommodate
anticipated growth in the Company's business and customer base. The amounts
actually expended by the Company for working capital purposes will vary
significantly depending upon a number of factors, including future revenue
growth, if any, the amount of cash generated by the Company's operations and the
progress of the Company's product development efforts. The Company's management
will retain broad discretion in the allocation of the net proceeds from this
offering. In addition, the Company may make one or more acquisitions of
complementary technologies, products or businesses which broaden or enhance the
Company's current product offerings. However, the Company has no specific
agreements or commitments, oral or written, for any such acquisition. Pending
the uses described above, the net proceeds will be invested in short-term,
interest-bearing, investment-grade securities.
DIVIDEND POLICY
The Company has not declared or paid any cash dividends on its Common Stock
during any period for which information is provided in this Prospectus. The
Company currently intends to retain future earnings, if any, to finance the
growth and development of its business and does not anticipate paying any cash
dividends in the foreseeable future.
15
<PAGE> 20
CAPITALIZATION
The following table sets forth (i) the actual capitalization of the Company
as of December 31, 1996, (ii) the pro forma capitalization after giving effect
to the conversion of all outstanding Preferred Stock and Class B nonvoting
Common Stock into Common Stock and (iii) the capitalization as adjusted to give
effect to the sale of the 1,435,000 shares of Common Stock offered by the
Company hereby at an assumed initial public offering price of $12.00 per share
(after deducting the estimated underwriting discount and offering expenses).
This table should be read in conjunction with the financial statements and notes
thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of note payable........................... $ 600 $ 600 $ 600
======== ======== ========
Note payable, net of current portion(1)................... $ 1,400 $ 1,400 $ 1,400
-------- -------- --------
Stockholders' equity:
Series A convertible preferred stock, $.01 par value --
authorized: 2,222,223 shares; issued and outstanding:
2,222,223 shares, actual; no shares authorized,
issued and outstanding, pro forma and as adjusted.... 22 -- --
Common stock, $.001 par value -- authorized: 25,000,000
shares; issued and outstanding: 4,846,120 shares,
actual; issued and outstanding: 6,610,952 shares, pro
forma; issued and outstanding 8,045,952 shares, as
adjusted(2).......................................... 5 7 8
Class B convertible nonvoting common stock, $.001 par
value -- authorized: 1,500,000 shares; issued and
outstanding: 1,307,442 shares, actual; no shares
authorized, issued and outstanding, pro forma and as
adjusted............................................. 1 -- --
Additional paid-in capital.............................. 39,393 39,414 54,778
Accumulated deficit..................................... (31,534) (31,534) (31,534)
Cumulative translation adjustment....................... (499) (499) (499)
-------- -------- --------
Total stockholders' equity......................... 7,388 7,388 22,753
-------- -------- --------
Total capitalization............................ $ 8,788 $ 8,788 $ 24,153
======== ======== ========
</TABLE>
- ------------------------------
(1) See Note 8 of Notes to MSI Consolidated Financial Statements.
(2) Based on shares outstanding as of December 31, 1996. Excludes (i) 1,567,912
shares of Common Stock issuable upon the exercise of options outstanding as
of December 31, 1996 at a weighted average exercise price of $1.93 per
share; (ii) 368,497 additional shares of Common Stock reserved for future
issuance under the Company's stock option plans existing as of such date;
and (iii) 75,000 additional shares of Common Stock reserved under the
Company's Non-Employee Directors' Stock Option Plan and Employee Stock
Purchase Plan. See "Management" and Notes 9 and 14 of Notes to MSI
Consolidated Financial Statements.
16
<PAGE> 21
DILUTION
The pro forma net tangible book value of the Company, as of December 31,
1996, was approximately $4.3 million or $0.65 per share. Pro forma net tangible
book value per share is equal to the Company's total tangible assets less its
total liabilities, divided by the number of outstanding shares of Common Stock,
assuming conversion of all outstanding shares of Class B Common and Preferred
Stock into Common Stock. After giving effect to the sale of the 1,435,000 shares
of Common Stock offered by the Company hereby (at an assumed initial public
offering price of $12.00 per share), the pro forma net tangible book value of
the Company at December 31, 1996 would have been approximately $19.7 million or
$2.44 per share. This represents an immediate increase in such net tangible book
value of $1.79 per share to existing stockholders and an immediate dilution of
$9.56 per share to new investors purchasing shares in this offering. The
following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................... $ 12.00
Pro forma net tangible book value per share as of
December 31, 1996............................................ $ 0.65
Increase per share attributable to new investors................ 1.79
------- -------
Pro forma net tangible book value per share after this offering... 2.44
-------
Dilution per share to new investors............................... $ 9.56
=======
</TABLE>
The following table summarizes on a pro forma basis, as of December 31,
1996, the differences between the number of shares purchased from the Company,
assuming conversion of all outstanding shares of Class B Common and Preferred
Stock into Common Stock, the total consideration paid and the average price paid
per share by the existing holders of Common Stock and by the new investors at an
assumed initial public offering price of $12.00 per share:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
---------------------- ------------------------ AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)........ 6,610,952 82.2% $ 39,421,000 69.6% $ 5.96
New investors(1)................ 1,435,000 17.8 17,220,000 30.4 12.00
------- -------
- -
----------- -----------
Total................. 8,045,952 100.0% $ 56,641,000 100.0%
=========== ======== =========== ========
</TABLE>
The foregoing tables excludes (i) 1,567,912 shares of Common Stock issuable
upon the exercise of options outstanding as of December 31, 1996 at a weighted
average exercise price of $1.93 per share; (ii) 368,497 additional shares of
Common Stock reserved for future issuance under the Company's stock option plans
existing as of such date; and (iii) 75,000 additional shares of Common Stock
reserved under the Company's Non-Employee Directors' Stock Option Plan and
Employee Stock Purchase Plan. To the extent that outstanding options are
exercised in the future, there may be further dilution to new stockholders.
- ------------------------------
(1) Sales by the Selling Stockholders in this offering will reduce the number of
shares held by existing stockholders to 5,545,952 shares or approximately
68.9% of the total shares of Common Stock outstanding after this offering
and will increase the number of shares held by new investors to 2,500,000
shares or approximately 31.1% of the total shares of Common Stock
outstanding after this offering. See "Principal and Selling Stockholders."
17
<PAGE> 22
SELECTED CONSOLIDATED FINANCIAL DATA
The following table contains selected consolidated financial data of the
Company and is qualified in its entirety by the more detailed financial
statements and notes thereto included elsewhere in this Prospectus. The
statement of operations data for the years ended December 31, 1994, 1995 and
1996, and the balance sheet data as of December 31, 1995 and 1996, have been
derived from such financial statements and notes thereto. The statement of
operations data for the years ended December 31, 1992 and 1993, and the balance
sheet data as of December 31, 1992, 1993 and 1994 have been derived from the
Company's consolidated financial statements, which statements have been audited
by Arthur Andersen LLP and are not included in this Prospectus. This data should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and notes
thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1992 1993 1994(1) 1995(1) 1996
-------- ------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue:
Software licenses..................... $ 12,977 $ 7,987 $ 7,920 $ 14,482 $ 19,739
Service and other..................... 5,745 5,609 6,110 11,165 21,344
Hardware.............................. 880 1,672 1,342 4,473 6,178
-------- -------- -------- -------- -------
Total revenue...................... 19,602 15,268 15,372 30,120 47,261
Total cost of revenue................... 3,675 2,309 2,888 6,609 7,759
-------- -------- -------- -------- -------
Gross profit....................... 15,927 12,959 12,484 23,511 39,502
Total operating expenses................ 15,345 15,492 15,183 35,150 35,802
-------- -------- -------- -------- -------
Operating income (loss)................. 582 (2,533) (2,699) (11,639) 3,700
Interest and other income............... 117 5 33 319 368
-------- -------- -------- -------- -------
Income (loss) before provision for
income taxes.......................... 699 (2,528) (2,666) (11,320) 4,068
Provision for income taxes.............. 475 253 262 560 1,471
-------- -------- -------- -------- -------
Net income (loss)....................... $ 224 $(2,781) $(2,928) $(11,880) $ 2,597
======== ======== ======== ======== =======
Net income (loss) per share(2).......... $ 0.20 $ (2.37) $ (2.25) $ (4.56) $ 0.34
======== ======== ======== ======== =======
Weighted average shares
outstanding(2)........................ 1,096 1,175 1,302 2,603 7,580
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------
1992 1993 1994 1995 1996
-------- ------- ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............. $ 2,065 $ 1,609 $ 5,855 $ 10,371 $ 14,509
Working capital....................... 2,197 1,579 5,481 291 4,280
Total assets.......................... 12,423 11,080 14,916 34,152 41,265
Note payable and other long-term
obligations, net of current
portion............................ 204 2,137 2,774 3,116 2,982
Total stockholders' equity............ 6,109 3,381 6,812 5,149 7,388
</TABLE>
- ------------------------------
(1) The financial information set forth above excludes financial information for
Biosym prior to August 16, 1995, the effective date of the Biosym
acquisition. Pro forma revenue, operating loss and net loss for 1994 are
$48.8 million, $6.7 million and $8.0 million, respectively, and for 1995 are
$46.8 million, $15.2 million and $16.4 million, respectively. These amounts
do not purport to be indicative of the results of operations that actually
would have resulted had the acquisitions been in effect as of January 1 of
such year. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Notes 3 and 4 of Notes to MSI Consolidated
Financial Statements for a discussion of the Biosym acquisition and its
effects.
(2) See Note 2 of Notes to MSI Consolidated Financial Statements for a
description of the computation of the net income (loss) per share and the
number of shares used in the per share calculation.
18
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" as well as those discussed elsewhere in
this Prospectus.
OVERVIEW
Molecular Simulations Incorporated was founded in 1984 and is the leading
provider of molecular modeling and simulation software. The Company designs,
develops, markets and supports software that facilitates the discovery and
development of new products and processes in the pharmaceutical, biotechnology,
chemical, petrochemical and materials industries. Using the Company's products,
researchers are able to increase the speed and efficiency of the research and
development cycle, thereby reducing product development costs and shortening the
time to market for new product introductions and process improvements.
The Company has pursued a strategy that involves internal product
development as well as licensing and acquiring complementary products and
technologies. In August 1995, the Company took a significant step in pursuit of
this strategy by acquiring Biosym, a leading provider of molecular modeling and
simulation software and a wholly owned subsidiary of Corning. The Biosym
acquisition has had a significant effect on MSI's subsequent revenue growth and
other financial results and allowed the Company to achieve several important
strategic objectives, including the acquisition of key technologies and
personnel; the addition of complementary products; a significant expansion of
the Company's customer base; expansion into new markets; improved cost
efficiencies; and broader research and development, marketing, and sales
capabilities. In conjunction with this acquisition, the Company undertook a
corporate restructuring that resulted in a reduction of excess facilities and
personnel, as well as a streamlining of overlapping projects, duplicate systems
and redundant processes. Since the transaction was accounted for as a purchase,
the operating results of Biosym prior to August 1995 are not included in the
Company's financial results. Much of the Company's revenue growth has been
attributable to the acquisition of Biosym. There can be no assurance that the
Company will be able to acquire, develop or integrate new technologies
successfully in the future. See "Risk Factors--Acquisition-Related Risks; Need
to Integrate Acquired Technologies."
The Company's revenue is primarily derived from the license of its software
products and from services, as well as the resale of third-party hardware
products. License revenue is recognized upon execution of a license agreement
and shipment of the product, if no significant contractual obligations remain.
The Company's services revenue includes software maintenance fees, consortia
fees and fees for other services associated with use of the Company's software
products. The Company's consortia are collaborative arrangements among the
Company and third parties created for purposes of product development and
validation.
The Company licenses its software either under long-term (ten years or
perpetual) licenses or annual, renewable licenses. In 1996, the Company
continued its program of emphasizing the benefits of annual licenses. The
Company believes that annual licenses offer customers increased flexibility with
respect to product modules and features at a lower up-front cost. Because annual
licenses are typically priced substantially lower than long-term licenses, they
generate lower revenue when the sale is first made as compared to sales of
long-term licenses. However, they will generate incremental future revenue each
time the license is renewed. In 1996, the Company experienced a marked increase
in the relative proportion of annual licenses, which increased from 14% of
software license revenue in 1995 to 27% in 1996. The Company expects that this
shift towards annual licenses will continue. See "Risk Factors--Increasing
Dependence on License Renewals."
19
<PAGE> 24
Service and other revenue consists principally of software maintenance fees
for ongoing support and product updates; payments for training, contract and
consulting services; and consortia membership fees. Software maintenance revenue
is recognized ratably over the term of the contract, which is typically 12
months. Training, contract and consulting revenue is recognized as the services
are performed. Consortia membership fees are recognized ratably over the
membership term of the consortium, which is typically one to three years. In
addition to initiating a shift toward annual software licenses, the Company has
recently placed added emphasis on marketing its services in order to increase
the proportion of its recurring revenue. As a result, the Company's service
revenue has increased as a percentage of total revenue.
As a convenience to its customers, the Company acts as a value-added
reseller of third-party computer hardware products in order to provide a
complete turn-key molecular simulation system. The Company's sales of computer
hardware are highly variable and unpredictable. Although fluctuations in the
sale of computer hardware can cause significant variability in the Company's
reported revenue, the gross profit earned by the Company on such sales is
relatively small and fluctuations in revenue from computer hardware have little
effect on the Company's overall gross profit.
The Company markets its products and services worldwide. The Company has
committed and continues to commit significant management time and financial
resources to develop direct and indirect international sales and support
channels. International revenue accounted for approximately 54% of total revenue
in fiscal 1996. The Company expects international license, service and
maintenance revenue to be a significant percentage of total revenue in the
future. In North America and Europe, the Company has a direct sales force
consisting of field sales representatives and telesales representatives. In
Japan and other Asia/Pacific countries, the Company markets and sells its
products through TMSI, which has certain exclusive rights to distribute the
Company's products and services. TMSI is a 50/50 joint venture between the
Company and Teijin, a large Japanese manufacturer and pharmaceutical company,
and distributes the Company's products and services through a network of
subdistributors. The Company accounts for its investment in TMSI using the
equity method. The Company's international operations are subject to risks
inherent in the conduct of international business and there can be no assurance
that the Company will be able to sustain or increase international revenue from
licenses or from service or maintenance arrangements. See "Risk Factors--Risks
Associated with International Operations."
The operating results of many software companies reflect seasonal trends,
and the Company has been and expects to continue to be affected by such seasonal
trends in the future. The Company's operating results have fluctuated
significantly from quarter to quarter because of seasonal and other factors and
the Company expects that future operating results will be subject to similar
fluctuations. The Company also has typically earned a significant portion of its
quarterly revenue late in the quarter. The Company in the past has recognized
its highest revenue in the fourth quarter followed by lower revenue in the first
quarter. In addition, MSI's sales to TMSI have in the past been higher in the
Company's first quarter, in part because the fiscal year of most Japanese
companies ends on March 31, and have declined sharply in the second quarter.
Furthermore, the Company's operating expenses have generally increased beginning
in its second quarter due to implementation of annual wage increases and
increased hiring. The decline in Japanese sales combined with increased
operating expenses typically has caused the Company's results of operations to
be lowest in the second quarter. The Company also has experienced quarterly
variability in service and other revenue. Finally, the Company has experienced
decreased European sales in its third quarter. Consistent with these seasonal
trends, the Company expects that its revenues and results of operations will be
lower in the first quarter of 1997 as compared to the fourth quarter of 1996,
and that its results of operations will decrease in the second quarter of 1997
as compared to the first quarter of 1997. The failure to achieve expected
revenue during any individual quarter will have a material adverse effect on the
Company's financial condition and results of operations, and the adverse effect
may be magnified by the Company's inability to adjust spending in a timely
manner to compensate for any revenue shortfall. There can be no assurance that
the Company's historical trends will continue in the future. See "Risk
20
<PAGE> 25
Factors--Fluctuations in Future Operating Results; Seasonality; Lengthy Sales
Cycles" and "--Risks Associated with International Operations."
In June 1996, the American Institute of Certified Public Accountants issued
"Proposed Statement of Position: Software Revenue Recognition." The Company has
reviewed the proposed statement of position and determined that its consolidated
financial statements for each of the three years in the period ended December
31, 1996 are, in all material respects, in compliance with the provisions of the
proposed statement of position.
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
The following table sets forth certain operating data expressed as a
percentage of total revenue for each period indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
STATEMENT OF OPERATIONS 1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Revenue:
Software licenses............................................. 51.5% 48.1% 41.8%
Service and other............................................. 39.8 37.1 45.1
Hardware...................................................... 8.7 14.8 13.1
----- ----- -----
Total revenue.............................................. 100.0 100.0 100.0
Cost of revenue:
Software licenses............................................. 11.3 9.0 5.3
Hardware...................................................... 7.5 12.9 11.1
----- ----- -----
Total cost of revenue ..................................... 18.8 21.9 16.4
----- ----- -----
Gross profit............................................... 81.2 78.1 83.6
Operating expenses:
Sales, marketing and customer support......................... 49.0 39.9 36.7
Research and development...................................... 36.1 25.2 27.2
General and administrative.................................... 13.6 11.2 11.9
Acquisition-related charges................................... -- 40.4 --
----- ----- -----
Total operating expenses................................... 98.7 116.7 75.8
----- ----- -----
Operating income (loss)......................................... (17.5) (38.6) 7.8
Interest and other income....................................... 0.2 1.1 0.8
----- ----- -----
Income (loss) before provision for income taxes................. (17.3) (37.5) 8.6
Provision for income taxes...................................... 1.7 1.9 3.1
----- ----- -----
Net income (loss)............................................... (19.0)% (39.4)% 5.5%
===== ===== =====
</TABLE>
Revenue
Software license revenue. Software license revenue increased 83% from $7.9
million in 1994 to $14.5 million in 1995, and 36% to $19.7 million in 1996. The
increase in software license revenue from 1994 to 1995 was due primarily to an
additional $5.2 million of software license revenue from Biosym's product lines
during the period from August 16, 1995 to December 31, 1995, and to an increase
of $2.0 million or 25% in sales of MSI software product lines. The 25% increase
in MSI software license revenue from 1994 to 1995 was the result of the
introduction of new product lines in 1994 and increased sales of existing
products. In 1996, software license revenue increased as a result of new
customers acquired through the Biosym acquisition, an increase in customer sites
and additional sales to existing customers. During 1996, revenue from annual
licenses grew to $5.3 million or 27% of software license revenue from $2.1
million or 14% of software license revenue in 1995. Software license revenue as
a percentage of total revenue decreased in 1996 primarily as a result of the
increase in annual licenses relative to long-term licenses.
21
<PAGE> 26
Service and other revenue. Service and other revenue increased 83% from
$6.1 million in 1994 to $11.2 million in 1995, and 91% to $21.3 million in 1996.
The increase from 1994 to 1995 was principally due to an additional $4.2 million
of service revenue relating to sales of Biosym products. The increase from 1995
to 1996 was primarily attributable to the inclusion of a full year of Biosym
service and other revenue in the Company's 1996 results. Additionally, the
increase in service and other revenue in 1996 was partially attributable to the
growing installed base of the Company's products and the associated increase in
demand for maintenance services. An increased focus on marketing software
maintenance, consulting and other services also contributed to increased service
and other revenue in 1996. In addition, service and other revenue increased as a
percentage of total revenue in 1996 as a result of the Company's strategic shift
from long-term to annual licenses. All of these factors had the added effect of
increasing service and other revenue as a percentage of total revenue from 37%
in 1995 to 45% in 1996.
Hardware revenue. Hardware revenue increased 233% from $1.3 million in 1994
to $4.5 million in 1995, and 38% to $6.2 million in 1996. The increase from 1994
to 1995 was primarily attributable to $2.5 million of hardware revenue
associated with sales of Biosym products. The 1996 increase in hardware revenue
was due to the Company's larger customer base resulting in a greater volume of
hardware orders.
Total revenue. Total revenue increased 96% from $15.4 million in 1994 to
$30.1 million in 1995, and 57% to $47.3 million in 1996. The increase from 1994
to 1995 was primarily due to the $6.6 million increase in software license
revenue, while the increase from 1995 to 1996 was principally attributable to
the $10.2 million increase in service and other revenue.
Cost of revenue
Cost of software license revenue. Cost of software license revenue consists
primarily of royalty expenses for software licensed to the Company; amortization
of capitalized software development costs; and product media, documentation,
packaging and freight expenses. The cost of software license revenue was $1.7
million in 1994, $2.7 million in 1995 and $2.5 million in 1996. The cost of
license revenue as a percentage of license revenue was 22%, 19% and 13%,
respectively, for these periods. The increase in the cost of license revenue
from 1994 to 1995 was the result of the higher royalty expenses associated with
the increase in the number of licenses sold and higher documentation costs
related to the integration of the Biosym product line. The decrease in the cost
of software license revenue from 1995 to 1996 was primarily the result of a
reduction in documentation costs following the integration of the Biosym product
line in 1995. The declines in the cost of software license revenue as a
percentage of license revenue were the result of relatively unchanged software
amortization costs. Cost of service and other revenue is immaterial and such
cost is included in the cost of software license revenue.
Cost of hardware revenue. The cost of hardware revenue was $1.1 million in
1994, $3.9 million in 1995 and $5.2 million in 1996. The cost of hardware
revenue as a percentage of hardware revenue was 85%, 87% and 85%, respectively,
for these periods. The increase in the cost of hardware revenue for all periods
was the result of a corresponding increase in hardware revenue. Although
fluctuations in the sale of computer hardware can cause significant variability
in the Company's reported revenue, the gross profit earned by the Company on
such sales is relatively small and fluctuations in revenue from computer
hardware have little effect on the Company's overall gross profit.
Operating expenses
Sales, marketing and customer support expense. Sales, marketing and
customer support expense was $7.5 million in 1994, $12.0 million in 1995 and
$17.4 million in 1996. These amounts represented 49%, 40% and 37% of total
revenue, respectively, for these periods. The increases were largely
attributable to additional expenses associated with the larger sales force and
increased customer support requirements resulting from the Biosym acquisition.
The increase in sales, marketing and customer support expense in 1996 also
reflected the hiring of additional sales, marketing and customer support
personnel, as well as increased costs associated with expanded promotional
activities. The
22
<PAGE> 27
Company expects that the dollar amount of sales, marketing and customer support
expense will increase in 1997.
Research and development expense. Research and development expense, net of
capitalized software costs, was $5.6 million in 1994, $7.6 million in 1995 and
$12.8 million in 1996. Research and development expense as a percentage of total
revenue was 36%, 25% and 27%, respectively, for these periods. Research and
development expense consists primarily of personnel, facilities and related
expenses. Research and development costs are expensed when incurred, with the
exception of certain software development costs required to be capitalized in
accordance with Statement of Financial Accounting Standard No. 86("SFAS No.
86"). In accordance with SFAS No. 86, the Company capitalized $1.1 million, $2.2
million and $1.5 million of software costs in 1994, 1995 and 1996, respectively.
The 1995 dollar increase was attributable in part to additional expenses
associated with increased operations resulting from the Biosym acquisition. The
Company believes that a significant level of investment in research and product
development is essential to market leadership and anticipates that it will
continue to commit substantial resources to research and product development in
the future.
General and administrative expense. General and administrative expense was
$2.1 million in 1994, $3.4 million in 1995 and $5.6 million in 1996. As a
percentage of total revenue, general and administrative expense was 14%, 11% and
12%, respectively, for these periods. The increase during 1995 was primarily
attributable to additional expenses associated with increased operations
resulting from the Biosym acquisition. The increases in general and
administrative expense for both periods were due in part to increased staffing
and additional investment in infrastructure necessary to manage and support the
Company's growing operations. The Company believes that its general and
administrative expense will increase in dollar amount for 1997 as a result of an
anticipated expansion of the Company's administrative staff required to support
its growing operations.
Acquisition-related charges. During the quarter ended September 30, 1995,
the Company charged to operations approximately $6.5 million of acquired
research and development costs associated with the Biosym acquisition, $4.5
million of restructuring costs, as well as $1.1 million for the impairment of
capitalized software. The acquired research and development was expensed in
accordance with generally accepted accounting principles. The restructuring
costs related primarily to reductions in personnel, consolidation of facilities,
and elimination of duplicate products and systems resulting from the Biosym
acquisition. The charge for the impairment of capitalized software reflects
capitalized software development costs for software products rendered obsolete
or redundant by the Biosym acquisition.
Interest and other income
Interest and other income primarily represents interest income earned on
the Company's cash, cash equivalents and short-term investments, net of interest
expense, and equity income from the Company's 50% ownership of TMSI. Interest
and other income was $33,000, $319,000 and $368,000 in fiscal 1994, 1995 and
1996, respectively. The increase from 1994 to 1995 was due primarily to interest
income from cash raised through the sale of equity in late 1994.
Provision for income tax
The Company's provision for income tax consists primarily of foreign income
taxes withheld on foreign revenue. The tax provision for 1994 and 1995 reflects
the inability to offset these foreign taxes with operating losses. The tax
provision for 1996 of 36% reflects the impact of foreign income taxes withheld
on revenue as well as the Company's inability to completely offset its operating
income with loss carryforwards because of minimum tax requirements. The Company
expects to be able to offset a substantial portion of its income in 1997 with
net operating loss carryforwards, after which all loss carryforwards will be
subject to significant limitations.
23
<PAGE> 28
QUARTERLY RESULTS OF OPERATIONS
The following table sets forth the unaudited quarterly financial data for
each of the five quarters ended December 31, 1996, which constitute the first
full quarters following the Biosym acquisition in August 1995. This quarterly
information has been prepared on the same basis as the audited MSI Consolidated
Financial Statements appearing elsewhere in this prospectus. In the opinion of
the Company's management, the quarterly information reflects all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the information for the reporting periods presented. Such
statement of operations data should be read in conjunction with the audited MSI
Consolidated Financial Statements and Notes thereto. Operating results for any
quarter are not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1995 1996 1996 1996 1996
------------- ------------- ------------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue:
Software licenses................ $ 6,044 $ 5,087 $ 3,931 $ 4,488 $ 6,233
Service and other................ 4,952 3,846 4,653 5,496 7,349
Hardware......................... 1,497 1,033 2,924 1,110 1,111
------- ------- ------- ------- -------
Total revenue............ 12,493 9,966 11,508 11,094 14,693
Cost of revenue:
Software licenses................ 1,103 580 352 621 964
Hardware......................... 1,237 858 2,525 914 945
------- ------- ------- ------- -------
Total cost of revenue.... 2,340 1,438 2,877 1,535 1,909
------- ------- ------- ------- -------
Gross profit............. 10,153 8,528 8,631 9,559 12,784
Operating expenses:
Sales, marketing and customer
support....................... 5,219 3,646 3,862 4,292 5,559
Research and development......... 3,264 2,945 3,051 3,284 3,554
General and administrative....... 1,632 1,077 1,279 1,342 1,911
------- ------- ------- ------- -------
Total operating
expenses............... 10,115 7,668 8,192 8,918 11,024
------- ------- ------- ------- -------
Operating income................... 38 860 439 641 1,760
Interest and other income.......... 214 64 60 225 19
------- ------- ------- ------- -------
Income before provision for income
taxes............................ 252 924 499 866 1,779
Provision for income taxes......... 148 332 181 314 644
------- ------- ------- ------- -------
Net income......................... $ 104 $ 592 $ 318 $ 552 $ 1,135
======= ======= ======= ======= =======
</TABLE>
The Company's operating results have fluctuated significantly from quarter
to quarter because of seasonal and other factors and the Company expects that
future operating results will be subject to similar fluctuations. The Company
also has typically earned a significant portion of its quarterly revenue late in
the quarter. The Company in the past has recognized its highest revenue in the
fourth quarter followed by lower revenue in the first quarter. For example,
total revenues decreased 20% from $12.5 million for the fourth quarter of 1995
to $10.0 million for the first quarter of 1996. In addition, MSI's sales to TMSI
in the past have been higher in the Company's first quarter, in part because the
fiscal year of most Japanese companies ends on March 31, and have declined
sharply in the second quarter. The 23% decrease in software license revenue from
$5.1 million in the first quarter of 1996 to $3.9 million in the second quarter
of 1996 was largely attributable to this pattern. Furthermore, the Company's
operating expenses have generally increased beginning in its second quarter due
to implementation of annual wage increases and increased hiring. The decline in
Japanese sales combined with increased operating expenses typically has caused
the Company's results of operations to be
24
<PAGE> 29
lowest in the second quarter. The Company also has experienced quarterly
variability in service and other revenue. For example, fourth quarter 1996
service and other revenue increased by 34% over the third quarter primarily as a
result of an increased focus on marketing software maintenance, consortia and
the completion of several large research and development contracts. Finally, the
Company typically has experienced decreased European sales in its third quarter.
The Company's hardware sales are subject to significant variability. The
gross profit earned by the Company from hardware sales is relatively small and
fluctuations in revenue from computer hardware have relatively little effect in
the Company's overall gross profit. For example, the Company's hardware revenue
spiked to $2.9 million in the second quarter of 1996, but produced only $399,000
in gross profit. See "Risk Factors -- Fluctuations in Future Operating Results;
Seasonality; Lengthy Sales Cycles" and "-- Risks Associated with International
Operations."
THREE MONTHS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1996
Revenue
Total revenue increased 18% from $12.5 million for the fourth quarter of
1995 to $14.7 million for the fourth quarter of 1996. Software license revenue
increased 3% from $6.0 million in the fourth quarter of 1995 to $6.2 million in
the fourth quarter of 1996. The software license revenue increase was limited by
the strategic shift in 1996 from long-term software licenses toward annual
licenses, which generate lower revenue when first sold but which provide
incremental revenue each time the annual licenses are renewed. Service and other
revenue increased 48% from $5.0 million in the fourth quarter of 1995 to $7.3
million in the fourth quarter of 1996. The increase in service and other revenue
was attributable to the growing installed base of the Company's products and an
associated increase in demand for maintenance service. Hardware revenue declined
26% from $1.5 million in the fourth quarter of 1995 to $1.1 million in the
fourth quarter of 1996 as a result of fewer customer orders for third-party
computer equipment.
Cost of revenue
Cost of revenue declined 18% from $2.3 million in the fourth quarter of
1995 to $1.9 million for the fourth quarter of 1996, primarily as a result of
the decline in computer hardware sales and the higher documentation costs
related to the integration of the Biosym product line.
Operating expenses
Total operating expenses were $10.1 million in the fourth quarter of 1995
and $11.0 million in the fourth quarter of 1996. Operating expenses as a
percentage of total revenue were 81% for the fourth quarter of 1995 and 75% for
the fourth quarter of 1996. The decrease in operating expense as a percentage of
total revenue was primarily due to increased operational efficiencies resulting
from the Company's restructuring following the Biosym acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has funded its operations primarily through
cash flows from operations and private sales of $39.4 million of equity
securities. Net cash provided by (used in) operating activities was ($866,000),
$1.4 million and $7.7 million in 1994, 1995 and 1996, respectively. Cash
provided by operations in 1996 resulted primarily from improved profitability
and increases in deferred revenue.
The Company's primary investing activities have consisted of capitalized
software development costs and purchases of equipment and software rights.
Capital expenditures were primarily for computer equipment used in support of
product development and other Company activities. The Company expects to
continue to invest in capital assets and capitalized software development
activities to support its growth.
25
<PAGE> 30
The Company is negotiating a line of credit with a commercial bank under
which it would be able to borrow up to $2 million at the bank's prime rate. As
of December 31, 1996, the Company had a note outstanding to Teijin in the amount
of $2.0 million, of which $600,000 in principal is due within the next twelve
months.
As of December 31, 1996, the Company had cash and cash equivalents totaling
$14.5 million. The Company's principal commitments as of December 31, 1996
consist of leases on facilities and equipment and the note payable to Teijin.
There are no material commitments for capital expenditures.
The Company believes that the net proceeds from the offering, together with
the anticipated cash flows from operations and cash and cash equivalents, will
be adequate to meet its cash needs for working capital and capital expenditures
for at least the next 12 months. Thereafter, the Company may require additional
funds to support its working capital requirements or for other purposes, and may
seek to raise such additional funds through public or private equity financing
or from other sources. There can be no assurance that such additional financing
will be available on terms favorable to the Company, if at all, and will not be
dilutive to the Company's then current stockholders. To the extent that the
Company is unable to accomplish the foregoing, the Company's business, financial
condition and results of operations could be materially adversely affected.
26
<PAGE> 31
BUSINESS
Molecular Simulations Incorporated ("MSI" or the "Company") is the leading
provider of molecular modeling and simulation software. The Company designs,
develops, markets and supports software that facilitates the discovery and
development of new products and processes in the pharmaceutical, biotechnology,
chemical, petrochemical and materials industries. Using the Company's products,
researchers are able to increase the speed and efficiency of the research and
development cycle, thereby reducing product development costs and shortening the
time to market for new product introductions and process improvements. The
Company's customers comprise leading commercial, governmental and academic
organizations, including many of the largest pharmaceutical, biotechnology,
chemical, petroleum and semiconductor companies worldwide.
The Company has a comprehensive product suite consisting of over 100
application modules based on proprietary technologies that employ fundamental
scientific principles, advanced computer visualization, molecular modeling
techniques and computational chemistry. The Company's application products allow
scientists to perform molecular level computations of chemical, biological and
physical properties, to simulate, visualize and analyze chemical and biological
systems, and to communicate the results to other scientists. The Company's
products are based upon advanced software architectures that facilitate the
development, integration and deployment of new software products. The Company
also offers open access to its core software development environment, within
which customers and third-party licensees can develop, integrate and distribute
their own software applications for computational chemistry, biology and
materials research. The Company markets its products and services worldwide,
principally through its direct sales force based in the United States and Europe
and through its distribution network in the Asia/Pacific region.
The Company has assembled its proprietary product suite through internal
development, licensing of technologies from third parties and acquisitions of
other companies. In August 1995, the Company acquired Biosym Technologies, Inc.
("Biosym"), a leading provider of molecular modeling and simulation software and
a wholly owned subsidiary of Corning Incorporated ("Corning"). The acquisition
of Biosym allowed the Company to achieve several important strategic objectives,
including the addition of key technologies and personnel; the addition of
complementary products; a significant expansion of the Company's customer base;
penetration into new markets; improved cost efficiencies; and broader research
and development, marketing and sales capabilities.
The Company plans to continue enhancing its product and service offerings
for simulation specialists, who are the principal users of the Company's
products. In addition, the Company plans to broaden significantly its user base
to include the much larger population of experimentalists-- laboratory
scientists and engineers that engage in experimental activities. The Company has
packaged its core simulation technologies into solutions-oriented applications
known as computational instruments. These products are easier to use than
traditional simulation products and perform specific functions analogous to
typical laboratory procedures. Recently, the Company has begun to develop
Web-based computational instruments accessible over corporate intranets. A key
component of the Company's strategy is to create a "virtual laboratory" of
computational instruments and other products for use on desktop computers by a
broad range of scientists to perform computational chemistry, biology and
materials experiments.
The Company intends to remain at the forefront of simulation technology in
order to offer a broad range of product solutions across diverse industries. The
Company has access to a high degree of scientific expertise in molecular
simulation through its employee base, academic collaborations and participation
in industry partnerships. As of December 31, 1996, the Company had 268
employees, approximately half of whom hold Ph.D. degrees. The Company currently
manages five industrial consortia, which are focused groups of industrial users,
academic experts and MSI personnel, that collaborate to create new simulation
software solutions for industrial research and development. The consortia allow
the Company to accelerate the development of new technologies, share development
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costs with consortia members, obtain customer guidance on product development
and secure early validation of the Company's products.
INDUSTRY BACKGROUND
For companies in the pharmaceutical, chemical and materials industries,
innovation in the discovery and development of new products and the rapid,
cost-effective commercialization of these products is crucial to success. To
keep pace with scientific advancement, companies in these industries invest
considerable resources in technologies designed to help discover, develop and
commercialize new products and processes. In the United States alone, $171
billion was spent on chemical research and development in 1995. The pace of
technical progress has resulted in the increased use of computation to simulate
processes, predict the outcome of product designs and decrease the time to
market.
Many factors that affect a product's performance, including activity,
bioavailability, toxicity, shelf life and environmental impact, are governed by
fundamental, atomic level properties such as molecular shape, structure and
reactivity. Molecular simulation was developed to predict these molecular
properties and help researchers discover new products, sharpen the focus of
experimental activities and improve ultimate product performance. Beginning in
the late 1970's, major pharmaceutical and chemical companies began to use
molecular simulation in their research and development activities. Initial
efforts involved academic and internally developed software running on mainframe
computers. This early simulation software had limited application, was expensive
to maintain and support, and often did not provide sufficient accuracy.
Increased academic and commercial investment in the 1980's improved the
utility of these new simulation technologies. As researchers began to migrate
from mainframe and minicomputer-based systems to high performance UNIX
workstations, companies emerged to provide commercial quality molecular
visualization and computational chemistry software products. Commercial
UNIX-based products were used primarily by highly trained simulation
specialists, and typically provided a graphical user interface ("GUI") and
improved quality and reliability over previously available alternatives. As a
result, molecular simulation was increasingly used as a tool in compound
discovery and development.
In recent years, a number of important developments have led to increased
use of simulation:
- Increased CPU Price Performance. CPU price performance has continued to
improve, leading to greater cost effectiveness and allowing calculations
with more realistic molecular models.
- Broadened Applicability. Improved algorithms and computational chemistry
techniques have expanded the range of materials to which molecular
simulation can be applied, including new drug candidates, polymers,
catalysts, optical fibers, semiconductors and environmentally safe
refrigerants, among others.
- Improved Experimental Capabilities. Advances in analytical
instrumentation in such areas as X-ray crystallography and nuclear
magnetic resonance ("NMR") spectroscopy are allowing researchers to
understand better the structure and behavior of complex chemical and
biochemical systems. The increase in the extent and detail of the
available data has improved the quality and predictive utility of
simulation-based methods.
- Increased Data. Automation of data generation activities, such as gene
sequencing, high throughput screening and combinatorial chemistry, have
produced increasing amounts of valuable data. Ongoing collection,
interpretation and use of this data require efficient computational
technology.
Despite these developments, molecular simulation has not yet been adopted
by many scientists who could benefit from its use. Experimentalists, who the
Company believes represent the largest segment of the scientific community,
typically conduct research using traditional laboratory methods
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without the benefit of simulation technology. Furthermore, commercial simulation
products have continued to operate primarily on UNIX workstations, which are
more difficult to learn and are more expensive and less prevalent than the
desktop systems commonly used by experimentalists. Additionally, despite the
continued improvements in predictive capability and an increasing number of
applications in the chemical, biological and materials industries, awareness of
the benefits of molecular simulation technology remains limited. Finally,
commercial software suppliers, and many academic, governmental and industrial
researchers, have developed diverse simulation software programs that employ
different GUIs, computational techniques and product architectures, which
historically have not been integrated through an open software architecture.
THE MSI SOLUTION
The Company offers a broad suite of software products and services designed
to enable MSI customers to shorten product lead times, reduce research and
development costs, improve product and process performance, collect and compute
otherwise inaccessible information, and communicate more effectively both inside
and outside an organization. The Company's products and services incorporate the
following attributes:
- Validated Core Technology. The Company's core technology consists of a
number of fundamental, scientifically proven methods for conducting
predictive computer modeling of chemical, biological and materials
phenomena at the atomic and molecular scale. This core technology is
validated by over a decade of industrial use and by the publication of
more than 400 presentations, papers and articles citing applications of
this technology.
- Broad Applicability. MSI's validated core technology enables the Company
to offer a wide range of products and services to a variety of
industries, including the pharmaceutical, biotechnology, chemical,
petrochemical, electronics, food, paper, agrochemical, aerospace,
plastics, paint and natural gas industries. The Company's products
simulate and analyze both small molecules that may be candidates for new
drugs and more complex molecular structures such as DNA or the polymers
found in plastics and rubber. These products are used in research
applications as diverse as drug discovery, protein design and structure
determination, crystallization and formulation, polymer property
prediction, catalysis and development of electronic materials.
- Open Architecture. The Company's products are based upon an open
architecture that allows customers, collaborators and third parties to
develop software applications in the same development environment used
internally by MSI. The Company's core molecular modeling functions are
included in this open environment, which permits developers to focus on
their particular scientific interests and increase the power and utility
of their programs by integrating them with the Company's products.
- Ease of Use. The Company develops software products that are integrated,
modular, focused on specific research areas or techniques, and accessible
by an intuitive GUI. The Company's GUI enables experimentalists to use
molecular simulation in a manner consistent with established analytical
and laboratory techniques, in a user-friendly computational environment.
- Increased Access. The Company is developing a Web-based product line that
targets a broader group of users, including experimentalists and
engineers. Web browsers and other software products are used increasingly
by scientific researchers on desktop computers to search for, analyze and
communicate scientific data, particularly within corporate intranets. The
Company's Web-based products use familiar Web browser technology and are
built upon the Company's open architecture and validated core technology.
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STRATEGY
The Company's objective is to strengthen its position as the leading
provider of molecular simulation products and services worldwide by providing a
set of productivity tools that are integral to the research and development
activities of its customers. The key elements of the Company's strategy to
achieve this objective include:
- Expand User Base. The Company plans to increase its number of direct
sales and telesales personnel in order to increase sales to its key
accounts and pursue new customers within existing markets. In addition,
the Company's computational instruments have been designed to expand use
of its simulation products to include not only a growing number of
simulation specialists, but also the much larger group of
experimentalists. Finally, the Company is developing its WebLab product
family to allow access to MSI technology on desktop computers operating
within corporate intranets.
- Expand Into New Markets. The Company intends to continue to expand the
markets for its products and services by targeting industries such as
foods, energy, glass, concrete, mining, textiles and fibers. In addition,
the Company is continuing to extend the use of its products beyond
fundamental research to include the design, synthesis, isolation,
analysis, testing, formulation and process phases.
- Become the Industry Standard. The Company has created a development
product, the Cerius(2) Software Developer's Kit ("Cerius(2) SDK"), that
allows customers and third-party licensees to use the Company's open
architecture to create their own applications for internal use or for
distribution. The architecture facilitates communication within and
between companies and institutions that use the Company's open
architecture. The Company intends to continue to promote Cerius(2) SDK as
the industry standard environment for use and development of molecular
simulation and related applications.
- Leverage Core Technology and Maintain Technology Leadership. The Company
believes its core technology has helped position MSI at the forefront of
simulation technology providers. The Company intends to continue to make
significant investments in research and development in order to improve
the efficiency and predictive accuracy of its core technology and to
maintain its technology leadership. Further, the Company's strategy for
WebLab is to create a "virtual laboratory" that is based upon the
Company's validated core technology.
- Leverage Relationships with Simulation Specialists. In becoming the
leading provider of molecular simulation technology, the Company has
developed strong relationships with the simulation specialists who
constitute the Company's primary user base. The Company encourages
simulation specialists to leverage their expertise by promoting the
Company's easy-to-use computational instruments to other scientists
within their organizations. The Company expects that this sponsorship by
simulation specialists will accelerate the broader adoption of the
Company's products.
- Promote Strategic Technology Relationships. The Company strengthens its
internal scientific and technical expertise through the Company's
consortia and through joint development projects with leading academic,
governmental and industrial researchers. In addition, the Company has
established strategic technology relationships with select academic
institutions that provide the Company rights to commercialize certain
technologies developed within these institutions. The Company will
continue to pursue strategic relationships with third parties in order to
provide it with early access to new technologies, facilitate market
acceptance of new products and reduce internal research and development
investment.
TECHNOLOGY
The Company's core technology delivers predictive models of chemical,
biological and materials phenomena within MSI's open environment. This
technology simulates interatomic and intermolecular
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interactions, and a wide range of corresponding properties, including molecular
structure, activity, diversity, stability, morphology, solubility, adhesion,
adsorption, diffusion, color, analytical spectra, and optical, electrical and
mechanical properties. The benefits of the Company's technology have been
validated by more than 400 published presentations, papers and articles citing
the Company's technology.
Methods
There are four primary classes of molecular simulation methods, all of
which are employed by the Company in its products:
Quantum Methods. Quantum methods, the most fundamental of the Company's
methods, compute interatomic interactions at the level of electrons and nuclei.
These methods make the least number of assumptions about the nature of relevant
interactions and require little or no parameterization. These methods are
capable of simulating which combinations of elements are stable, how chemical
reactions occur, and other electronic structural properties such as reactivity,
color and magnetism. These methods are the most computationally demanding and
are applied to small, carefully selected models.
Molecular Methods. Molecular methods probe molecular conformations and the
interactions between molecules based on simplified analytical expressions. These
methods include automated procedures for probing how a drug molecule binds to an
active site, what conformations a polymer chain may adopt, what similarities
exist between a new amino acid sequence and protein sequences for which tertiary
structures are known, and they also include tools used to determine structure
based on X-ray diffraction or NMR data.
Correlative Methods. Correlative methods identify interrelationships
between structure and properties that can be used predictively. In many cases,
macroscopic properties are known to be determined by molecular-level behavior,
but the analytical details of these relationships are not known. The
quantitative structure activity relationship methods ("QSAR") provide a
framework in which to correlate molecular attributes and macroscopic properties.
The framework can predict, to a reasonable degree of confidence, the properties
of molecules that are comparable with a control set for which properties have
been measured.
Statistical Methods. Statistical methods are needed when many different
configurations must be sampled or when macroscopic properties reflect an
averaging over many different states. These include methods for modeling complex
polymer structures, computing thermodynamic parameters and conducting
statistical analyses of real and virtual molecular libraries.
Open Architecture
The Company has pioneered an open molecular simulation software
architecture, Cerius(2), which includes an efficient data model; libraries of
mathematical, chemical and graphical utilities; and a client/server data and
communications management layer. Cerius(2), a modular, object-oriented system,
is written principally in C++ and uses industry-standard protocols such as MOTIF
and TCP/IP. This modular architecture is designed to provide streamlined access
to the various methods, allowing their use in discrete, combined and packaged
ways. The Cerius(2) application programming interfaces ("APIs") are used by the
Company's internal developers to create products. The same APIs are made
available through the Cerius(2) SDK to customers and third-party licensees.
Using the Cerius(2) open architecture and its validated methods, the Company has
created its computational instruments. In each of these computational
instruments, a particular application of one or more methods is precalibrated,
parameters and protocols are predefined and results are delivered in an easily
interpretable fashion. These computational instruments are designed for and used
by experimentalists, such as synthetic, analytical and formulation chemists.
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WebLab is a Web-enabling extension of the Cerius(2) open architecture, and
is the medium by which the Company can deliver desktop products for
experimentalists. Accessed from a Web browser operating as a client, these
products are being designed to make use of both the Cerius(2) architecture and
the Company's methods running on a server machine. The server is a UNIX
workstation accessed through a corporate intranet. The client browser
application is created using industry-standard languages and protocols. The
WebLab Viewer, a helper application, provides improved performance in the
display and manipulation of molecular structures. Versions of the WebLab Viewer
have been released for PCs running under Windows 95, Windows NT and MacOS.
The Company's Cerius(2) architecture, graphics and interface subsystems are
supported on Silicon Graphics and IBM UNIX workstations. Certain of the methods
are also supported on vector supercomputers and on shared and distributed memory
parallel architectures. Existing and planned WebLab products will run on all
major platforms that support standard browser technology.
PRODUCTS AND SERVICES
The Company provides an extensive suite of products used throughout the
research and development cycle. The Company believes that offering a
"single-shop," integrated molecular simulation solution is a significant benefit
to its customers. The Company's product family consists of over 100 application
modules. The following table sets forth information with respect to
representative examples of the Company's products and products under
development.
<TABLE>
<CAPTION>
FIRST COMMERCIAL
DESCRIPTION INDUSTRIES(1) RELEASE DATE
SOFTWARE
PRODUCTS
-----------------------------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------------------------------
INTEGRATION AND MOLECULAR GRAPHICS PRODUCTS:
Graphical modeling system Pharmaceutical/ 1986
QUANTA Biotechnology
Graphical modeling system All 1988
InsightII
Graphical modeling system All 1994
Cerius(2)
Visualizer
Open architecture and development environment All 1995
Cerius(2)
SDK
- ------------------------------------------------------------------------
METHODS PRODUCTS:
Molecular mechanics and dynamics simulations All 1984
Discover
Protein structure simulations Pharmaceutical/ 1985
CHARMm Biotechnology
Property predictions by correlative methods All 1989
QSAR
Density functional quantum methods for All 1989
DMol molecules
Density functional quantum methods for solids Chemicals/Materials 1994
CASTEP
- ------------------------------------------------------------------------
APPLICATION PACKAGES:
Protein structure determination package Pharmaceutical/ 1987
X-PLOR Biotechnology
Analog-based drug discovery package Pharmaceutical/ 1990
Catalyst Biotechnology
NMR data plotting and analysis package Pharmaceutical/ 1990
Felix Biotechnology
Chemical
Suite of more than 50 modules for specific All 1994/1988
Cerius(2)/InsightII applications
application
modules
- ------------------------------------------------------------------------
WEBLAB PRODUCTS:
Molecular display and integration with All 1996
WebLab desktop productivity tools
Viewer
Gene sequence data interpretation Pharmaceutical/ 1997(2)
WebLab Biotechnology
Gene
Explorer
Design and selection of polymers Chemicals/Materials 1997(2)
WebLab
Polymer
Explorer
- -
-
</TABLE>
- ------------------------------
(1) "All" indicates the pharmaceutical, biotechnology, chemicals and materials
industries.
(2) Expected release date. There can be no assurance that the products will be
commercially released by such time.
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MSI's methods products are powerful, full-featured simulation engines used
primarily by simulation specialists. MSI's application packages are targeted,
solutions-oriented modules usually built upon the Company's methods. These
application packages are also used by simulation specialists and, in the case of
computational instruments, by experimentalists. The Cerius(2) Visualizer has a
flexible card-stack layout and is designed to be user-friendly for the
experimentalist as well as the simulations specialist. The Company's WebLab
products are simple-to-use, desktop products designed for specific research
tasks of experimental chemists, biologists and engineers. The Company's methods
products, applications packages, graphical modeling systems and WebLab Viewer
are used throughout the pharmaceutical, biotechnology, chemical and materials
industries.
The Company's individual software modules are priced from $2,500 to $75,000
for an industrial customer on a UNIX workstation with a single processor. A
typical commercial product installation for a new user in one application area
costs approximately $60,000. Larger installations might include software modules
for several different application areas and for multiple processors or
workstations. The Company's WebLab products are planned to have individual user
prices of less than $5,000; the WebLab Viewer is provided at no charge on a
compact disc or may be downloaded from the Company's Web site.
Research and Development
The Company's products are used in a variety of research areas within a
number of industries. The principal research and development areas in which MSI
products are used include the following:
Protein Design. The pharmaceutical, biotechnology, cosmetics and
agrochemical industries use MSI's software to understand the relationship
between protein structure and function and to analyze, modify and tailor
proteins and peptides. The Company's protein modeling products integrate
capabilities in structure generation, molecular simulation, protein
database search and analysis, molecular visualization and presentation.
Products used in protein design include Cerius(2) and Insight II modules,
QUANTA, Discover and CHARMm.
Macromolecular Structure Determination. Protein structure
determination is a prerequisite for a structure-based route to drug
discovery in the pharmaceutical and biotechnology industries. MSI provides
complete software systems that streamline the process of protein structure
determination from X-ray and NMR data. These systems include products for
data processing and reduction, rapid model building, structure refinement,
model evaluation, analysis and graphical display. Products used in protein
structure determination include X-PLOR, Insight II application modules,
QUANTA, Discover, CHARMm and Felix.
Rational Drug Design. The Company's rational drug design products are
used in the pharmaceutical and biotechnology industries. These products
allow the design and optimization of small, organic therapeutics, based on
a protein active site model or on activity data for a set of compounds.
Related techniques are used to design and assess combinatorial molecular
libraries. Products used in drug design include Catalyst, Cerius(2) and
Insight II application modules, QSAR and Discover.
Polymer Modeling. Polymer modeling products are used by researchers in
the chemical, plastics, rubber, adhesives, petrochemical, aerospace and
automotive industrial sectors. Polymer researchers seek to analyze and
predict polymer properties and establish the link between these properties
and the molecular-level structure of the material. MSI's polymer software
products allow these researchers to construct and characterize models of
polymers and predict key properties, such as blend compatibility,
mechanical behavior, cohesion and adhesion to surfaces. MSI's polymer
products include Cerius(2) and Insight II application modules, QSAR and
Discover.
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Crystallization. Crystallization phenomena are important to
development and formulation departments in companies in the pharmaceutical,
paint and pigment, petrochemical and chemical industrial sectors. MSI
offers products to predict crystal structure, polymorphism and crystal
shapes, and to design additives to control or inhibit crystal growth. MSI's
crystallization products include Cerius(2) and Insight II application
modules, Discover, DMol, CASTEP and QSAR.
Electronics Research. The trend toward microminiaturization of
electronic devices has created a need for improved processes and materials.
MSI's software products are used by semiconductor and electronics companies
to understand surface chemistry, defects, thin oxide layers, magnetic
properties and the performance of new packaging materials. These products
include Cerius(2) and Insight II application modules, Discover, DMol and
CASTEP.
Chemical Reactions. Understanding, controlling and improving chemical
conversions is a key research and development objective of petrochemical,
chemical and pharmaceutical companies. MSI offers a range of quantum
methods products for simulating chemical reactivity, conversions and
thermochemical data, including Cerius(2) and Insight II application
modules, DMol and CASTEP.
Catalysis and Sorption. The Company's catalysis and sorption products
are used by companies in the chemical, petrochemical, natural gas and
plastics industries and by catalyst manufacturers to characterize catalysts
and sorbent materials and to simulate thermodynamic and reactivity data.
MSI's products are used to characterize and design metallocene catalysts,
zeolites and other molecular sieves, and metal oxides. The Company's
catalysis and sorption products include Cerius(2) and Insight II
application modules, Discover, DMol and CASTEP.
Analytical Simulation. The Company's analytical products are used by
companies in each of the markets served by the Company to display and
interpret diffraction, electron microscopy, infra-red and other analytical
data. The Company's analytical products include Cerius(2) and Insight II
application modules, and Felix.
Other Products and Services
Integration Products. The Cerius(2) SDK offers customers and third-party
licensees a standard simulation environment in which to develop and integrate
their own applications. The Cerius(2) SDK provides an external developer with
access to the full set of Cerius(2) APIs used by the Company's own internal
development staff. With the Cerius(2) SDK a developer can employ any of the
functions, subsystems or methods embodied in or accessible through Cerius(2) to
integrate an external program or to create additional application functionality,
with a corresponding Cerius(2) GUI.
Databases. Databases are a close adjunct to the Company's software
products. The Company resells a number of scientific databases for use with its
product modules, including Derwent's World Drug Index, MDL Information Systems'
Available Chemical Directory, and the Brookhaven Protein Databank.
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Accelerated Research Services. The Company offers consulting, contract
research, custom development and systems integration services. The Company's
Accelerated Research Services allow its customers to benefit from the Company's
facilities and the expertise of the Company's staff in outsourcing these types
of specialist functions. In certain contract research projects, the Company may
receive some future compensation in the form of a royalty payment on sales of
products or processes that result from the contract research project. The
Company intends to continue to apply its technology and the expertise of its
staff to design new products and processes, both internally and through
collaborative activity, and to benefit from such projects when possible through
future royalty payments.
Computer Hardware. As a convenience to its customers, the Company acts as a
value-added reseller of computer hardware in order to deliver a complete
turn-key molecular simulation system.
DISCOVERY AND DEVELOPMENT CYCLES AND CASE STUDIES
The following examples illustrate how the Company's products impact
research and development cycles, and illustrate the use and implementation of
the Company's products and services by certain of the Company's customers. There
can be no assurance that new or existing customers will achieve any of the
benefits described below.
Drug Discovery
The drug discovery cycle begins with identification of a biological target,
typically a discrete protein, and the development of an assay by which the
activity of possible drug molecules can be screened. Two subsequent routes are
then pursued, often in parallel. In the first route, conventional synthesis or
combinatorial chemistry are used to create libraries of drug candidates, which
are screened by traditional or high throughput techniques. The Company's
products are used to develop and qualify such libraries and to develop
structure-activity relationships from the resulting data. In the second route, a
three-dimensional model of the structure of the protein is developed, and
molecules are designed to bind with the active site in this structure. The
Company's products are applied both to obtain the structural models and to
design the drug candidates with respect to such models. The subsequent discovery
and development stages for promising lead molecules include pre-clinical
evaluation of toxicity, clinical trials, and delivery and formulation
development. The following case studies illustrate how the Company's products
are used in the drug discovery process.
Development of an HIV Protease Inhibitor--Vertex Pharmaceuticals
Incorporated. One approach to AIDS therapy is to develop therapeutic agents that
will interfere with one or more of the biological processes specific to the AIDS
virus. Vertex utilized the three-dimensional structure of a key HIV protein,
solved by X-ray crystallographic measurements on a single crystal of HIV
protease, which had been cloned and expressed by recombinant DNA methods.
Macromolecular structure simulation and experimental data fitting were used to
develop the three-dimensional molecular structure from the measured X-ray data.
The structure-based tools of the Company's rational drug design package were
then applied to assist in the design of molecules to optimally bind with the
protease active site and prevent the protein from performing its key function in
the AIDS virus replication cycle. Chemists then synthesized the target
molecules, and the inhibitory activities of these molecules were measured.
Vertex was issued a U.S. patent in December 1996 covering certain HIV protease
inhibitors developed using these molecular modeling and drug design techniques,
and one of these compounds is now in Phase II clinical trials.
Development of Anti-Cancer Therapeutics--Agouron Pharmaceuticals,
Inc. Several genes and proteins have now been implicated in various types of
cancer. As one approach in their anti-cancer program, Agouron targeted
Thymidylate Synthase, the enzyme responsible for synthesis of thymidine, a key
component of nucleic acids. Inhibition of this enzyme prevents cell growth, but
with disproportionately large damage to cancerous tissues given their greater
growth rates. Agouron researchers pursued a structure-based design approach that
included use of the Company's macromolecular
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structure determination, simulation and rational drug design tools, followed by
synthesis and testing. Following this approach, they developed effective
Thymidylate Synthase inhibitors. Phase II clinical trials of certain of these
inhibitors are now in progress.
Chemical Optimization
The discovery and optimization cycles for chemical agents or processes are
analogous to the drug discovery process, beginning with either a chance
discovery or a defined new performance objective. Historically, the subsequent
optimization stage comprised iterative measurements of the performance impact of
adjustments in composition, synthesis conditions, formulation or other key
variables, largely by trial-and-error. The best of any viable materials
developed would then proceed from the laboratory to pilot and, ultimately,
production scale. The Company's products are used to aid the researcher's
intuition and to focus the experimental effort by eliminating non-viable
alternatives and by identifying the best compositions or formulations.
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CUSTOMERS
The Company's customer base consists of leading commercial, governmental
and academic organizations. Most of the Company's customers have been licensees
for five or more years.
Industrial Customers. MSI industrial customers include many of the largest
pharmaceutical, biotechnology, chemical, petroleum and semiconductor companies
worldwide. In each of the past three fiscal years, a significant portion of the
Company's total revenue has been derived from pharmaceutical, biotechnology and
chemical companies.
Set forth below is a list of industrial customers of the Company currently
under a license, maintenance or other service agreement with the Company or
TMSI, or a member of one or more consortia, from which the Company or TMSI
derived at least $50,000 of revenue in 1996:
PHARMACEUTICALS
Abbott Laboratories
Banyu Pharmaceuticals Co., Ltd.
Boehringer Ingelheim International GmbH
Bristol-Myers Squibb Company
Chisso Corporation
Chugai Pharmaceutical Co., Ltd.
Chiyoda Corp.
Daiichi Pharmaceutical Co., Ltd.
DuPont Merck Pharmaceuticals
Eli Lilly and Company
GlaxoWellcome plc
Green Cross Corp.
Hoechst Marion Roussel, Inc.
Kaken Pharmaceutical Co., Ltd.
LG Biomedical
Merck & Co., Inc.
Nippon Roche KK
Novartis
Pfizer Inc.
Pharmacia and Upjohn, Inc.
R.W. Johnson Pharmaceutical Research Institute
Roche Bioscience
Roussel Uclaf
Santen Pharmaceutical Co., Ltd.
Schering-Plough Corporation
SmithKline Beecham
Taisho Pharmaceutical Co., Ltd.
Wyeth-Ayerst Research
Zeneca Limited
CHEMICALS AND PETROCHEMICALS
AECI, Ltd.
Air Products and Chemicals Inc.
AKZO Nobel N.V.
Amoco Corporation
Asahi Chemical Industry Co., Ltd.
BASF AG
Bayer AG
BHP Research Laboratories
Chevron Research and Technology Company
Courtaulds PLC
Cytec Industries Inc.
Dainippon Ink & Chemicals, Inc.
DSM Research
Eastman Kodak Company
Engelhard Corporation
EniChem SpA
Eniricerche SpA
Exxon Chemical Co.
E.I. du Pont de Nemours and Company
Hoechst AG
ICI Katalco
Intevep S.A.
Kelco Corp.
L'Air Liquide
The Lubrizol Corporation
Mitsubishi Chemical Industries, Ltd.
Mitsui Toatsu Chemicals, Inc.
Mobil Corporation
Nissan Chemical Industries, Ltd.
Norsk Hydro A/S
The Proctor & Gamble Company
Rhone-Poulenc Chimie
Saudi Aramco
Smith & Nephew plc
Sumitomo Chemical Co. Ltd.
Teijin Ltd.
Texaco Inc.
Tonen Corp.
Total
Ube Industries, Ltd.
Unilever
Union Carbide Corporation
MATERIALS
Asahi Glass Co., Ltd.
Hitachi, Ltd.
Kubota Corp.
Matsushita Electric Industrial Co., Ltd.
Motorola, Inc.
PPG Industries, Inc.
Ricoh Co., Ltd.
Sharp Electronics Corp.
Texas Instruments Inc.
Tokyo Electron Ltd.
Toray Industries, Inc.
BIOTECHNOLOGY
Agouron Pharmaceuticals, Inc.
Alanex Corporation
Amgen Inc.
Arris Pharmaceutical Corporation
Astra Merck, Inc.
Berlex Biosciences
Cape Cod Research
Genentech, Inc.
Genetics Institute, Inc.
H. Lundbeck A/S
Isis Pharmaceuticals, Inc.
Japan Tobacco Inc.
Vertex Pharmaceuticals Incorporated
ZymoGenetics, Inc.
- -
- -
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<PAGE> 42
Governmental Customers. Major governmental institutions that use the
Company's products include:
UNITED STATES
Argonne National Laboratory
Brookhaven National Laboratory
Lawrence Livermore National Laboratory
Los Alamos National Laboratory
National Institutes of Health
National Renewable Energy Center
Sandia National Laboratories
United States Department of Agriculture
AUSTRALIA
Commonwealth Scientific and Industrial Research Organization
JAPAN
Japan Information Center of Science and Technology
Biomolecular Engineering Research Institute
National Institute of Materials and Chemical Research
CANADA
National Research Council
FRANCE
Commissariat a l'Energie Atomique
Centre National de la Recherche Scientifique
Institut Superieur des Materiaux du Mans
UNITED KINGDOM
Council for the Central Laboratory of the Research Councils
Defense Research Agency
National Institute for Medical Research
DENMARK
Riso/ National Laboratories
GERMANY
Max Planck Institute
ITALY
Consiglio Nazionale delle Ricerce
- -
- -
Academic Customers. Many of the world's leading universities use the
Company's products. This use historically has been for purposes of academic
research, but the Company believes its products increasingly may be used as a
part of formal university teaching curricula.
The Company's academic customers in the United States, Europe and the
Asia/Pacific region include:
- --------------------------------------------------------------------------------
UNITED STATES
- --------------------------------------------------------------------------------
California Institute of
Technology
Cornell University
Harvard University
Massachusetts Institute of
Technology
Princeton University
Stanford University
University of California at
Berkeley
University of Chicago
University of Texas
Yale University
EUROPE
Eidgenossische Technische Hochschule, Zurich
Free University of Amsterdam
Imperial College (London)
Leiden University
Oxford University
University of Cambridge
University of Heidelberg
University of Paris
University of Stuttgart
Weitzmann Institute
ASIA/PACIFIC
Australian National University
Chinese Academy of Sciences
Korea Institute of Science and Technology
National University of Singapore
Taiwan National University
Tohoku University
University of Hong Kong
University of New South Wales
University of Tokyo
Waseda University
- --------------------------------------------------------------------------------
STRATEGIC AND ACADEMIC ALLIANCES
The Company has entered into a number of strategic alliances relating to
product development, product distribution and joint marketing. The Company
expects to continue to cultivate relationships with academic, governmental and
commercial research organizations for purposes of identifying and licensing new
technology for the Company to use in product development. In addition, the
Company expects to maintain and expand its alliances focused on compatibility of
the Company's products with databases and database management systems, other
computational chemistry and molecular simulation products, and products in
related markets such as laboratory instrumentation. The Company also intends to
continue to enter into porting and joint marketing arrangements with hardware
vendors on whose systems the Company's products operate.
A number of academic and industrial leaders involved in research and
development have entered into consulting agreements with the Company and
comprise the Company's Scientific Advisory Group
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<PAGE> 43
that has panels in each of the Company's main initiative areas. This group
includes professors from Harvard University, Oxford University, The Royal
Institution (London), the Free University of Amsterdam, the University of
Cambridge, the University of California at Santa Barbara, Yale University and
the University of York. The members of the Scientific Advisory Group are
employed by academic institutions or employers other than the Company and have
commitments to or consulting or advisory agreements with other entities, which
may limit their availability to the Company.
CONSORTIA
Since 1986, the Company has formed a number of consortia with outside
parties, commonly for purposes of market expansion. The Company believes the
formation and management of these consortia helps the Company focus on topical
industrial needs and establishes the consortia members as an initial customer
base for its products. The Company believes its consortia help the Company
establish valuable working relationships with leaders in its target markets.
These consortia bring together groups of industrial researchers, academic
experts and MSI scientists that focus on developing, validating and applying
simulation to the target industrial research area. Typically, MSI consortia
participants provide funds and a liaison to the Company. Each consortium
generally has a three-year term and has a defined set of objectives and
milestones that are updated and re-prioritized annually by the consortium's
members. Some of the consortia have been extended beyond their initial terms in
order to continue the benefits of the collaborative activities.
The following chart contains information concerning the Company's consortia
and its industrial and governmental members as of December 31, 1996:
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NO. OF YEAR
CONSORTIUM MARKET MEMBERS FORMED GOAL
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Potential Energy Pharmaceutical, Biotechnology 9 1986 To improve simulations of
Functions structures, dynamics and
properties of molecules of
interest to the
pharmaceutical industry.
Polymer Chemical, Petrochemical, 20 1989 To improve software for
Materials simulating structures and
properties of polymers.
Catalysis and Chemical, Petrochemical, 24 1991 To improve software for
Sorption Materials simulating structures and
properties of catalysts
and sorbents.
Electronic, Optic Semiconductor, 15 1993 To improve software for
and Magnetic Telecommunications, Materials simulating solid state
Materials electronic, optic and
magnetic properties.
Combinatorial Pharmaceutical 7 1996 To develop software for
Chemistry designing, managing and
assessing combinatorial
molecular libraries.
Pharmaceutical Pharmaceutical -- (1) To develop software for
Development addressing drug
formulation and delivery
problems.
Thermomechanical Transportation, Energy, -- (1) To integrate materials
Materials Metals, Materials databases and simulation
tools for computing
properties of metals,
ceramics and composites.
- --------------------------------------------------------------------------------------------------
- - - -
</TABLE>
- ------------------------------
(1) Currently in planning stage.
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<PAGE> 44
The Company intends to continue ongoing consortia and to pursue new
consortia in other market and technology areas.
SALES AND MARKETING
The Company markets its products and services worldwide. In the United
States and Europe, the Company has direct sales forces, consisting of field
sales and telesales representatives. In Japan and other Asia/Pacific countries,
the Company distributes its products and services through TMSI, which manages a
network of subdistributors in this region. The Company and Teijin each own 50%
of TMSI. As of December 31, 1996, the Company's sales organization consisted of
45 management, sales and administrative employees, excluding those employed by
TMSI. The Company intends to increase the number of its sales personnel
worldwide.
North and South America. As of December 31, 1996, the Company employed 12
direct sales representatives and seven telesales representatives in 10 locations
(San Diego, CA; Santa Clara, CA; Wilton, CT; Riverview, FL; Chicago, IL;
Burlington, MA; Livonia, MI; Greensboro, NC; Waretown, NJ; and The Woodlands,
TX) to market and sell the Company's products and services in North and South
America. Certain of the telesales representatives focus exclusively on sales to
academic researchers. The direct sales representatives and remaining telesales
representatives work in teams selling to commercial and governmental accounts in
assigned geographic territories, with the direct sales representatives typically
focused on larger accounts and account transactions greater than $50,000. The
direct sales representatives also work closely with the Company's pre-sales
support scientists in order to demonstrate the Company's products and their
applicability to various research and development efforts.
Europe. As of December 31, 1996, the Company employed 10 direct sales
representatives and four telesales representatives in four offices (Copenhagen,
Denmark; Cambridge, England; Paris, France; and Munich, Germany) to market and
sell the Company's products and services primarily in Europe. In 1996, all of
the telesales representatives focused exclusively on sales to academic
researchers. Working closely with the Company's pre-sales support scientists,
the direct sales representatives in Europe sell to commercial and governmental
accounts in assigned geographic territories and focus on either life sciences
industries or material sciences industries. The Company also has one senior
sales representative focused on sales of the Company's full product and service
offerings to a specified group of major accounts in the United Kingdom. The
Company intends to add telesales representatives in Europe to assist the direct
sales representatives in a team approach similar to that used in North America.
Japan and the Asia/Pacific region. The Company has a distribution
agreement with TMSI under which TMSI serves as the exclusive distributor of the
Company's products and services in Japan, South Korea, Taiwan, Hong Kong, China,
India, Singapore, Malaysia, Australia and New Zealand. TMSI has been the
Company's exclusive distributor in Japan since April 1, 1992 and in the other
Asia/Pacific countries since April 1, 1994. TMSI's Japanese office has six
sales, marketing and administrative personnel who manage and support five
subdistributors in Japan. TMSI also maintains an office in Sydney, Australia
with four sales, marketing and administrative personnel who manage and support
subdistributors and conduct direct sales activities in the other Asian
countries. TMSI's subdistributor agreements generally renew automatically each
year but may be terminated if either party gives notice 90 days prior to
expiration of the then current term.
In support of its sales activities, the Company participates in industry
trade shows, publishes its own magazine, places advertisements in other industry
publications, publishes articles in industrial and scientific publications,
conducts direct mail campaigns, sponsors industry conferences and seminars, and
maintains a World Wide Web home page that contains information about the Company
and its product and service offerings.
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<PAGE> 45
PRODUCT DEVELOPMENT
The Company's development efforts are focused on expanding its simulation
software product line, designing enhancements to the Company's core technology
and integrating existing and new products into the Company's principal software
architectures. The Company intends to offer regular updates to its products and
to expand its existing product suite. A key component of the Company's product
development activities is the extension of its core UNIX-based software
architecture to accommodate access to the Company's products from Web browser
technology operating on desktop computers. The Company introduced its WebLab
Viewer in 1996 and expects to release additional families of WebLab products
targeted toward new users of molecular simulation technology.
The Company licenses products or otherwise has acquired products from
governmental and academic institutions including BASF AG, Bayer AG,
Bristol-Myers Squibb, DuPont, the National Institutes of Health, California
Institute of Technology, the University of Cambridge and Harvard University.
These arrangements sometimes involve joint development efforts and frequently
require the payment of royalties by the Company. The Company has also developed
products with funding and direction from customers through the Company's
consortia activities. See "--Consortia." The Company intends to continue to
license or otherwise acquire technology or products from third parties in the
future and to develop products as part of its consortia arrangements with
customers.
CUSTOMER SERVICES AND SUPPORT
The Company is committed to providing customers with superior support
including telephone, electronic mail, fax and Internet-based technical support
services; training; user group conferences; and targeted contract and consulting
services involving application of the Company's technology and scientific
expertise to particular research needs of customers. The Company believes that a
high level
of customer service, support and training is critical to the adoption and
successful utilization of its products.
Purchases of multi-year licenses to use the Company's software products
include one year of maintenance services, consisting of technical support and
software upgrades. Thereafter, the Company offers renewals of maintenance
services on an annual basis for an annual fee. Annual licenses to use the
Company's software products generally include all maintenance services. Most of
the Company's customers contract for maintenance and support services. These
give customers access to new releases, technical notes, documentation addenda
and other support required to utilize the Company's products effectively,
including access to the Company's technical and scientific support personnel
during extended business hours. Through its distribution channels, the Company
offers training conducted by staff knowledgeable in both the theory and
application of molecular simulation. Technical newsletters and bulletins and
advance notification about future software releases are sent to customers to
keep them informed and to help them with resource allocation and scheduling. To
maintain an ongoing understanding of customer requirements, the Company sponsors
scientific symposia and user group meetings throughout the year.
COMPETITION
The market for the Company's products is intensely competitive, subject to
rapid change and significantly affected by new product introductions and other
market activities of industry participants. The Company's competitors offer a
variety of products and services to address this market. The Company believes
that the principal competitive factors in this market are product quality,
flexibility, ease-of-use, scientific validation and performance, functionality
and features, open architecture, quality of support and service, reputation and
price. Competition currently comes from five principal sources: other molecular
simulation software packages; desktop software applications, including chemical
drawing, molecular modeling and analytical data simulation applications;
consulting and outsourcing services; other types of simulation software provided
to engineers; and firms supplying databases, such as chemical information
databases, and information technology. In addition, certain of
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<PAGE> 46
the Company's licenses grant the right to sublicense the Company's software. As
a result, the Company's customers and third-party licensees could develop
specific simulation applications using the Cerius(2) SDK and compete with the
Company by distributing such programs to potential customers of the Company.
Customers or licensees could also develop their own simulation technology and
cease using the Company's products and services. Further, they may choose to
sublicense such technology, in which case the Company may receive royalty
payments.
Certain of MSI's competitors and potential competitors have longer
operating histories than the Company and have greater financial, technical,
marketing and other resources. Further, many of the Company's competitors offer
products and services directed at more specific markets than those targeted by
the Company, enabling these competitors to focus a greater proportion of their
efforts on such markets. There can be no assurance that the Company's current or
potential competitors will not develop products or services comparable or
superior to those developed by the Company or that they will not adapt more
quickly than the Company to new technologies and new customer demands, thereby
increasing their market share relative to that of the Company. Any significant
decrease in the demand for the Company's products would have a material adverse
effect on the Company's business, financial condition and results of operations.
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
The Company relies primarily on a combination of copyright, trademark and
trade secret laws, confidentiality procedures and contractual provisions to
protect its proprietary rights. The Company also has two United States patents.
The Company believes that factors such as the technological and creative skills
of its personnel, new product development, frequent product enhancements, name
recognition and reliable product maintenance are essential to establishing and
maintaining a technical leadership position. The Company seeks to protect its
software, documentation and other written materials under trade secret and
copyright laws, which afford only limited protection. Further, there can be no
assurance that the Company's patents will offer any protection or that they will
not be challenged, invalidated or circumvented. Furthermore, there can be no
assurance that others will not develop technologies that are similar or superior
to the Company's technology. Despite the Company's efforts to protect its
proprietary rights, unauthorized parties may attempt to copy aspects of the
Company's products or to obtain and use information that the Company regards as
proprietary. In limited instances, the Company has released source codes of
certain products to customers or collaborators. Policing unauthorized use of the
Company's products therefore may be difficult. In addition, the laws of some
foreign countries do not protect proprietary rights as fully as do the laws of
the United States. There can be no assurance that the Company's means of
protecting its proprietary rights in the United States or abroad will be
adequate or that competition will not independently develop similar technology.
There can be no assurance that third parties will not claim infringement by
the Company of their intellectual property rights. From time to time the Company
receives letters from third parties claiming or suggesting that its products may
infringe patents or other intellectual property rights. In particular, the
Company has received letters from Tripos, Inc. and Immunex Corporation stating
that the Company's products may be relevant to patents held by them. The Company
has investigated these matters and believes that they are without merit or
immaterial. There can be no assurance, however, that the Company's products do
not infringe upon the patent or other intellectual property rights of these or
other third parties, that the Company will not be required to seek licenses for
or otherwise acquire rights to technology as a result of claims of infringement
or that these or other companies will not bring infringement suits against the
Company. The Company expects in general that simulation software product
developers will increasingly be subject to infringement claims as the number of
products and competitors in the Company's industry segments grows and the
functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time consuming to defend, result in
costly litigation, divert management's attention and resources, cause product
shipment delays or require the Company to enter into royalty or licensing
agreements. Such
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<PAGE> 47
royalty or licensing agreements, if required, may not be available on terms
acceptable to the Company, if at all. In the event of a successful claim of
product infringement against the Company, the failure or inability of the
Company to license or design around the infringed technology would have a
material adverse effect on the Company's business, financial condition and
results of operations.
EMPLOYEES
As of December 31, 1996, the Company had a total of 268 employees, of whom
205 were based in the United States, 37 were based in the United Kingdom and 26
were based in other locations outside the United States. Of that total, 117 were
engaged in marketing, sales and related customer support services, 111 in
product development and 40 in operations, administration and finance. The
Company's future success depends in significant part upon the continued service
of its key scientific, technical and senior management personnel and its
continuing ability to attract and retain highly qualified technical and
managerial personnel. None of the Company's employees is covered by a labor
union or represented by a collective bargaining agreement. The Company has not
experienced any work stoppages and considers its relations with employees to be
good. See "Risk Factors--Dependence upon Key Personnel" and "--Management of
Growth."
FACILITIES
The Company's principal administrative, sales, support, marketing and
product development facilities and the corporate headquarters are located in San
Diego, California, where the Company has leased 51,635 square feet through April
2000. The Company's European headquarters, also with administrative, sales,
support, marketing and product development functions, are located in Cambridge,
England, where the Company has leased 6,545 square feet through July 26, 2008
and has subleased an additional 4,952 square feet in the same building through
October 2006. The Company leases five other domestic sales and service offices
in Santa Clara, CA; Naperville, IL; The Woodlands, TX; Parsippany, NJ; and
Burlington, MA. The Company's European subsidiaries lease sales and service
offices in France and Germany. The Company believes that its existing facilities
are adequate for its current needs and that additional space will be available
as needed.
LEGAL MATTERS
The Company is not a party to any material litigation and is not aware of
any threatened material litigation.
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<PAGE> 48
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company and their ages as of
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------- --- ------------------------------------------------------
<S> <C> <C>
Michael J. Savage................. 43 President, Chief Executive Officer and Director
Saiid Zarrabian................... 44 Chief Operating Officer
David B. Hiatt.................... 50 Chief Financial Officer; Senior Vice President,
Finance and Administration; Secretary and Treasurer
Lissa A. Goldenstein.............. 41 Senior Vice President, Worldwide Sales
Thomas M. Carney.................. 35 Vice President, Corporate Development; General Counsel
Christopher Herd.................. 41 Vice President and General Manager, Life Sciences
John M. Newsam, D. Phil........... 42 Chief Scientific Officer
Michael R. Stapleton, Ph.D........ 32 Vice President, Product Marketing
C. Derek Statham, D. Phil.(1)..... 53 Chairman of the Board of Directors
R. Pierce Baker................... 49 Director
C. Peter W. Booth(2).............. 57 Director
Thomas J. Cable................... 57 Director
Peter H. Engel(1)................. 61 Director
Bruns H. Grayson(2)............... 49 Director
</TABLE>
- ------------------------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
Michael J. Savage has been President, Chief Executive Officer and a
Director of the Company since December 1991. He has been employed by the Company
or its predecessors in an executive capacity since April 1990. Mr. Savage earned
his M.S. degree in molecular biology at the California Institute of Technology
and holds B.S. degrees in chemistry and biology.
Saiid Zarrabian has been Chief Operating Officer of the Company since
October 1994. From 1988 to October 1994, Mr. Zarrabian was Vice President and a
Director of Symbolics Inc., which declared Chapter 11 bankruptcy in January
1993. From 1978 to 1988, Mr. Zarrabian was Director of Mechanical Applications
Development at Computervision Corporation.
David B. Hiatt has been the Company's Chief Financial Officer; Senior Vice
President, Finance and Administration; Secretary and Treasurer, since April
1992. From November 1986 to September 1991, he was Vice President, Finance and
Administration, and Chief Financial Officer at Language Technology Inc. Mr.
Hiatt holds an M.S. in finance from the Sloan School of M.I.T., and an M.S. in
computer science and a B.S. in mechanical engineering from M.I.T.
Lissa A. Goldenstein has been the Company's Senior Vice President,
Worldwide Sales since January 1994. Since January 1996, Ms. Goldenstein also has
been President and Chief Executive Officer of TMSI. From 1991 to 1994 she served
in various sales and management positions with Biosym. From 1981 to 1991, Ms.
Goldenstein directed sales activities for McDonnell Douglas Corporation. Ms.
Goldenstein holds a B.S. in engineering from Pennsylvania State University.
Thomas M. Carney has been the Company's Vice President, Corporate
Development and General Counsel since November 1995. From February 1993 to
October 1995, he was the Company's Corporate Counsel. From October 1992 to
January 1993, Mr. Carney was in-house counsel for Easel Corporation, a software
company. Mr. Carney was a private consultant from October 1991 through September
1992, prior to which he was an attorney with Testa, Hurwitz & Thibeault. He
holds a B.A. from Amherst College and a J.D. from Harvard University.
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<PAGE> 49
Christopher Herd has been the Company's Vice President and General Manager,
Life Sciences since 1993. Mr. Herd joined Biosym at its inception in 1984. He
holds B.S. and M.S. degrees in mechanical engineering from the University of
Delaware.
John M. Newsam has been the Company's Chief Scientific Officer since March
1996. From March 1996 to February 1997, he also served as the Company's Vice
President, Partnering and Services. From August 1995 to March 1996 he served as
the Company's Vice President and General Manager, Materials Sciences. Dr. Newsam
joined Biosym in October 1990 and served in various executive positions
including Director, Catalysis & Sorption Project; Senior Director, Solid State
and Vice President, Materials Technology. Dr. Newsam received B.A., M.A. and
D.Phil degrees in chemistry from Oxford University.
Michael R. Stapleton has been the Company's Vice President, Product
Marketing, since March 1996. He joined Polygen in May 1991 as a senior scientist
supporting materials science activities in Europe. Dr. Stapleton received his
B.Sc. and M.Phil. in chemistry and his Ph.D. in chemical physics from the
University of Southampton.
C. Derek Statham has been Chairman of the Board of the Company since August
1995. From December 1994 to August 1995, he was President and Chief Executive
Officer of Biosym. Since August 1995, he has served as the Senior Director of
Corporate Development at Corning. Dr. Statham also serves as a Director of
Saturn Solutions, Inc., a Canadian software company. Dr. Statham holds B.A.,
M.A. and D.Phil. degrees in metallurgy and materials science from Oxford
University and an M.B.A. from Rider College.
R. Pierce Baker has been a Director of the Company since January 1997.
Since April 1996, Mr. Baker has served as Vice President and General
Manager-Science Products Division of Corning. From May 1995 to April 1996, he
was President and Chief Executive Officer of Corning Costar Corporation. From
May 1993 to May 1995, he served as Executive Vice President of Corning Costar
Corporation. From November 1987 to May 1993, he served as Corning's
Manager -- Marketing and Business Development for Science Products. Mr. Baker
holds a B.S. degree in management science from the University of Rochester and
an M.B.A. from the University of Maine.
C. Peter W. Booth has been a Director of the Company since August 1995. Mr.
Booth has served as Senior Vice President, Strategy and Development of Corning
since 1991. Mr. Booth is also a Director of MDL Information Systems, Inc., a
software company. He holds A.B. and J.D. degrees from Harvard University.
Thomas J. Cable has been a Director of the Company since August 1991. Mr.
Cable serves as General Partner of Cable and Howse Ventures, L.P. Mr. Cable is
also a Director of Endosonics, Inc., a medical equipment company; Fischer
Imaging, Inc., a medical equipment company; Mycogen Corporation, an agricultural
products company; and Ostex International, Inc., a medical diagnostic procedure
company. He earned his A.B. degree from Harvard University, and his M.B.A. from
Stanford University.
Peter H. Engel has been a Director of the Company since August 1991. Mr.
Engel serves as President and Chief Executive Officer of American Consulting
Corporation, Inc. He earned his B.Com degree from McGill University.
Bruns H. Grayson has been a Director of the Company since July 1985. Mr.
Grayson has served as the Managing General Partner of Calvert Capital, L.P.
since August 1987. He is also a Director of Anadigics, Inc., a semiconductor
manufacturer, and Cascade Communications Corporation, a data communications
company. He earned his A.B. from Harvard University, his M.A. from Oxford
University and his J.D. from the University of Virginia.
45
<PAGE> 50
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee consists of Mr. Engel and Dr. Statham. The Audit
Committee makes recommendations to the Board of Directors regarding the
selection of independent auditors, reviews the results and scope of the audit
and other services provided by the Company's independent auditors and reviews
and evaluates the Company's audit and control functions.
The Compensation Committee consists of Mr. Grayson and Mr. Booth. The
Compensation Committee makes recommendations regarding the Company's 1996 Equity
Incentive Plan, Non-Employee Directors' Stock Option Plan and Employee Stock
Purchase Plan and makes decisions concerning salaries and incentive compensation
for employees and consultants of the Company.
DIRECTOR COMPENSATION
The Company's directors do not currently receive any cash compensation for
services on the Board of Directors or any committee thereof, but directors may
be reimbursed for certain expenses in connection with attendance at Board and
committee meetings. Upon the completion of this offering, non-employee directors
will be eligible to participate in the Equity Incentive Plan and will receive
options under the Non-Employee Directors' Stock Option Plan, as described below.
See "--Non-Employee Directors' Stock Option Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Company serves as a member
of the board of directors or compensation committee of any entity that has one
or more executive officers serving as a member of the Company's Board of
Directors or Compensation Committee. See "Certain Transactions" for a
description of transactions between the Company and entities affiliated with
members of the Compensation Committee.
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
On November 30, 1995, the Company entered into Employment Agreements with
Michael J. Savage, Saiid Zarrabian, David B. Hiatt and Thomas M. Carney in
connection with their relocation from Massachusetts to California following the
Company's acquisition of Biosym.
Under these Employment Agreements, each employee's employment may be
terminated by the Company without cause for any reason or no reason, subject to
the Company's obligation to make certain severance payments to the terminated
employee. Each employee may also be terminated for "cause" as defined in the
agreements without any obligation of the Company to make severance payments. In
addition, these agreements provide for a base salary, target annual bonus,
option grant, one-time relocation bonus, reimbursement of relocation expenses,
accelerated vesting of 50% of unvested options in connection with a "change of
control" of the Company coupled with certain changes of employment status and
the potential for the Company to be obligated to make severance payments to the
employee if his target compensation is reduced by more than 10% below his 1996
target compensation.
As President and Chief Executive Officer of the Company, Mr. Savage's
Employment Agreement provides for an annual base salary of $170,000, a target
annual bonus of $100,000, option grants for 246,296 shares of Common Stock
vesting over four years, and severance payments equal to his 1996 base salary
paid in each of the two years following termination of employment without cause.
As Chief Operating Officer of the Company, Mr. Zarrabian's Employment
Agreement provides for an annual base salary of $162,500, a target annual bonus
of $75,000, an option grant for 135,990 shares of Common Stock vesting over four
years, and severance payments equal to his 1996 base salary paid during the
one-year period following termination of employment without cause.
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<PAGE> 51
As Senior Vice President, Finance and Administration and Chief Financial
Officer of the Company, Mr. Hiatt's Employment Agreement provides for an annual
base salary of $150,000, a target annual bonus of $50,000, an option grant for
87,777 shares of Common Stock vesting over four years, and severance payments
equal to his 1996 base salary paid during the one-year period following
termination of employment without cause.
As Vice President, Corporate Development and General Counsel of the
Company, Mr. Carney's Employment Agreement provides for an annual base salary of
$120,000, a target annual bonus of $30,000, an option grant for 17,250 shares of
Common Stock vesting over four years, and severance payments equal to six months
of his 1996 base salary paid during the six-month period following termination
of employment without cause.
An Interoffice Memorandum executed by the Company and Lissa A. Goldenstein
sets forth Ms. Goldenstein's compensation plan. Pursuant to the memorandum, Ms.
Goldenstein's base salary is $130,000, and a bonus schedule is based on the
Company's sales. The memorandum also provides for a $6,000 car allowance, and in
the event her employment is terminated for any reason other than unsatisfactory
performance, Ms. Goldenstein is guaranteed six months of severance pay at her
base annual rate.
The Company and John M. Newsam, the Company's Chief Scientific Officer,
have entered into an Employment Agreement dated as of September 29, 1992.
Pursuant to the agreement, Dr. Newsam is entitled to a base annual salary of
$95,000, subject to increases and annual bonuses at the discretion of the
Company's Board of Directors. The agreement terminates as of June 30, 1997,
unless terminated sooner as provided therein.
The Company and Christopher Herd, the Company's Vice President and General
Manager, Life Sciences, have entered into an Employment Agreement dated as of
September 29, 1992. Pursuant to this agreement, Mr. Herd is entitled to a base
annual salary of $90,000, subject to increases and annual bonuses at the
discretion of the Company's Board of Directors. The agreement terminates as of
August 6, 1997, unless terminated sooner as provided therein.
In connection with an acquisition of the Company by merger, asset sale or
other transaction, each outstanding option held by the President, executive
officers and all other employees of the Company under the 1986 Plan or 1996 Plan
will automatically accelerate in full, except to the extent such options are to
be assumed by the successor corporation. In addition, as described above with
respect to the Employment Agreements of Messrs. Savage, Zarrabian, Hiatt and
Carney, even if the successor corporation assumes such options, if the
employment of any of these individuals is terminated or otherwise materially
modified as described in the Employment Agreements, the vesting of his options
will accelerate such that 50% of his unvested options become exercisable.
47
<PAGE> 52
EXECUTIVE COMPENSATION
The following table sets forth the compensation awarded or paid to, or
earned by, the Company's Chief Executive Officer and the four other most highly
compensated executive officers of the Company who earned in excess of $100,000
in salary and bonus (collectively, the "Named Executive Officers") for services
rendered to the Company during the year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
--------------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($)(2) COMPENSATION($)(3) COMPENSATION($)(4)
- ------------------------------------- --------- ----------- ------------------ ------------------
<S> <C> <C> <C> <C>
Michael J. Savage.................... 170,000 200,000 -- --
President, Chief Executive Officer
and Director
Saiid Zarrabian...................... 162,500 150,000 -- 70,176
Chief Operating Officer
David B. Hiatt....................... 150,000 100,000 -- 81,441
Chief Financial Officer; Senior
Vice President, Finance and
Administration; Secretary and
Treasurer
Lissa A. Goldenstein................. 128,750 158,437 6,000 --
Senior Vice President, Worldwide
Sales
John M. Newsam....................... 127,500 75,500 -- --
Chief Scientific Officer
</TABLE>
- ------------------------------
(1) In accordance with the rules of the Securities and Exchange Commission (the
"Commission"), the compensation described in this table does not include
medical, group life insurance or other benefits received by the Named
Executive Officers that are available generally to all salaried employees of
the Company and certain perquisites and other personal benefits received by
the Named Executive Officers that do not exceed the lesser of $50,000 or 10%
of any such officer's salary and bonus disclosed in this table. There were
no options or long-term compensation awards granted to the Named Executive
Officers during the year ended December 31, 1996.
(2) For Ms. Goldenstein, bonus compensation represents, in part, the value of
commission-based compensation earned in 1996.
(3) Represents an automobile allowance.
(4) Represents reimbursement of relocation expenses.
STOCK OPTION PLANS
The Company adopted its 1986 Incentive Stock Option Plan and its 1986
Supplemental Stock Option Plan in August 1986, which were amended and restated
in January 1991 (the "1986 Plans"). The 1986 Plans expired in August 1996. In
February 1996, the Company adopted its 1996 Stock Plan (the "Former 1996 Plan").
The Company has not issued any options or other rights to acquire securities
under the Former 1996 Plan. In November 1996, the Company adopted its 1996
Equity Incentive Plan (the "1996 Plan").
The plans provide for incentive stock option awards for employees
(including officers and employee directors), and nonstatutory stock options and
certain other direct stock awards for employees (including officers and employee
directors) and non-employee directors and consultants. These plans are
administered by the Board of Directors, or a Committee appointed by the Board,
which determine the option awards to be granted, including exercise prices,
number of shares subject to the awards and the exercisability thereof, provided
that such terms comply with the provisions of the plan under with the option
award is granted. Non-employee directors are eligible only for nonstatutory
grants and stock rights to the extent provided in the plans.
The term of the stock options granted under the various plans generally may
not exceed 10 years. The exercise price of options granted under the plans is
determined by the Board of Directors, but in
48
<PAGE> 53
the case of an incentive stock option, cannot be less than 100% of the fair
market value of the Common Stock on the date of the grant. Options granted under
the plans vest at the rate specified in the option agreement. No stock option
may be transferred by the optionee other than by will or the laws of descent or
distribution or, in certain limited instances, pursuant to a domestic relations
order, provided that an optionee may designate a beneficiary who may exercise
the option following the optionee's death. A nonstatutory option may also be
transferred to the extent provided in the option agreement. An optionee whose
relationship with the Company or any related corporation ceases for any reason
(other than by death or permanent and total disability) may exercise options in
the three-month period following such cessation (unless such options terminate
sooner or later by the terms of the option agreement). Options may be exercised
for up to twelve or eighteen months, respectively, after an optionee's
relationship with the Company and related corporations ceases due to disability
or death (unless such options terminate sooner or later by the terms of the
option agreement).
No incentive stock option may be granted to any person who, at the time of
the grant, owns (or is deemed to own) stock possessing more than 10% of the
total combined voting power of the Company or any affiliate of the Company,
unless the option exercise price is at least 110% of the fair market value of
the stock subject to the option on the date of grant, and the term of the option
does not exceed five years from the date of grant. The aggregate fair market
value, determined at the time of grant, of the shares of Common Stock with
respect to which incentive stock options are exercisable for the first time by
an optionee during any calendar year (under all such plans of the Company and
its affiliates) may not exceed $100,000.
Pursuant to the 1996 Plan, shares subject to stock awards that have expired
or otherwise terminated without having been exercised in full again become
available for the grant, but shares subject to exercised stock appreciation
rights will not again become available for the grant. The Board of Directors has
the authority to reprice outstanding options and stock appreciation rights and
to offer optionees and holders of stock appreciation rights the opportunity to
replace outstanding options and stock appreciation rights with new options or
stock appreciation rights for the same or a different number of shares.
Restricted stock purchase awards granted under the plans may be granted
pursuant to a repurchase option in favor of the Company in accordance with a
vesting schedule and at a price determined by the Board of Directors. Restricted
stock purchases must be at a price equal to at least 85% of the stock's fair
market value on the award date, but stock bonuses may be awarded in
consideration of past services without a purchase payment. Rights under a stock
bonus or restricted stock bonus agreement may not be transferred other than by
will, the laws of descent and distribution or a domestic relations order while
the stock awarded pursuant to such an agreement remains subject to the
agreement. Stock appreciation rights granted under the 1996 Plan may be tandem
rights, concurrent rights or independent rights.
Upon certain changes in control of the Company, all outstanding awards
under the 1996 Plan must either be assumed or substituted by the surviving
entity. If the surviving entity refuses to assume or substitute such awards with
respect to persons then performing services as employees, directors or
consultants, the time during which such awards may be exercised shall be
accelerated and the awards terminated if not exercised prior to such change in
control; with respect to any other outstanding awards under the 1996 Plan, such
awards shall be terminated if not exercised prior to such event.
As of December 31, 1996, options to purchase 1,567,912 shares of Common
Stock at a weighted average exercise price of $1.93 were outstanding and 368,497
shares, cumulatively, remained available for future grant under the 1996 Plan
and the Former 1996 Plan. The 1996 Plan and the Former 1996 Plan will terminate
in November 2006 and February 2006, respectively, unless terminated sooner by
the Board of Directors.
49
<PAGE> 54
AGGREGATED FISCAL YEAR-END OPTION VALUES
The following table sets forth for each of the Named Executive Officers the
number and value of securities underlying unexercised options held by the Named
Executive Officers at December 31, 1996. No shares of Common Stock were acquired
by exercise of stock options during the year ended December 31, 1996 by any of
the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996(#) DECEMBER 31, 1996(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael J. Savage............................. 197,498 214,723 $ 2,008,466 $ 2,162,224
Saiid Zarrabian............................... 48,440 116,435 491,619 1,171,569
David B. Hiatt................................ 50,908 72,758 523,561 731,044
Lissa A. Goldenstein.......................... 15,000 45,000 150,000 450,000
John M. Newsam................................ 11,250 33,750 112,500 337,500
</TABLE>
- ------------------------------
(1) Amount based on the difference between the initial public offering price of
$12.00 per share and the exercise price, multiplied by the number of shares
underlying the option.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
In February 1997, the Company adopted its Non-Employee Directors' Stock
Option Plan (the "Directors' Plan"), effective upon the closing of this offering
to provide for the automatic grant of options to purchase shares of Common Stock
to non-employee directors of the Company. The Directors' Plan is administered by
the Board, unless the Board delegates administration to a committee of not fewer
than two directors.
The maximum number of shares of Common Stock that may be issued pursuant to
options granted under the Directors' Plan is 25,000. Pursuant to the terms of
the Directors' Plan, each non-employee director first elected after the
completion of the offering shall receive an option grant of 5,000 shares on the
date of election. Further, each non-employee director shall receive an option
grant of 2,500 shares following re-election at annual meetings of shareholders,
beginning the second annual meeting after the date of this offering.
Upon certain changes in control of the Company, the options shall vest and
the time during which outstanding options may be exercised shall be accelerated,
and the options shall be terminated if not exercised prior to such change in
control.
No options granted under the Directors' Plan may be exercised after the
expiration of ten years from the date it was granted. Options granted under the
Directors' Plan will not vest until the first anniversary of the date of grant.
The exercise price of options under the Directors' Plan will equal 100% the fair
market value of the Common Stock on the date of grant. Options granted under the
Directors' Plan may be transferable if permitted by their terms. Unless
otherwise terminated by the Board of Directors, the Directors' Plan
automatically terminates in February 2007. As of the date hereof, no options
have been granted under the Directors' Plan.
EMPLOYEE STOCK PURCHASE PLAN
In February 1997, the Company adopted its Employee Stock Purchase Plan (the
"Purchase Plan"), effective as of the closing of this offering, covering an
aggregate of 50,000 shares of Common Stock. The Purchase Plan is intended to
qualify as an employee stock purchase plan within the meaning of Section 423 of
the Code. The Purchase Plan is administered by the Board, unless the Board
delegates administration to a committee of not fewer than two directors. Under
the Purchase Plan, the Board or committee may authorize participation by
eligible employees, including officers, in periodic offerings
50
<PAGE> 55
following the commencement of the Purchase Plan. The initial offering under the
Purchase Plan shall commence on the date of this Prospectus and terminate on
March 31, 1999.
Employees are eligible to participate if they are employed by the Company
or a subsidiary of the Company designated by the Board for at least 20 hours per
week and are customarily employed by the Company or a subsidiary of the Company
designated by the Board for at least five months per calendar year. Employees
who participate in an offering have up to 15% of their earnings withheld
pursuant to the Purchase Plan. The amount withheld is then used to purchase
shares of the Common Stock on specified dates determined by the Board. The price
of Common Stock purchased under the Purchase Plan will be equal to 85% of the
lesser of the fair market value of the Common Stock at the commencement date of
each offering period or the relevant purchase date. Employees may end their
participation in the offering at any time during the offering period except as
provided by the Board or Committee under the terms of the offering, and
participation ends automatically on termination of employment with the Company.
In the event of a merger, reorganization, consolidation or liquidation
involving the Company, (i) each right to purchase Common Stock will be assumed
or an equivalent right substituted by the successor corporation, (ii) such
rights will continue in full force and effect, or (iii) participants accumulated
payroll deductions will be used to purchase Common Stock immediately prior to
such transaction and the participants' rights under the ongoing offering
terminated. The Board has the authority to amend or terminate the Purchase Plan,
provided, however, that no such action may adversely affect any outstanding
rights to purchase Common Stock.
401(K) PLAN
In November 1984, the Board adopted an employee savings and retirement plan
(the "401(k) Plan") covering certain of the Company's employees who have at
least 90 days of service with the Company, and work a minimum of 1,000 hours
during the plan year. Pursuant to the 401(k) Plan, eligible employees may elect
to reduce their current compensation by up to the lesser of 15% of such
compensation or the statutorily prescribed annual limit ($9,500 in 1996) and
have the amount of such reduction contributed to the 401(k) Plan. The Plan
allows for the Company to make discretionary matching contributions as
determined by a committee of the Board of Directors. No discretionary
contributions were made by the Company in 1994 and 1995 and during the 1996 Plan
year, the Company will match 25% of the employee's contributions to a maximum of
2% of employee earnings. In addition, eligible employees may make roll-over
contributions to the 401(k) Plan from a tax-qualified retirement plan. Employees
become 20% vested in these Company contributions after one year of service, and
increase their vested percentages by an additional 20% for each year of service
thereafter. The 401(k) Plan is intended to qualify under Section 401 of the
Internal Revenue Code of 1986, as amended, so that contributions by employees or
by the Company to the 401(k) Plan, and income earned on the 401(k) Plan
contributions, are not taxable to employees until withdrawn from the 401(k)
Plan, and so that contributions by the Company, if any, will be deductible by
the Company when made. The trustee under the 401(k) Plan, at the direction of
each participant, invests the 401(k) Plan employee salary deferrals in selected
investment options.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Bylaws provide that the Company will indemnify its directors,
officers, employees and agents to the fullest extent not prohibited by Delaware
law as in effect from time to time. The Company is also empowered under its
Bylaws to enter into indemnification contracts with its directors and officers
and to purchase insurance on behalf of any person it is required or permitted to
indemnify. Pursuant to this provision, the Company has entered into
indemnification agreements with each of its directors and executive officers.
In addition, the Company's Amended and Restated Certificate of
Incorporation provides that directors of the Company shall not be personally
liable to the Company or its stockholders for
51
<PAGE> 56
monetary damages for any breach of fiduciary duty as a director, except for
liability (i) for any breach of the directors' duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law
or (iv) for any transaction from which the director derives any improper
personal benefit. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.
52
<PAGE> 57
CERTAIN TRANSACTIONS
The Company, D. E. Shaw Investment Group, L.P. ("D.E. Shaw") and certain
other shareholders of the Company are parties to a certain Amended and Restated
Investor Rights Agreement dated October 18, 1991, as amended on February 14,
1992, July 14, 1994 and September 29, 1994 (the "Investor Rights Agreement"),
pursuant to which certain shareholders of the Company have registration rights
with respect to shares of the Company's capital stock and certain transfer
restrictions with respect to such shares.
In September 1994, the Company issued and sold 2,222,223 shares of
Preferred Stock to D.E. Shaw for an aggregate purchase price of $6,000,000, or
$2.70 per share, pursuant to a Series A Convertible Preferred Stock Purchase
Agreement dated as of September 29, 1994. See Note 9 of Notes to MSI
Consolidated Financial Statements for a description of the Preferred Stock. In
connection with the transaction, D.E. Shaw became a party to the Investor Rights
Agreement. Upon the closing of this offering, each share of Preferred Stock will
automatically convert into one-half of a share of Common Stock.
In August 1995, pursuant to an Agreement and Plan of Merger dated as of
August 15, 1995 (the "Biosym Merger Agreement") among Corning, Biosym, the
Company and a wholly-owned subsidiary of the Company created for purposes of the
transaction (the "Acquisition Sub"), Biosym merged with and into Acquisition Sub
(the "Biosym Merger"). Pursuant to the Biosym Merger Agreement, the Company
issued to Corning 2,888,279 shares of Common Stock and 1,467,825 shares of Class
B Common. See Note 9 of Notes to MSI Consolidated Financial Statements for a
description of the Class B Common. Upon the closing of this offering, each share
of Class B Common will automatically convert into one-half of a share of Common
Stock.
In connection with the Biosym Merger, Corning made a contribution of
capital to Biosym equal to $20,875,956, of which $3,168,000 was in cash and
$17,707,956 was in the form of canceled indebtedness of Biosym to Corning. In
addition, the Company and Corning entered into a Revolving Loan and Credit
Agreement dated as of August 15, 1995 (the "Corning Letter of Credit") pursuant
to which the Company may borrow up to $3,000,000 from Corning. The Company has
not borrowed and does not expect to borrow under the Corning Letter of Credit,
and the Corning Letter of Credit terminates upon the closing of this offering.
Further, Corning agreed to reimburse the Company for up to $200,000 of expenses
associated with the Company's purchase of software technology from DCL
Information Systems, Inc., and up to $100,000 of legal expenses associated with
any United States government inquiry, investigation, objection or litigation
arising out of the Biosym Merger. See "Risk Factors -- Acquisition-Related
Risks; Need to Integrate Acquired Technologies." In addition, in consideration
for Corning's grant to the Company of an exclusive, royalty-free, perpetual
license to use, market and distribute certain of Corning's software programs,
the Company granted to Corning a non-exclusive, royalty-free, perpetual license
for Corning and its subsidiaries to use all of the Company's software products
and to participate without charge through August 1999 in all of the Company's
consortia.
Also in connection with the Biosym Merger, the Company, Corning, D. E. Shaw
and certain other shareholders of the Company entered into a Shareholders
Agreement dated as of August 15, 1995 (the "Shareholders Agreement"). Pursuant
to the Shareholders Agreement, Corning and the other shareholder parties
acquired certain rights with respect to representation on the Company's Board of
Directors, restrictions on transfer of shares and rights to purchase additional
shares offered by the Company. The Shareholders Agreement terminates as of the
closing of this offering.
The Company has granted options to certain of its directors and executive
officers. The Company also has entered into an Indemnification Agreement with
each of its directors and executive officers.
53
<PAGE> 58
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of December 31, 1996, and
as adjusted to reflect the sale of this offering, by (i) each Named Executive
Officer, (ii) each director, (iii) each holder of more than 5% of the Company's
Common Stock, (iv) each of the Selling Stockholders and (v) all current
directors and executive officers as a group. The table assumes conversion of all
outstanding Preferred Stock and nonvoting Common Stock into Common Stock upon
completion of this offering. Except as indicated in the footnotes to this table,
the persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(1) NUMBER OF OFFERING(1)(2)
PRINCIPAL STOCKHOLDERS, DIRECTORS AND ---------------------- SHARES BEING -----------------------
OFFICERS NUMBER PERCENT OFFERED NUMBER PERCENT
- -------------------------------------- --------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Corning Incorporated.................. 3,622,191 54.8% 362,219 3,259,972 40.5%
One Riverfront Plaza
Corning, New York 14831
D.E. Shaw Investment Group, LP........ 1,204,250 18.2 240,854 963,396 12.0
120 West 45th Street, 30th Floor
New York, NY 10036
Michael J. Savage(3).................. 197,497 2.9 -- 197,497 2.4
Saiid Zarrabian(4).................... 48,440 * -- 48,440 *
David B. Hiatt(5)..................... 51,999 * -- 51,999 *
Lissa A. Goldenstein(6)............... 15,000 * -- 15,000 *
John M. Newsam(7)..................... 11,250 * -- 11,250 *
C. Derek Statham(8)................... -- -- -- -- --
R. Pierce Baker(8).................... -- -- -- -- --
C. Peter W. Booth(8).................. -- -- -- -- --
Thomas J. Cable(9).................... 218,288 3.3 40,866 177,422 2.2
Peter H. Engel(10).................... 66,697 1.0 10,548 56,149 *
Bruns H. Grayson(11).................. 235,154 3.5 58,436 176,718 2.2
All directors and executive officers
as a group (14 persons)(12)......... 4,488,859 64.0 472,069 4,016,799 47.5
</TABLE>
<TABLE>
<CAPTION>
OTHER SELLING STOCKHOLDERS
- --------------------------------------
<S> <C> <C> <C> <C> <C>
Randy Bolten.......................... 966 * 966 -- --
Andrew J. Ferrara..................... 15,741 * 15,741 -- --
William Goddard III and Amelia Yvonne
Correy Goddard...................... 99,952 1.5 5,000 94,952 1.2
Joel Schwartz......................... 4,648 * 4,648 -- --
Transitions Two L.P................... 13,889 * 13,889 -- --
Steven Mayo........................... 82,547 1.2 16,510 66,037 *
GeoCapital II(13)..................... 82,152 1.2 82,152 -- --
Mayfield Fund(14)..................... 225,049 3.4 45,527 179,522 2.2
Menlo Ventures III.................... 67,109 1.0 67,109 -- --
Morgan Stanley Venture Capital Fund
L.P.(15)............................ 86,316 1.3 86,316 -- --
KME Venture Capital L.P............... 14,219 * 14,219 -- --
</TABLE>
- ------------------------------
* Represents beneficial ownership of less than 1%.
54
<PAGE> 59
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
Percentage of beneficial ownership is based on 6,610,952 shares of Common
Stock outstanding as of December 31, 1996 and 8,045,952 shares of Common
Stock outstanding after completion of this offering.
(2) Assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting." If the Underwriters' over-allotment option is exercised in
full, the Company will sell up to an aggregate of 375,000 shares of Common
Stock of the Company, and up to 8,420,952 shares of Common Stock will be
outstanding after the completion of this offering.
(3) Includes 197,497 shares subject to stock options exercisable within 60 days
of December 31, 1996.
(4) Includes 48,440 shares subject to stock options exercisable within 60 days
of December 31, 1996.
(5) Includes 51,999 shares subject to stock options exercisable within 60 days
of December 31, 1996.
(6) Includes 15,000 shares subject to stock options exercisable within 60 days
of December 31, 1996.
(7) Includes 11,250 shares subject to stock options exercisable within 60 days
of December 31, 1996.
(8) Excludes 3,622,191 shares held by Corning Incorporated. The director is
affiliated with Corning Incorporated, but disclaims beneficial ownership of
such shares.
(9) Represents 9,849 shares held by The Cable Family Partnership and 194,480
shares held by CH Partners IV. Mr. Cable, a director of the Company, is a
general partner of the above named partnerships. Mr. Cable disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest therein. Also includes 13,959 shares subject to stock options
granted to Mr. Cable which are exercisable within 60 days of December 31,
1996.
(10) Represents 52,738 shares held by American Consulting Corporation Inc. Mr.
Engel, a director of the Company, is President and Chief Executive Officer
of American Consulting Corporation Inc. Also includes 13,959 shares subject
to stock options granted to Mr. Engel which are exercisable within 60 days
of December 31, 1996.
(11) Represents 87,564 shares held by ABS Ventures II Prime Limited Partnership,
58,435 shares held by ABS Ventures III Limited Partnership and 61,238
shares held by Brown Technology Associates Limited Partnership. Mr.
Grayson, a director of the Company, is a managing general partner of
Calvert Capital, LP, which manages the investments of the above named
partnerships. Mr. Grayson disclaims beneficial ownership of such shares
except to the extent of his pecuniary interest therein. Also includes
27,917 shares subject to stock options granted to Mr. Grayson which are
exercisable within 60 days of December 31, 1996.
(12) Includes 419,221 shares subject to stock options exercisable within 60 days
of December 31, 1996.
(13) Includes 32,759 shares held by GeoCapital II and 49,393 shares held by
GeoCapital Ventures.
(14) Includes 9,002 shares held by Mayfield Associates and 216,047 shares held
by Mayfield VI.
(15) Includes 24,662 shares held by SIF Limited Partnership.
55
<PAGE> 60
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 25,000,000 Common
Stock, $.001 par value, and 2,222,223 shares of Preferred Stock, $.01 par value.
COMMON STOCK
As of December 31, 1996, there were 4,846,120 shares of Common Stock
outstanding held of record by approximately 233 stockholders. The holders of
Common Stock are entitled to one vote per share on all matters to be voted on by
the stockholders. Subject to preferences that may be applicable to outstanding
shares of Preferred Stock, if any, the holders of Common Stock are entitled to
receive ratably such dividends as may be declared from time to time by the Board
of Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities, subject to prior liquidation rights of Preferred Stock, if any,
then outstanding. The Common Stock has no preemptive, conversion, subscription
or other 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, and the shares of Common Stock to be outstanding upon completion
of this offering will be fully paid and non-assessable.
Upon the closing of this offering, all outstanding shares of the Class B
Common will be converted into 653,721 shares of Common Stock. See Note 9 of
Notes to MSI Consolidated Financial Statement for a description of the currently
outstanding Class B Common.
PREFERRED STOCK
Upon the closing of this offering, all outstanding shares of Preferred
Stock will be converted into 1,111,111 shares of Common Stock. See Note 9 of
Notes to MSI Consolidated Financial Statements for a description of the
currently outstanding Preferred Stock. Under the Amended and Restated
Certificate of Incorporation, which will become effective in connection with the
closing of this offering, there will be no authorized shares of Preferred Stock.
REGISTRATION RIGHTS
After this offering, the holders of 2,263,053 shares of Common Stock will
be entitled to certain rights with respect to the registration of such shares
under the Securities Act, pursuant to the Amended and Restated Investor Rights
Agreement among such holders and the Company, dated October 18, 1991, as amended
(the "Investor Rights Agreement"). Under the terms of the Investor Rights
Agreement, if the Company proposes to register any of its securities under the
Securities Act, either for its own account or for the account of other security
holders exercising registration rights, such holders are entitled to notice of
such registration and are entitled, subject to certain limitations, to include
shares therein. The holders may also require the Company to file a registration
statement under the Securities Act with respect to their shares, and the Company
is required to use its best efforts to effect such registrations. Furthermore,
the holders may require the Company to register their shares on Form S-3 when
such form becomes available to the Company. Generally, the Company is required
to bear all registration and selling expenses incurred in connection with any
such registrations. These rights are subject to certain conditions and
limitations, among them the right of the underwriters of an offering to limit
the number of shares included in such registration. Such registration rights
terminate five years from the date of this offering.
DELAWARE ANTI-TAKEOVER LAW
The Company is governed by the provisions of Section 203 of the Delaware
Law. In general, Section 203 prohibits a public Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed
56
<PAGE> 61
manner. A "business combination" includes mergers, asset sale or other
transactions resulting in a financial benefit to the stockholder. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within three years, did own) 15% or more of the corporation's voting stock. The
statute could have the effect of delaying, deferring or preventing a change in
control of the Company.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is Harris
Trust Company of California.
57
<PAGE> 62
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for the Common
Stock of the Company. Future sales of substantial amounts of Common Stock in the
public market could adversely affect market prices prevailing from time to time.
Furthermore, since only a limited number of shares will be available for sale
shortly after this offering because of certain contractual and legal
restrictions on resale described below, sales of substantial amounts of Common
Stock of the Company in the public market after the restrictions lapse could
adversely affect the prevailing market price and the ability of the Company to
raise equity capital in the future.
Upon completion of this offering, the Company will have outstanding an
aggregate 8,045,952 shares of Common Stock, assuming (i) no exercise of the
Underwriters' over-allotment option and (ii) no exercise of options to purchase
1,567,912 shares of Common Stock outstanding as of December 31, 1996. Of these
shares, the 2,500,000 shares of Common Stock sold in this offering will be
freely tradable without restriction or further registration under the Securities
Act, unless such shares are purchased by "affiliates" of the Company as that
term is defined in Rule 144 under the Securities Act ("Affiliates"). The
remaining 5,525,635 shares of Common Stock held by existing stockholders are
"restricted securities" as that term is defined in Rule 144 under the Securities
Act (the "Restricted Shares"). Restricted Shares may be sold in the public
market only if registered or if they qualify for an exemption from registration
under Rules 144 or 701 promulgated under the Securities Act, which rules are
summarized below. As a result of the contractual restrictions described below
and the provisions of Rules 144 and 701, additional shares will be available for
sale in the public market as follows: 695,924 shares of Common Stock will be
eligible for sale without restriction pursuant to Rule 144(k) or Rule 701, and
approximately, 1,571,199 shares will be eligible for sale subject to the volume
and other restrictions of Rule 144.
Upon completion of this offering, the holders of approximately 2,198,811
shares of Common Stock, or their transferees, will be entitled to certain rights
with respect to the registration of such shares under the Securities Act.
Registration of such shares under the Securities Act would result in such shares
becoming freely tradable without restriction under the Securities Act (except
for shares purchased by Affiliates) immediately upon the effectiveness of such
registration.
The Company's officers, directors and certain stockholders have agreed that
they will not, without the prior written consent of Hambrecht & Quist LLC,
directly or indirectly offer, sell, contract to sell or otherwise dispose of
5,335,276 of the Restricted Shares or any securities convertible into or
exercisable or exchangeable for Common Stock during the 180-day period (the "H&Q
Lock-Up Agreement") commencing on the Effective Date. Of the remaining 670,110
Restricted Shares not subject to the H&Q Lock-Up Agreement, 581,509 Restricted
Shares are subject to a 180-day lock-up agreement with the Company, pursuant to
which holders have agreed that they will not directly or indirectly offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock or other
securities of the Company during the same 180-day period (the "MSI Lock-Up
Agreement"). Of the remaining 88,601 Restricted Shares, 67,126 will be available
for sale without restriction pursuant to Rule 144(k) and 21,475 shares will be
available for sale subject to the volume and other restrictions of Rule 144. The
Company has agreed that it will not, without the prior written consent of
Hambrecht & Quist LLC, (i) directly or indirectly offer, sell, contract to sell
or otherwise dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock during such 180-day period
(the "180-day Lock-Up") except for the sale of the shares of Common Stock in
this offering, the issuance of options and shares of Common Stock pursuant to
employee benefit plans set forth in this Prospectus, and the issuance of shares
of Common Stock upon exercise of warrants or options presently outstanding,
provided that the holders of such Common Stock issued upon the exercise of such
warrants or options agree in writing to the 180-day Lock-Up and (ii) allow any
security holder of the Company subject to the MSI Lock-Up Agreement to sell,
transfer or otherwise dispose any shares of Common Stock or security exercisable
for Common Stock without the prior written consent of Hambrecht & Quist LLC. Any
shares subject to the lock-up agreements may
58
<PAGE> 63
be released at any time by Hambrecht & Quist LLC, except for 1,664,810 shares
that may not be so released until 90 days after the Effective Date.
In general, under Rule 144 as currently in effect, beginning 90 days after
the Effective Date, an Affiliate of the Company, or person (or persons whose
shares are aggregated) who has beneficially owned Restricted Shares for at least
two years will be entitled to sell in any three-month period a number of shares
that does not exceed the greater of (i) one percent of the then outstanding
shares of the Company's Common Stock or (ii) the average weekly trading volume
of the Company's Common Stock in the Nasdaq National Market during the four
calendar weeks immediately preceding the date on which notice of the sale is
filed with the Securities and Exchange Commission. Sales pursuant to Rule 144
are subject to certain requirements relating to manner of sale, notice, and the
availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed to have been an Affiliate
of the Company at any time during the 90 days immediately preceding the sale and
who has beneficially owned Restricted Shares for at least three years is
entitled to sell such shares under Rule 144(k) without regard to the limitations
described above.
The Securities and Exchange Commission has proposed certain amendments to
Rule 144 that would reduce by one year the holding periods required for shares
subject to Rule 144 and Rule 144(k) to become eligible for resale in the public
market. This proposal, if adopted, would substantially increase the number of
shares of Common Stock eligible for immediate resale following the expiration of
the lock-up agreements described above. No assurance can be given concerning
whether or when the proposal will be adopted by the Commission.
An employee, officer or director of or consultant to the Company who
purchased or was awarded shares or options to purchase shares pursuant to a
written compensatory plan or contract is entitled to rely on the resale
provisions of Rule 701 under the Securities Act, which permits Affiliates and
non-Affiliates to sell their Rule 701 shares without having to comply with Rule
144's holding period restrictions, in each case commencing 90 days after the
date of this Prospectus. In addition, non-Affiliates may sell Rule 701 shares
without complying with the public information, volume and notice provisions of
Rule 144.
The Company intends to file a registration statement under the Securities
Act covering shares of Common Stock reserved for issuance under the Company's
stock option plans and purchase plan. Based on the number of options outstanding
and options and shares reserved for issuance at February 3, 1997, such
registration statement would cover approximately 2,011,409 shares. Such
registration statement is expected to be filed and to become effective as soon
as practicable after the date hereof. Shares registered under such registration
statement will, subject to Rule 144 volume limitations applicable to Affiliates,
be available for sale in the open market, unless such shares are subject to
vesting restrictions with the Company or the lock up agreements described above.
See "Management."
59
<PAGE> 64
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Hambrecht & Quist LLC,
Volpe, Welty & Company L.L.C. and Adams, Harkness & Hill, Inc., have severally
agreed to purchase from the Company and the Selling Stockholders the following
respective numbers of shares of Common Stock:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
------------------------------------------------------------------ ---------
<S> <C>
Hambrecht & Quist LLC.............................................
Volpe, Welty & Company L.L.C. ....................................
Adams, Harkness & Hill, Inc. .....................................
---------
Total............................................................. 2,500,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in the Company's business and the receipt of
certain certificates, opinions and letters from the Company, its counsel and
independent auditors. The nature of the Underwriters' obligation is such that
they are committed to purchase all shares of Common Stock offered hereby if any
of such shares are purchased.
The Underwriters propose to offer the shares of Common Stock directly to
the public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow and such dealers may
reallow, a concession not in excess of $ per share to certain other dealers.
After the initial public offering of the shares, the offering price and other
selling terms may be changed by the Representatives of the Underwriters. The
Representatives have informed the Company that the Underwriters do not intend to
confirm sales to any accounts over which they exercise discretionary authority.
The Company has granted to the Underwriters an option, exercisable no later
than 30 days after the date of this Prospectus, to purchase up to 375,000
additional shares of Common Stock at the initial public offering price, less the
underwriting discount, set forth on the cover page of this Prospectus. To the
extent that the Underwriters exercise this option, each of the Underwriters will
have a firm commitment to purchase approximately the same percentage thereof
which the number of shares of Common Stock to be purchased by it shown in the
above table bears to the total number of shares of Common Stock offered hereby.
The Company will be obligated, pursuant to the option, to sell shares to the
Underwriters to the extent the option is exercised. The Underwriters may
exercise such option only to cover overallotments made in connection with the
sale of Common Stock offered hereby.
The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.
The Selling Stockholders and certain other stockholders of the Company,
including the executive officers and directors, who will own in the aggregate
5,335,276 shares of Common Stock after the offering, have agreed that they will
not, without the prior written consent of Hambrecht & Quist LLC,
60
<PAGE> 65
offer, sell or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock owned by them during the 180-day
period following the date of this Prospectus. The Company has agreed that it
will not, without the prior written consent of Hambrecht & Quist LLC, offer,
sell or otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock during the 180-day period following the date of
this Prospectus, except that the Company may issue shares upon the exercise of
options granted prior to the date hereof, and may grant additional options under
its stock option plans, provided that, without the prior written consent of
Hambrecht & Quist LLC, such additional options shall not be exercisable during
such period.
Prior to the offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be determined
by negotiation among the Company, the Selling Stockholders and the
Representatives. Among the factors to be considered in determining the initial
public offering price are the prevailing market and economic conditions, revenue
and earnings of the Company, market valuations of other companies engaged in
activities similar to the Company, estimates of the business potential and
prospects of the Company, the present state of the Company's business
operations, the Company's management and other factors deemed relevant. The
estimated initial public offering price range set forth on the cover of this
Prospectus is subject to change as a result of market conditions and other
factors.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by its counsel, Cooley Godward LLP, San Diego, California.
As of the date of this Prospectus, certain members and associates of Cooley
Godward own an aggregate of 4,698 shares of Common Stock through an investment
partnership. Certain legal matters in connection with the offering will be
passed upon for the Underwriters by Gunderson Dettmer Stough Villeneuve Franklin
& Hachigian, LLP, Menlo Park, California.
EXPERTS
The financial statements included in this Prospectus or elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
ADDITIONAL INFORMATION
The Company has filed with the SEC, Washington, D.C. 20549, a Registration
Statement on Form S-1 under the Securities Act of 1933, as amended, with respect
to the Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and such
Common Stock, reference is made to the Registration Statement and the exhibits
and schedules filed as part thereof. Statements contained in this Prospectus as
to the contents of any contract or document filed as an exhibit to the
Registration Statement is qualified by reference to such exhibit as filed. A
copy of the Registration Statement, and the exhibits and schedules thereto, may
be inspected without charge at the public reference facilities maintained by the
SEC in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
SEC's regional offices located at the Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048, and copies of all or any part of
the Registration Statement may be obtained from such offices upon the payment of
the fees prescribed by the SEC. The SEC maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. The address of the
SEC's World Wide Web site is http://www.sec.gov.
61
<PAGE> 66
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
Report of Independent Public Accountants.............................................. F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996.......................... F-3
Consolidated Statements of Operations for the years ended December 31, 1994, 1995 and
1996................................................................................ F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1994,
1995 and 1996....................................................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995 and
1996................................................................................ F-6
Notes to Consolidated Financial Statements............................................ F-7
BIOSYM TECHNOLOGIES, INC. AND SUBSIDIARIES
Report of Independent Public Accountants.............................................. F-23
Consolidated Statements of Operations for the year ended December 31, 1994 and the
period January 1, 1995 through August 15, 1995...................................... F-24
Consolidated Statements of Stockholders' Deficit for the year ended December 31, 1994
and the period January 1, 1995 through August 15, 1995.............................. F-25
Consolidated Statements of Cash Flows for the year ended December 31, 1994 and the
period January 1, 1995 through August 15, 1995...................................... F-26
Notes to Consolidated Financial Statements............................................ F-27
</TABLE>
F-1
<PAGE> 67
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Molecular Simulations Incorporated:
We have audited the accompanying consolidated balance sheets of Molecular
Simulations Incorporated (a Delaware Corporation) and subsidiaries as of
December 31, 1995 and 1996 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1996. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Molecular
Simulations Incorporated and subsidiaries as of December 31, 1996 and 1995 and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
San Diego, California
February 6, 1997
F-2
<PAGE> 68
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
DECEMBER 31, 1996
--------------------- ------------
1995 1996 PRO FORMA
-------- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 10,371 $ 14,509
Trade receivables, net of allowance for doubtful
accounts of $635 in 1995 and $496 in 1996........... 14,831 16,178
Prepaid expenses and other current assets.............. 976 4,488
-------- --------
Total current assets........................... 26,178 35,175
-------- --------
Property and equipment, net.............................. 2,194 1,511
Software development costs, net of accumulated
amortization of $3,283 in 1995 and $4,208 in 1996...... 3,097 3,099
Investment in joint venture.............................. 1,153 1,019
Goodwill, net of accumulated amortization of $95 in
1995................................................... 1,174 --
Other assets............................................. 356 461
-------- --------
Total assets................................... $ 34,152 $ 41,265
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 2,474 $ 1,634
Accrued liabilities.................................... 10,362 12,930
Current portion of deferred revenue.................... 12,451 15,731
Current portion of note payable........................ 600 600
-------- --------
Total current liabilities...................... 25,887 30,895
Note payable............................................. 2,000 1,400
Other long-term liabilities.............................. 559 446
Deferred revenue, net of current portion................. 557 1,136
-------- --------
Commitments and contingencies:
Stockholders' equity:
Series A convertible preferred stock, $0.01 par
value--authorized: 2,222,223 shares; issued and
outstanding: 2,222,223 shares....................... 22 22 $ --
Common stock, $0.001 par value--authorized: 25,000,000
shares; issued and outstanding: 4,704,729 shares in
1995 and 4,846,120 shares in 1996................... 5 5 7
Class B convertible nonvoting common stock, $0.001 par
value--authorized: 1,500,000 shares; issued and
outstanding: 1,467,825 shares in 1995 and 1,307,442
shares in 1996...................................... 1 1 --
Additional paid-in capital............................. 39,285 39,393 39,414
Accumulated deficit.................................... (34,131) (31,534) (31,534)
Cumulative translation adjustment...................... (33) (499) (499)
-------- -------- --------
Total stockholders' equity........................ 5,149 7,388 $ 7,388
-------- -------- --------
Total liabilities and stockholders' equity..... $ 34,152 $ 41,265
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 69
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1995 1996
------- -------- -------
<S> <C> <C> <C>
Revenue:
Software licenses.......................................... $ 7,920 $ 14,482 $19,739
Service and other.......................................... 6,110 11,165 21,344
Hardware................................................... 1,342 4,473 6,178
------- -------- -------
Total revenue...................................... 15,372 30,120 47,261
Cost of revenue:
Software licenses.......................................... 1,743 2,709 2,517
Hardware................................................... 1,145 3,900 5,242
------- -------- -------
Total cost of revenue.............................. 2,888 6,609 7,759
------- -------- -------
Gross profit....................................... 12,484 23,511 39,502
Operating expenses:
Sales, marketing and customer support...................... 7,536 12,003 17,359
Research and development................................... 5,552 7,603 12,834
General and administrative................................. 2,095 3,383 5,609
Acquired in-process research and development............... -- 6,500 --
Restructuring charge....................................... -- 4,519 --
Impairment of capitalized software......................... -- 1,142 --
------- -------- -------
Total operating expenses........................... 15,183 35,150 35,802
------- -------- -------
Operating income (loss)...................................... (2,699) (11,639) 3,700
Interest and other income, net............................... 33 319 368
------- -------- -------
Income (loss) before provision for income taxes.............. (2,666) (11,320) 4,068
Provision for income taxes................................... 262 560 1,471
------- -------- -------
Net income (loss)............................................ $(2,928) $(11,880) $ 2,597
======= ======== =======
Net income (loss) per share.................................. $ (2.25) $ (4.56) $ 0.34
======= ======== =======
Weighted average shares outstanding.......................... 1,302 2,603 7,580
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 70
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
SERIES A
CONVERTIBLE CLASS B
PREFERRED CONVERTIBLE
STOCK COMMON STOCK COMMON STOCK ADDITIONAL CUMULATIVE
-------------- -------------- -------------- PAID-IN ACCUMULATED TRANSLATION
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT TOTAL
------ ------ ------ ------ ------ ------ ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993......... -- $-- 1,567 $2 -- -$- $ 22,792 $ (19,323) $ (90) $ 3,381
Sales of Series A Convertible
Stock............................ 2,222 22 5,978 6,000
Stock issued in connection with
purchase of company.............. 223 -- 334 334
Exercise of stock options and
warrants......................... 3 -- 17 17
Translation adjustment............. 8 8
Net Loss........................... (2,928) (2,928)
----- --- ----- --- --- --- ------- -------- ----- --------
Balance, December 31, 1994......... 2,222 22 1,793 2 -- -- 29,121 (22,251) (82) 6,812
Stock issued in connection with
purchase of company.............. 2,888 3 1,468 1 10,129 10,133
Exercise of stock options and
warrants......................... 23 -- 35 35
Translation adjustment............. 49 49
Net Loss........................... (11,880) (11,880)
----- --- ----- --- --- --- ------- -------- ----- --------
Balance, December 31, 1995......... 2,222 22 4,704 5 1,468 1 39,285 (34,131) (33) 5,149
Exercise of stock options and
warrants......................... 62 -- 108 108
Conversion of Class B Common
Stock............................ 80 -- (161) -- -- --
Translation adjustment............. (466) (466)
Net Income......................... 2,597 2,597
----- --- ----- --- --- --- ------- -------- ----- --------
Balance, December 31, 1996......... 2,222 $ 22 4,846 $5 1,307 $1 $ 39,393 $ (31,534) $ (499) $ 7,388
===== === ===== === === === ======= ======== ===== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 71
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1994 1995 1996
------- -------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).......................................................... $(2,928) $(11,880) $ 2,597
Adjustments to reconcile net income (loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization............................................ 1,692 2,250 2,531
Charge for acquired in-process research and development.................. -- 6,500 --
Impairment of capitalized software....................................... -- 1,142 --
Equity in undistributed earnings of joint venture........................ -- (67) (55)
Changes in current assets and liabilities, net of businesses acquired:
Accounts receivable.................................................... 1,134 (5,936) (1,347)
Other current assets................................................... 79 717 (1,912)
Accounts payable....................................................... (804) 244 (840)
Accrued liabilities.................................................... (51) 4,146 2,941
Deferred revenue....................................................... (68) 4,693 3,859
Other assets........................................................... 80 (380) (29)
------- -------- -------
Net cash provided by (used in) operating activities................. (866) 1,429 7,745
------- -------- -------
Cash flows from investing activities:
Purchase of property and equipment, net.................................... (213) (319) (756)
Increase in capitalized software development costs......................... (1,059) (2,210) (1,520)
Cash proceeds from acquisition............................................. -- 6,262 --
------- -------- -------
Net cash provided by (used in) investing activities................. (1,272) 3,733 (2,276)
------- -------- -------
Cash flows from financing activities:
Principal payments under capital lease obligations......................... (191) (180) (373)
Proceeds from exercise of stock options and warrants....................... 17 35 108
Proceeds from sale of preferred stock...................................... 6,000 -- --
Proceeds from (payments on) note payable................................... 1,000 (400) (600)
Net repayments under lines of credit....................................... (450) (150) --
------- -------- -------
Net cash provided by (used in) financing activities................. 6,376 (695) (865)
------- -------- -------
Exchange rate effects on cash................................................ 8 49 (466)
------- -------- -------
Net increase in cash......................................................... 4,246 4,516 4,138
Cash and cash equivalents, beginning of year................................. 1,609 5,855 10,371
------- -------- -------
Cash and cash equivalents, end of year....................................... $ 5,855 $ 10,371 $14,509
======= ======== =======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest................................................................. $ 74 $ 61 $ 44
======= ======== =======
Income taxes............................................................. $ 274 $ 531 $ 817
======= ======== =======
Supplemental disclosure of noncash investing and financing activities:
Stock issued in connection with acquisitions............................... $ 334 $ 10,133 --
======= ======== =======
Fixed assets acquired under capital leases................................. $ -- $ 139 $ 34
======= ======== =======
Realization of the benefit of certain Biosym net operating loss
carryforwards through the reduction of goodwill by approximately $983,000
and capitalized software by approximately $617,000....................... $ -- $ -- $ 1,600
======= ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 72
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY
Molecular Simulations Incorporated and Subsidiaries (the "Company") was
incorporated in June 1984 to develop and market integrated molecular modeling
systems and technical information systems. The Company designs, develops,
markets and supports computer software products for the pharmaceutical,
biotechnology, chemical, petrochemical and materials industries and also offers
consulting, training and maintenance services in support of its customers' use
of its software products. Distribution of Company products is primarily through
a direct sales force and distributors.
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements reflect the application
of certain significant accounting policies as described in this note and
elsewhere in the accompanying notes to consolidated financial statements.
Unaudited Pro Forma Presentation
The unaudited pro forma capitalization as of December 31, 1996 reflects the
automatic conversion of all outstanding shares of Preferred stock and Class B
nonvoting common stock into an aggregate of 1,764,832 shares of common stock,
which will occur upon the closing of the Company's proposed initial public
offering.
Principles of Consolidation
The consolidated financial statements include the accounts of Molecular
Simulations Incorporated and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The Company has a
50 percent ownership interest in a joint venture, which is accounted for under
the equity method.
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue from licenses of computer software provided
that all of the following are achieved: a noncancelable license agreement has
been signed, the software and related documentation has been shipped, there are
no material uncertainties regarding customer acceptance, collection of the
resulting receivable is deemed probable and no other significant obligations by
the Company exist. Prepaid post contract support and maintenance ("PCS") revenue
that is bundled with software license agreements is unbundled using objective,
vendor specific evidence, deferred, and recognized as revenue over the related
contract period, which is generally one year. PCS services and other revenue
generated from professional consulting, training and software customization sold
separately from license agreements are recognized as the services are performed.
Prepayments of PCS and other such services by customers are deferred and
recognized as revenue over the applicable service period.
Under certain circumstances, the Company will sell hardware to a licensee
that is used to run the Company's licensed software products. In these
instances, the Company typically orders the hardware
F-7
<PAGE> 73
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
from an unrelated vendor with instructions to ship the product directly to the
licensee. The Company records revenue upon shipment of the hardware to the
licensee by the vendor. The Company is liable for payment to the hardware
vendor.
Cost of license revenue consists primarily of royalty expense for software
licensed to the Company; amortization of capitalized software development costs;
and product media, documentation, packaging and freight expenses. Cost of
service and other revenue is immaterial and such cost is included in cost of
license revenue in the accompanying statements of operations. Service personnel
costs are included in sales, marketing and customer support expenses.
The Company earns revenue under product development and consortia
agreements with various parties. A consortium agreement is a product development
agreement wherein several unrelated parties jointly enter into a single product
development agreement with the Company. The Company's product development and
consortia agreements are generally three years in length, call for a stipulated
fee to be paid to the Company in annual installments and contain progressive
milestones. The Company is not required to deliver specified continuing products
under the agreements and related fees earned by the Company are non-refundable.
The Company recognizes revenue under such agreements on a straight line basis
over the life of the agreement.
If the Company is successful in developing products under the product
development and consortia agreements described above, a non transferable license
is typically awarded to the customer or consortia members who funded the related
research and development efforts. Such licenses are generally ten years in
length. For the years ended December 31, 1995 and 1996, the Company recognized
approximately $1,641,000 and $4,777,000, respectively, under such product
development and consortia agreements, which is included in service and other
revenue. There was no consortia revenue earned in 1994.
Concentrations of Risk
The Company purchases substantially all hardware products it sells (see
above) to its licensees from a single vendor. Management believes that other
vendors could be identified who could provide the Company and its licensees with
similar hardware products at comparable terms.
Financial instruments that potentially subject the Company to
concentrations of risk consist primarily of cash equivalents. The Company
licenses its products primarily to corporations, including value added resellers
and academic institutions, serving a wide variety of domestic and foreign
markets. The Company extends credit to its licensees based on its evaluation of
the customer's financial condition, generally without requiring a deposit or
collateral. Exposure to losses on receivables is principally dependent on each
customer's financial condition. The Company monitors its exposure for credit
losses and maintains allowances for estimated losses.
International sales currently account for approximately 54% of the
Company's revenues, 28% of which is derived from the Company's foreign
subsidiaries as disclosed in note 13. The Company expects that international
sales will continue to account for a significant portion of the Company's
revenue in future periods. The Company's international sales are generally
denominated in foreign currencies. Losses on the conversion of
foreign-denominated receivables into U.S. dollars could have a material adverse
effect on the Company's financial statements.
See "Risk Factors" in the accompanying prospectus for a more complete
discussion of risks faced by the Company.
F-8
<PAGE> 74
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Disclosures about Fair Value of Financial Instruments
The Financial Accounting Standards Board has issued Statement No. 107 (SFAS
No. 107), "Disclosures about Fair Value of Financial Instruments". This
statement requires companies to disclose the fair value of financial
instruments, including both assets and liabilities recognized and not
recognized, in its consolidated financial statements. It is management's opinion
that the carrying amounts reflected in the accompanying consolidated financial
statements for such instruments are reasonably estimated at their related fair
values. The adoption of SFAS No. 107 in 1995 did not have a significant impact
on the Company's consolidated financial statements.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid instruments with a
maturity of three months or less when purchased.
Property and Equipment
Property and equipment are recorded at cost. The Company provides for
depreciation and amortization using the straight-line method by charges to
operations in amounts estimated to allocate the costs of the property and
equipment over their estimated useful lives. The estimated useful lives are as
follows:
<TABLE>
<CAPTION>
ASSET CLASSIFICATION USEFUL LIFE
----------------------------------------------------- ---------------
<S> <C>
Equipment............................................ 3-5 years
Leasehold improvements............................... Life of Lease
Purchased Software................................... 3 years
Equipment under capital leases....................... Life of lease
</TABLE>
Maintenance and repairs are charged to operations as incurred. When assets
are sold or otherwise disposed of, the cost and related accumulated depreciation
are removed from the accounts and any gain or loss is included in the results of
operations.
Intangibles
Goodwill
The excess of the cost over the fair value of identifiable tangible and
intangible assets is amortized using the straight-line method over five years.
The Company evaluates the realizability of goodwill based on estimated cash
flows to be generated from such acquired assets as compared to the original
estimates used in measuring the assets. To the extent impairment is identified,
the Company recognizes a write-down. To date, the Company has not identified any
such impairments.
Software Development Costs
Product development costs related to the Company's software products are
expensed as incurred until technological feasibility has been established.
Thereafter, the Company capitalizes computer software development costs in
accordance with Statement of Financial Accounting Standards No. 86 (SFAS No.
86), "Accounting for the Cost of Computer Software to be Sold, Leased or
Otherwise Marketed". The Company amortizes such costs over the estimated product
life, not to exceed three years from the date on which the product is available
for general release. The Company capitalized approximately $2,210,000 and
$1,520,000 in 1995 and 1996, respectively. Included in the accompanying
consolidated statements of operations for 1994, 1995 and 1996, respectively, is
approximately $690,000, $1,123,000 and $902,000 of amortization expense related
to capitalized software.
F-9
<PAGE> 75
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company periodically re-evaluates the original assumptions and
rationale utilized in the establishment of the carrying value and estimated life
of its assets. The criteria used for these evaluations include management's
estimates of the assets continuing ability to generate income from operations
and positive cash flow in future periods, as well as the strategic significance
of its intangible assets to the Company's business objectives. During the year
ended December 31, 1995, the Company expensed approximately $1,142,000 of
previously capitalized software development costs in order to recognize an
impairment of this asset as determined by management.
Foreign Currency Translation
The Company translates certain of its accounts and the financial statements
of its foreign subsidiaries in accordance with Statement of Financial Accounting
Standards No. 52 (SFAS No. 52), "Foreign Currency Translation". In translating
the accounts of the foreign subsidiaries into U.S. dollars, assets and
liabilities are translated at the rate of exchange in effect at year-end, while
stockholders' equity is translated at historical rates. Resulting translation
adjustments are reflected as a separate component of stockholders' equity as a
cumulative translation adjustment. Revenue and expense accounts are translated
using the weighted average exchange rate in effect during the year. Transaction
gains and losses are reflected in the results of operations. The Company does
not enter into foreign exchange transactions to hedge its balance sheet
exposures and intercompany balances against movements in foreign exchange rates.
Computation of Net Income (Loss) Per Share
Net income (loss) per share is computed using the weighted average number
of common and common equivalent shares outstanding during the period. Common
equivalent shares are included in the per share calculations where the effect of
their inclusion would be dilutive. Dilutive common equivalent shares consist of
the incremental common shares issuable upon conversion of convertible preferred
stock and convertible common stock using the "if converted" method and
incremental shares issuable upon the exercise of stock options and warrants
using the modified treasury stock method in all periods. Pursuant to Securities
and Exchange Commission Staff Accounting Bulletin No. 83, common and common
equivalent shares issued by the Company during the twelve months preceding the
initial filing of the Company's initial public offering, using the treasury
stock method and the midpoint of the initial filing range, have been included in
the calculation of net income (loss) per share for all periods presented.
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income
Taxes", which requires the use of the liability method of accounting for
deferred income taxes. Under this method, deferred income taxes are recorded to
reflect the tax consequences on future years of differences between the tax
bases of assets and liabilities and their financial reporting amounts at each
year-end. If it is more likely than not that some portion or all of the deferred
tax asset will not be realized, a valuation allowance is recognized.
Recent Accounting Pronouncements
The Company implemented early adoption of Statement of Financial Accounting
Standards No. 121 (SFAS No. 121), "Accounting for the Impairment of Long Lived
Assets" effective January 1, 1995. The adoption of this statement had no
material effect on the Company's consolidated financial statements.
F-10
<PAGE> 76
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In November 1995, the Financial Accounting Standards Board issued SFAS No.
123 (SFAS No. 123), "Accounting for Stock-Based Compensation", which establishes
a fair-value-based method of accounting for stock compensation plans with
employees and others. As permitted, the Company has not adopted the recognition
and measurement aspects of SFAS No. 123, but has adopted the disclosure
requirements of SFAS No. 123 effective January 1, 1996. See note 9.
In June 1996, the American Institute of Certified Public Accountants issued
"Proposed Statement of Position: Software Revenue Recognition", which if
adopted, will be effective for years beginning after December 31, 1996. The
Company has reviewed the proposed statement of position and believes its
adoption will not have a material effect on the Company's results of operations
or financial position.
3. ACQUISITIONS
On August 15, 1995, the Company acquired 100 percent of the outstanding
shares of common stock of Biosym Technologies, Inc. (Biosym) from Corning
Incorporated (See note 9), Biosym's sole shareholder, in exchange for 50 percent
of the Company's fully diluted equity, consisting of 2,888,279 shares of common
stock and 1,467,825 shares of non-voting common stock valued at approximately
$10,133,000. The acquisition was accounted for as a purchase and accordingly,
the results of operations of Biosym have been included in the consolidated
financial statements of the Company since August 16, 1995. The purchase price
has been allocated to the net assets acquired based on an independent appraisal
of, among other things, the acquired capitalized software and the acquired in-
process research and development. A summary of the net assets acquired, after
allocation of purchase price, at August 15, 1995 is as follows (in thousands):
<TABLE>
<S> <C>
Tangible assets:
Current assets (including cash of approximately $6,262)......... $ 8,585
Property and equipment.......................................... 2,119
Other assets.................................................... 3,309
--------
14,013
Intangible assets:
Capitalized software............................................ 1,000
Acquired in-process research and development.................... 6,500
Goodwill........................................................ 1,300
--------
8,800
--------
Total assets acquired................................... 22,813
Liabilities assumed............................................... (12,680)
--------
Net assets acquired..................................... $ 10,133
========
</TABLE>
Acquired in-process research and development represents the present value
of the estimated cash flows expected to be generated by the Biosym related
technology, which at the acquisition date had not yet reached the point of
technological feasibility and does not have an alternative future use.
Therefore, in accordance with generally accepted accounting principles, acquired
in-process research and development of approximately $6,500,000 was written off
and charged to operations during the year ended December 31, 1995.
During 1996 the Company realized the tax benefit of certain Biosym net
operating loss carryforwards and concurrently recorded a $1,600,000 reduction in
goodwill and capitalized software. (See note 6).
F-11
<PAGE> 77
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
On May 27, 1994, the Company completed the purchase of BioCAD Corporation
("BioCAD") in a transaction accounted for as a purchase. The Company issued
222,764 shares of common stock valued at $334,147 as consideration for the
purchase. BioCAD's operations and the related net assets acquired were not
material.
The accompanying consolidated statements of operations reflect the
operating results of Biosym and BioCAD since the effective dates of the
respective acquisitions. Pro forma unaudited consolidated operating results of
the Company and Biosym for the years ended December 31, 1994 and 1995, are
summarized below (in thousands):
<TABLE>
<CAPTION>
1994 1995
-------- --------
(UNAUDITED)
<S> <C> <C>
Revenue.................................................. $ 48,767 $ 46,758
Operating loss........................................... (6,746) (15,234)
Net loss................................................. (8,003) (16,398)
</TABLE>
These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments such as the expensing of the
acquired in-process research and development costs and additional goodwill
amortization. They do not purport to be indicative of the results of operations
that actually would have resulted had the acquisitions been in effect on January
1, 1994 and 1995, or of future results of operations of the consolidated
entities.
4. RESTRUCTURING CHARGE
During 1995, the Company commenced a formal plan of restructuring. The plan
was initiated primarily as a result of the Company's acquisition of Biosym which
resulted in, among other things, excess facilities and personnel, duplicate
projects in process and duplicate systems and processes worldwide. A summary of
the restructuring charge is as follows (in thousands):
<TABLE>
<S> <C>
Reductions in personnel............................................. $1,287
Facility consolidation.............................................. 2,387
Elimination of duplicate products and systems....................... 337
Other............................................................... 508
------
$4,519
======
</TABLE>
At December 31, 1995, $2,532,000 of accrued restructuring costs were
included in accrued liabilities. During 1996 substantially all activities
related to the restructuring were completed. There were no material variations
from the amounts originally accrued.
5. BALANCE SHEET COMPONENTS
Following is a summary of property and equipment at December 31, 1995 and
1996 (in thousands):
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Equipment.............................................. $ 3,402 $ 4,006
Purchased software..................................... 254 227
Equipment under capital leases......................... 239 278
Leasehold improvements................................. 78 257
------- -------
3,973 4,768
Less: accumulated depreciation and amortization........ (1,779) (3,257)
------- -------
$ 2,194 $ 1,511
======= =======
</TABLE>
F-12
<PAGE> 78
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Following is a summary of accrued liabilities at December 31, 1995 and 1996
(in thousands):
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Payroll and other compensation........................... $ 3,394 $ 5,310
Commissions.............................................. 1,528 1,933
Accrued restructuring.................................... 2,532 --
Royalties................................................ 529 624
Income and other accrued taxes........................... 312 2,013
Other.................................................... 2,067 3,050
------ -------
$10,362 $12,930
====== =======
</TABLE>
6. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1995 1996
---- ---- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current tax expense
Federal................................................... $-- $-- $ 47
State..................................................... -- -- 59
Foreign................................................... 262 560 1,365
---- ---- ------
$262 $560 $1,471
==== ==== ======
</TABLE>
The provision for income taxes differs from the amount computed by applying
the federal statutory rate to the Company's income before taxes as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1994 1995 1996
------ ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Tax provision (benefit) at statutory rate.............. $ (906) $(3,849) $ 1,383
State tax, net of federal benefit...................... (154) (653) 244
Increase in valuation allowance........................ 1,060 4,502 --
Foreign taxes provided at rates other than the U.S.
statutory rate....................................... -- -- 250
Foreign taxes other than income........................ 262 560 1,111
Tax benefit of utilization of U.S. and foreign
operating losses..................................... -- -- (1,635)
Other.................................................. -- -- 118
----- ------- ------
Provision for income taxes............................. $ 262 $ 560 $ 1,471
===== ======= ======
</TABLE>
F-13
<PAGE> 79
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of deferred tax assets (liabilities) are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1994 1995 1996
------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards................... $ 6,590 $ 10,264 $ 5,413
Research and development and other tax credits..... 1,510 2,062 2,096
Accrued liabilities................................ 339 2,358 2,808
Other.............................................. 124 164 --
------ -------- -------
8,563 14,848 10,317
Less:
Deferred tax liabilities:
Depreciation and amortization...................... (1,025) (1,498) (1,644)
------ -------- -------
Net asset before valuation allowance............... 7,538 13,350 8,673
Valuation allowance................................ (7,538) (13,350) (7,073)
------ -------- -------
Net deferred tax asset............................. $ -- $ -- $ 1,600
====== ======== =======
</TABLE>
As of December 31, 1996, the Company has net operating loss carryforwards
of approximately $17,674,000 and $6,676,000 for federal and state tax reporting
purposes, respectively. The Company also has federal research and development
credit carryforwards of approximately $1,750,000 at December 31, 1996. The
federal net operating losses and credits expire through 2011. In addition,
certain foreign subsidiaries have net operating loss carryforwards amounting to
approximately $3,400,000 expiring at various dates.
The Federal Tax Code contains provisions that may limit the federal net
operating loss carryforwards available to be used in any given year if a
significant change in ownership interests, as defined, occurs. Such a change in
ownership occurred in 1995. As a result, federal net operating losses incurred
prior to August 15, 1995, which amount to approximately $10,578,000, are limited
in their availability to offset any future federal taxable income. The Company
is subject to a 10% withholding tax on software revenue earned in Japan. The
withholding tax expense is reported as current foreign taxes.
Realization of certain components of the net deferred tax asset is
dependent on the Company generating sufficient taxable income prior to
expiration of net operating loss and credit carryforwards. Although realization
is not assured, management believes that it is more likely than not that some or
all of the net deferred tax asset will be realized. The amount of the net
deferred tax asset considered realizable, however, could be reduced in the near
term if estimates of future taxable income during the carryforward period are
changed. Also, as noted above, under Federal tax law, certain potential changes
in ownership of the Company may limit annual future utilization of these
carryforwards. Accordingly, a valuation allowance on the net deferred tax asset
has been recorded as of December 31, 1994, 1995 and 1996. The net deferred tax
asset of $1,600,000 represents the estimated benefit from net operating loss
carryforwards, which management currently believes the Company will, more likely
than not, realize in the future. The net deferred tax asset is included in
prepaid expenses and other current assets in the accompanying consolidated
balance sheet as of December 31, 1996. The net operating loss benefit relates
principally to carryforward losses acquired in the Biosym acquisition.
Accordingly, goodwill and other intangible assets acquired in the Biosym
transaction have been reduced concurrent with recognizing the aforementioned tax
asset.
F-14
<PAGE> 80
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. LINE OF CREDIT
The Company had a $1,200,000 working capital line of credit that expired in
February 1996. Borrowings under the line of credit bore interest at the bank's
prime rate plus 3/4% and were collateralized by substantially all of the
Company's assets. No amounts were outstanding under the line of credit at
December 31, 1995 or 1996. The Company is negotiating a line of credit with a
commercial bank under which it would be able to borrow up to $2 million at the
bank's prime rate.
8. NOTE PAYABLE
In 1993, the Company entered into a software development agreement (the
Agreement) with Teijin Limited ("Teijin"--see Note 11) whereby Teijin agreed to
fund the Company's development of new products through loans, up to an aggregate
of $3,000,000. Upon the execution of this agreement, $2,000,000 was received
from Teijin. The remaining $1,000,000 was received in 1994 as the Company began
shipment of a specified product.
In connection with this loan, the Company is obligated to repay the debt at
the rate of 4% of the Company's net software margin, as defined in the
Agreement. The Agreement contains the following cumulative minimum repayments,
to be paid on April 1, of the respective periods:
<TABLE>
<CAPTION>
MINIMUM
CUMULATIVE
YEAR REPAYMENTS
------------------------------------------------- ----------
<S> <C>
1995............................................. $ 400,000
1996............................................. 1,000,000
1997............................................. 1,600,000
1998............................................. 2,300,000
1999............................................. 3,000,000
</TABLE>
9. STOCKHOLDERS' EQUITY
Convertible Preferred Stock
In 1994, the Board of Directors authorized 2,222,223 shares and the Company
issued 2,222,223 shares of Series A, $.01 par value, convertible preferred stock
(Series A preferred stock). The Series A preferred stockholders have the
following rights and privileges:
Voting
The Series A preferred stockholders are entitled to vote on an as-converted
basis with common stockholders as one class.
Dividends
The Series A preferred stockholders are entitled to dividends, when and if
declared, at the same rate as dividends are paid with respect to the common
stock.
Liquidation
In the event of a liquidation, dissolution or winding up of the Company,
the Series A preferred stockholders have a liquidation preference over common
stockholders to be paid in an amount equal to the greater of (i) $2.70 per
share, subject to adjustment, or (ii) such amount per share as would be payable
had such shares been converted into common stock.
F-15
<PAGE> 81
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Conversion
Each two shares of Series A preferred stock is convertible at the option of
the holder into one share of common stock. The Series A preferred stock,
automatically converts on the same two shares of preferred stock for one share
of common stock upon the closing of an initial public offering of the Company's
common stock in which the Company receives aggregate gross proceeds of at least
$10,000,000.
The Company is required at all times to reserve and keep available shares
of its authorized common stock, solely for the purpose of issuance upon the
conversion of Series A preferred stock, in the event that the holders of the
convertible preferred stock exercise their right of conversion.
Nonvoting Common Stock
In 1995, the Board of Directors authorized 1,500,000 shares of Class B,
$.001 par value, nonvoting common stock (Class B Common stock) and concurrently
issued 1,467,825 shares of this stock. The Class B Common stockholders have the
following rights and privileges:
General
The dividend and liquidation rights of the holders of the Class B Common
stock are subject to and qualified by the rights of the holders of the Series A
preferred stock.
Voting
The Class B Common stock shall not be entitled to vote in any
circumstances, except as required by applicable law.
Dividends
No dividends may be declared or paid on the Class B Common stock.
Liquidation
In the event of dissolution or liquidation of the Company, whether
voluntary or involuntary, holders of common stock and Class B Common stock will
be entitled to receive all assets of the Company available for distribution to
its stockholders, subject to any preferential rights of any then outstanding
preferred stock. In any such dissolution or liquidation of the Company, the
assets available for distribution to the holders of common stock and Class B
Common stock shall be distributed in equal amounts per share and without
preference or priority to either the common stock or the Class B Common stock.
Conversion
Subject to certain terms and conditions, the holder of any share or shares
of Class B Common stock shall have the right, at its option at any time after a
Conversion Event to convert two shares of Class B Common stock into one share of
common stock. Conversion events include 1) the issuance of additional shares of
common stock or shares of convertible preferred into common stock to parties
other than Corning Incorporated and its transferees, such that after such
issuance the total number of shares of common stock and shares of convertible
preferred into common stock held by Corning Incorporated and its transferees are
equal to or less than forty percent of the total number of then issued and
outstanding shares of common stock and shares of convertible preferred into
common stock or 2) the consummation of any acquisition of the Company or
substantially all of its assets by a third
F-16
<PAGE> 82
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
party or a merger with a third party pursuant to which (i) the Company is not
the surviving corporation and (ii) the shares of capital stock of the Company
are exchanged or converted into less than a majority of the surviving
corporation's shares of capital stock.
Two shares of nonvoting common stock are also automatically converted into
one share of common stock upon the closing of an underwritten initial public
offering of the Company's common stock in which the Company receives aggregate
gross proceeds of at least $10,000,000.
Common Stock
Common stock consists of 25,000,000, $.001 par value, authorized voting
shares.
Registration Rights
Under the terms of an investor rights agreement, certain of the Company's
common stockholders may require the Company to file a registration statement
under the Securities Act with respect to their shares. Generally, the Company is
required to bear all registration and selling expenses incurred in connection
with any such registrations. Such registration rights terminate five years from
the date of the initial public offering.
Stock Plans
The Board of Directors has established the Incentive Stock Option Plan, the
Supplemental Stock Option Plan and The 1996 Stock Plan. The Company has reserved
1,700,000 shares of common stock for issuance under the combined stock plans.
Incentive Stock Option Plan
Under the Incentive Stock Option Plan, options may be granted to employees
at a price not less than the fair market value of the stock at the date of
grant. Options under this plan generally vest at 25 percent per year over a four
year period. Options typically expire 10 years after issuance.
Supplemental Stock Option Plan
Under the Supplemental Stock Option Plan, non qualified options may be
granted at the discretion of the Board of Directors to non employees, employees,
directors and consultants at not less than 85% of the fair market value of the
stock at the date of grant. Options under this plan generally vest at 25 percent
per year over a four year period. Options typically expire 10 years after
issuance.
The 1996 Stock Plan
In May 1996, the Company implemented a stock option plan for employees and
others, to attract, retain and reward key employees and providers to the
Company, by offering such persons stock options of the Company. The plan
provides for the issuance of qualified and non qualified stock options. Under
this plan, options are granted at an exercise price equal to the fair value of
the Company's common stock, have 10 year terms, and typically vest at 25 percent
per year over a four year period.
1996 Equity Incentive Plan
In November 1996 the Board approved the 1996 Equity Incentive Plan, which
will serve as the successor to the Company's Incentive Stock Option Plan,
Supplemental Stock Option Plan and the 1996 Stock Plan (the "Prior Plans"). The
1996 Equity Incentive Plan will become effective upon the
F-17
<PAGE> 83
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
closing of the initial public offering and will serve as the successor to the
Prior Plans. No further option grants will be made under the Prior Plans.
Options granted under the Prior Plans will remain outstanding in accordance with
their terms, but no further options will be granted under the Prior Plans after
the offering. The Company has reserved 300,000 shares of common stock for
issuance under the 1996 Equity Incentive Plan.
Stock Option Plan Activity
The following tables summarize stock option plan activity for the years
ended December 31, 1994, 1995 and 1996 under the combined stock plans:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding, December 31, 1993............................. 484,158 $ 1.50
Granted.................................................. 127,839 1.50
Exercised................................................ (5,055) 1.50
Terminated............................................... (57,422) 1.50
--------- -----
Outstanding, December 31, 1994............................. 549,520 1.50
Granted.................................................. 1,126,948 2.00
Exercised................................................ (22,409) 1.50
Terminated............................................... (57,742) 1.52
--------- -----
Outstanding, December 31, 1995............................. 1,596,317 1.82
Granted.................................................. 74,562 4.02
Exercised................................................ (61,512) 1.58
Terminated............................................... (41,455) 1.60
--------- -----
Outstanding, December 31, 1996............................. 1,567,912 $ 1.93
========= =====
Exercisable, December 31, 1996............................. 632,551 $ 1.70
========= =====
</TABLE>
As permitted, the Company has adopted the disclosure only provisions of
SFAS No. 123 effective January 1, 1996. Accordingly, no compensation expense has
been recognized for the stock option plans. Had compensation expense for the
Company's stock option plans been determined based on the fair value at date of
grant for 1995 and 1996 awards consistent with the provisions of SFAS No. 123,
the Company's net income and earnings per share would have been reduced to the
pro forma amounts indicated below (in thousands, except per share amounts):
<TABLE>
<CAPTION>
1995 1996
-------- ------
<S> <C> <C>
Net income (loss)--as reported................................... $(11,880) $2,597
Net income (loss)--pro forma..................................... $(11,924) $2,400
Earnings per share (loss)--as reported........................... $ (4.56) $ 0.34
Earnings per share (loss)--pro forma............................. $ (4.58) $ 0.32
</TABLE>
Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years. The fair
value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1996: risk free interest rate of 7.00%, expected
option life of 6 years, expected volatility of zero percent and a dividend rate
of zero. The weighted average fair value of options granted in 1995 and 1996 was
$0.68 and $1.64, respectively.
F-18
<PAGE> 84
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Warrants
In 1992, the Company issued a warrant to purchase 12,245 shares of its
common stock at an exercise price of $32.70 per share. The warrant expires on
the earlier of June 1997, the completion of an initial public offering with
gross proceeds in excess of $5,000,000, or the sale of the Company, as defined.
10. COMMITMENTS AND CONTINGENCIES
Leasing Agreements
The Company has both operating and capital lease commitments for certain
facilities and equipment which expire through July 2012.
The future commitments under these leases as of December 31, 1996 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
OPERATING
LEASES
---------
<S> <C>
Year Ending December 31,
1997............................................ $ 1,402
1998............................................ 1,298
1999............................................ 847
2000............................................ 333
2001............................................ 152
Thereafter...................................... 890
------
Total minimum lease payments...................... $ 4,922
======
</TABLE>
Capital lease obligations amounted to $526,000 and $187,000 in total at
December 31, 1995 and 1996, respectively. Rent expense was approximately
$641,000, 855,000 and $1,063,000 in 1994, 1995 and 1996, respectively. The
entire balance of capital lease obligations will mature during 1997.
Royalties
The Company pays royalties to various partners for the exclusive, worldwide
licenses to enhance and market certain software developed at universities,
corporations and other institutions. During 1997, the Company is required to pay
minimum royalties of approximately $361,000. The Company paid royalties under
these agreements of approximately $369,000, $281,000 and $606,000 in 1994, 1995
and 1996, respectively. Approximately $462,000, 647,000 and $701,000 of royalty
expense related to royalty agreements is included in license cost of revenue for
the year ended December 31, 1994, 1995 and 1996, respectively.
Litigation
In the ordinary course of business, the Company is subject to claims and,
from time to time, is named in various legal proceedings. In the opinion of
management, the amount of ultimate liability, if any, with respect to any
pending actions will not materially affect the financial position or results of
operations of the Company.
11. JOINT VENTURE AGREEMENT
In February 1992, the Company formed a joint venture with Teijin, with each
company owning 50% of a Japanese company, Teijin Molecular Simulations
Incorporated (TMSI), formed for the
F-19
<PAGE> 85
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
purpose of marketing, distributing, licensing, selling and supporting the
Company's products in Japan. Each company invested 100,000,000 Japanese yen
($750,000 at February 1992) to form TMSI. Translation gains or losses related to
the Company's investment in TMSI have been immaterial for all periods presented.
The Company had product sales to TMSI of approximately $1,484,000, $2,111,000
and $5,924,000 in 1994, 1995 and 1996, respectively.
This investment is being accounted for by the Company using the equity
method of accounting. Condensed financial information of TMSI as of and for the
year ended September 30, is as follows (in thousands):
<TABLE>
<CAPTION>
1995 1996
------ ------
(UNAUDITED)
<S> <C> <C>
Current assets............................................. $4,119 $5,425
Non-current assets......................................... 162 642
Current liabilities........................................ 1,975 4,028
Stockholders' equity....................................... 2,307 2,039
Revenue.................................................... 4,422 6,490
Operating income........................................... 270 267
Net income................................................. 134 110
</TABLE>
12. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) Plan (the Plan) covering substantially all
employees meeting minimum service requirements. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The
Plan allows for the Company to make discretionary matching contributions as
determined by a committee of the Board of Directors. No discretionary
contributions were provided in 1994 or 1995 and the Company provided for a
$250,000 contribution in 1996.
13. GEOGRAPHIC OPERATIONS
The Company operates exclusively in a single industry segment, the
molecular modeling and simulation software industry. A summary of the Company's
operations by geographic area is presented below (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------- -------- -------
<S> <C> <C> <C>
Revenues
United States...................................... $11,502 $ 22,161 $34,111
Europe............................................. 3,870 7,959 13,150
Operating profit (loss)
United States...................................... $(2,634) $(11,739) $ 884
Europe............................................. (65) 100 2,816
Identifiable assets
United States...................................... $ 9,380 $ 26,594 $26,366
Europe............................................. 5,536 7,558 14,899
</TABLE>
Operating profit (loss) is computed using net sales less operating expenses
and does not include interest, other income and income taxes. General corporate
expenses have been included in determining operating profit (loss). Revenue in
the category United States includes export sales, primarily to TMSI, the
Company's sales and distribution entity for Japan and the Asia/Pacific region.
Export sales totaled $3,818,000, $8,305,000 and $12,228,000 in 1994, 1995 and
1996, respectively.
F-20
<PAGE> 86
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. SUBSEQUENT EVENTS
Reverse Stock Split and Share Conversion
In February 1997, the Board of Directors adopted a one for two reverse
stock split of the Company's Common Stock. All share and per share data in the
accompanying financial statements have been retroactively adjusted to give
effect to the reverse stock split.
All outstanding shares of Preferred stock and Class B convertible nonvoting
common stock will automatically convert to 1,764,832 shares of common stock if
the public offering is consummated under the terms presently anticipated.
1996 Employee Stock Purchase Plan
In February 1997, the Board adopted, subject to shareholder approval, the
1996 Employee Stock Purchase Plan (the "1996 Purchase Plan"). The Company has
reserved 50,000 shares of Common stock for issuance under the 1996 Purchase
Plan. The 1996 Purchase Plan will enable eligible employees to purchase common
stock at 85% of the lower of the fair market value of the Company's common stock
on the first or last day of each purchase period.
Non-Employee Directors Stock Option Plan
In February 1997, the Board adopted, subject to shareholder approval, the
Non-Employee Directors Stock Option Plan (the "Director Plan"). The Company has
reserved 25,000 shares of common stock for issuance under the Director Plan. The
Director Plan provides an initial grant of 5,000 shares of common stock to each
new non employee director of the Company (an "outside director") upon election
to the Board and an additional option to purchase 2,500 shares of common stock
at each succeeding annual meeting. The exercise price per share of all options
granted under the Director Plan will be equal to the fair market value of the
Company's common stock on the date of grant. Options may be granted for periods
up to ten years and generally vest over four years.
F-21
<PAGE> 87
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Biosym Technologies, Inc.:
We have audited the accompanying consolidated statements of operations,
stockholders' deficit and cash flows of Biosym Technologies, Inc. (a Delaware
corporation) and subsidiaries for the year ended December 31, 1994 and the
period January 1, 1995 through August 15, 1995. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Biosym Technologies, Inc. for the year ended December 31, 1994 and for
the period January 1, 1995 through August 15, 1995, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
San Diego, California
November 14, 1995
F-22
<PAGE> 88
BIOSYM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994 AND
FOR THE PERIOD JANUARY 1, 1995 THROUGH AUGUST 15, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Revenues:
product................................................................ $19,675 $ 8,441
Contract and maintenance............................................... 13,720 8,197
------- -------
Total revenues................................................. 33,395 16,638
Cost of revenues:
Product................................................................ 13,791 5,656
Contract and maintenance............................................... 360 208
------- -------
Total cost of revenues......................................... 14,151 5,864
------- -------
Gross profit................................................... 19,244 10,774
Operating expenses:
Research and product development....................................... 10,434 6,126
Selling, general and administrative.................................... 12,603 8,318
------- -------
Total operating expenses....................................... 23,037 14,444
------- -------
Operating loss........................................................... (3,793) (3,670)
Other income (expense):
Interest expense, net.................................................. (773) (626)
Other income (expense)................................................. 90 (63)
------- -------
Net loss before provision for income taxes............................... (4,476) (4,359)
Provision for income taxes, principally foreign withholding taxes........ 345 180
------- -------
Net loss................................................................. $(4,821) $(4,539)
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-23
<PAGE> 89
BIOSYM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1994 AND
FOR THE PERIOD JANUARY 1, 1995 THROUGH AUGUST 15, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------- CUMULATIVE TOTAL
NUMBER OF NO ACCUMULATED TRANSLATION STOCKHOLDERS'
SHARES PAR VALUE DEFICIT ADJUSTMENT DEFICIT
--------- --------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993............. 1 $ 1 $ (7,612) $(13) $ (7,624)
Translation adjustment............... 13 13
Net loss............................. -- -- (4,821) -- (4,821)
- --
-------- ---- --------
Balance, December 31, 1994............. 1 $ 1 (12,433) -- (12,432)
Translation adjustment............... -- -- -- 36 36
Net loss............................. -- -- (4,539) -- (4,539)
- --
-------- ---- --------
Balance, August 15, 1995............... 1 $ 1 $ (16,972) $ 36 $ (16,935)
= == ======== ==== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-24
<PAGE> 90
BIOSYM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1994, AND
FOR THE PERIOD JANUARY 1, 1995 THROUGH AUGUST 15, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................................... $(4,821) $(4,539)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization....................................... 4,725 2,754
Changes in current assets and liabilities:
Accounts receivable............................................... 358 5,003
Prepaid expenses and other assets................................. 106 (144)
Account payable................................................... (543) (1,251)
Accrued expenses.................................................. 426 (1,061)
Deferred revenues................................................. 1,499 (627)
------ ------
Net cash provided by operating activities...................... 1,750 135
------ ------
Cash flows from investing activities:
Sale of equipment...................................................... 94 108
Cash used and capitalized in software development...................... (2,323) (1,959)
------ ------
Net cash used in investing activities.......................... (2,229) (1,851)
------ ------
Cash flows from financing activities:
Principal payments under capital lease obligation...................... (899) (313)
Increase in payable to related party................................... 1,943 3,919
------ ------
Net cash provided by financing activities...................... 1,044 3,606
------ ------
Exchange rate effects on cash............................................ (13) 36
------ ------
Net increase in cash and cash equivalents................................ 552 1,926
Cash and cash equivalents, beginning of year............................. 474 1,026
------ ------
Cash and cash equivalents, end of year................................... $ 1,026 $ 2,952
====== ======
Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest............................................................ $ 61 $ 51
====== ======
Income taxes........................................................ $ 1 $ 1
====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-25
<PAGE> 91
BIOSYM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND AUGUST 15, 1995
1. THE COMPANY
Biosym Technologies, Inc. and subsidiaries ("the Company") was incorporated
in 1984 to develop and market integrated molecular modeling systems and
technical information systems for the pharmaceutical, biotechnical and chemical
industries, as well as for academia. The Company also offers consulting,
training and maintenance services in support of its customers' use of its
software products. In addition, the Company performs research and development
under contract and licenses proprietary software products for use in the
aforementioned industries. The Company distributes its products through value
added resellers ("VARs"), distributors and a direct sales force.
2. MERGER WITH MOLECULAR SIMULATIONS INCORPORATED
On August 15, 1995, Corning Incorporated ("Corning"), the Company's sole
shareholder, exchanged 100 percent of the Company's issued and outstanding
common stock for 50 percent of Molecular Simulations Incorporated's ("MSI")
fully diluted equity, consisting primarily of 2,888,279 shares of MSI common
stock, and, 1,467,825 shares of MSI non-voting common stock. Concurrent with
this transaction, Corning contributed to the Company capital all amounts owed to
it by the Company. The accompanying consolidated financial statements of the
Company and related footnotes, have been prepared to reflect the financial
position of the Company immediately prior to the consummation of the merger with
MSI. Accordingly, the accompanying financial statements do not reflect any
accounting impact or effects of the merger.
3. SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements reflect the application
of certain significant accounting policies as described in this note and
elsewhere in the accompanying notes to consolidated financial statements.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Biosym Technologies, Inc. and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated.
Revenue Recognition
In December 1991, the American Institute of Certified Public Accountants
issued a Statement of Position on Software Revenue Recognition. This statement
provides guidance on applying generally accepted accounting principles in
recognizing revenue on software transactions. The Company's revenue recognition
policies comply with the statement in all material respects.
The Company recognizes revenue from product development contracts ratably
over the contract life. Revenue from royalties and license fees is recognized
upon shipment if they contain no significant future performance requirements.
Revenue related to agreements with customers which contain future performance
requirements is recognized in accordance with such performance requirements.
Revenue from product sales is recognized when the product is shipped.
Maintenance revenue that is bundled with the initial licensing fee is deferred
and recognized as revenue over the term of the related term of the maintenance
period, typically one year. Deferred revenue represents cash received in excess
of revenue recognized under maintenance and research and development agreements
and pre-paid licenses. Deferred revenue is recognized ratably as revenue on a
straight line basis over the term of the respective agreements.
F-26
<PAGE> 92
BIOSYM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Capitalized Software and Research and Development Costs
Product development costs related to the Company's software products are
expensed as incurred until technological feasibility has been established for
the product. Thereafter, the Company capitalizes computer software development
costs in accordance with Statement of Financial Accounting Standards No. 86
(SFAS No. 86), Accounting for the Cost of Computer Software To Be Sold, Leased
or Otherwise Marketed. The Company amortizes such costs over the lesser of the
estimated product life or three years from the date on which the product is
available for general release. Included in the accompanying statements of
operations are approximately $3,300,000 and $2,174,000 of amortization expense
for the year ended December 31, 1994 and the period January 1, 1995 through
August 15, 1995 respectively, related to capitalized software.
Depreciation and Amortization
The Company provides for depreciation and amortization using the
straight-line method by charges to operations in amounts estimated to allocate
the costs of the property and equipment over their estimated useful lives. The
estimated useful lives are as follows:
<TABLE>
<CAPTION>
ESTIMATED USEFUL
ASSETS CLASSIFICATION LIFE
--------------------------------------------- ----------------
<S> <C>
Equipment.................................... 3-5 Years
Leasehold improvements....................... Life of lease
Equipment under capital lease................ Life of lease
</TABLE>
Foreign Currency Translation
The Company translates certain of the accounts and the financial statements
of its foreign subsidiaries in accordance with Statement of Financial Accounting
Standards No. 52 (SFAS No. 52), Foreign Currency Translation. In translating the
accounts of the foreign subsidiaries into U.S. dollars, assets and liabilities
are translated at the rate of exchange in effect at year or period-end, while
stockholders' equity is translated at historical rates. Revenue and expense
accounts are translated using the weighted average exchange rate in effect
during the year. Resulting translation adjustments are reflected as a separate
component of stockholders' equity as a cumulative translation adjustment.
Transaction gains and losses are reflected in operations and are not material.
4. INCOME TAXES
The Company has adopted Statement of Financial Accounting Standards No. 109
(SFAS No. 109), Accounting for Income Taxes, which requires that the Company
follow the liability method of accounting for income taxes. At December 31, 1994
and August 15, 1995, the Company had federal net tax operating loss
carryforwards of approximately $7,437,000 available to offset future federal
taxable income, if any, and subject to the limitation discussed below. The
Company also has federal research and development credit carryforwards of
approximately $80,000 at December 31, 1994 and August 15, 1995. In addition,
certain foreign subsidiaries have net operating loss carryforwards totaling
approximately $2,000,000 and $2,700,000, at December 31, 1994 and August 15,
1995, respectively with no expiration dates.
The Federal Tax Reform Act of 1986 contains provisions that may limit the
federal net operating loss carryforwards available to be used in any given year,
including limitation in the event of significant changes in ownership interests.
Such a change in ownership occurred in 1992, when Corning acquired the Company.
As a result, the federal net operating losses incurred prior to 1992 may be
limited in their availability to offset any future federal taxable income.
F-27
<PAGE> 93
BIOSYM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company is subject to a 10% withholding tax on software revenue earned
in Japan. The withholding tax expense is reported as current foreign taxes
below.
The provision for income taxes is comprised of the following for the year
ended December 31, 1994, and for the period January 1, 1995 through August 15,
1995:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Foreign taxes--
Current.............................................. $345,043 $179,268
Deferred............................................. -- --
-------- --------
345,043 179,268
State taxes--
Current.............................................. 800 800
Deferred............................................. -- --
-------- --------
800 800
-------- --------
$345,843 $180,068
======== ========
</TABLE>
5. RELATED PARTY TRANSACTIONS:
The Company has outstanding $13,789,200 and $17,707,956 under an unsecured
note payable to Corning at December 31, 1994 and August 15, 1995, respectively.
The Company paid $0 interest related to the note during the periods January 1,
1995 through August 15, 1995, and, for the year ended December 31, 1994. The
interest rate to the Company under the note is LIBOR plus 3/8 percent, or
approximately 7% and 6% at August 15, 1995, and December 31, 1994, respectively.
As explained in Note 2, Corning contributed the payable to the Company's capital
effective August 15, 1995.
No significant purchases or sales occurred between the Company and the
Parent during the year ended December 31, 1994 or during the period January 1,
1995 through August 15, 1995.
6. COMMITMENTS AND CONTINGENCIES
(a) Leasing Agreements
The Company has both operating and capital lease commitments for certain
facilities and equipment which expire through April 2000.
The future commitments under these leases as of August 15, 1995 are
summarized as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
---------- --------
<S> <C> <C>
August 15, 1995 to December 31, 1995................. $ 242,000 $321,100
1996............................................... 645,000 203,305
1997............................................... 590,000 53,000
1998............................................... 574,000 --
1999............................................... 612,000 --
2000............................................... 155,000 --
Thereafter......................................... -- --
---------- --------
Total minimum lease payments......................... $2,818,000 577,405
==========
Less -- Amount representing interest................. 53,000
--------
Present value of minimum lease payments.............. $524,405
========
</TABLE>
F-28
<PAGE> 94
BIOSYM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Rent expense was approximately $779,000 and $641,000 for the year ended
December 31, 1994 and the period January 1, 1995 through August 15, 1995,
respectively.
(b) Royalties
The Company pays royalties to various partners for the exclusive, worldwide
license to further develop and market certain software developed at certain
universities, corporations and other institutions. At August 15, 1995, the
Company is required to pay aggregate minimum royalties of approximately $275,000
under such agreements. The Company paid royalties under these agreements of
approximately $1,182,000 and $474,000 for the year ended December 31, 1994 and
for the period January 1, 1995 through August 15, 1995, respectively.
Approximately $992,000 and $392,000 of royalty expense related to royalty
agreements is included in cost of revenues, for the year ended December 31, 1994
and for the period January 1, 1995 through August 15, 1995, respectively.
(c) Employment Agreements
The Company has employment agreements with certain officers which call for
annual aggregate remuneration of approximately $450,000, plus additional
discretionary incentive compensation.
(d) Product Development and Consortia Agreements
The Company earns research, development and licensing revenue under product
development and consortia agreements with various parties. A consortia agreement
is a product development agreement entered into by the Company, whereby several
unrelated partners entered into a single product development agreement with the
Company. The product development and consortia agreements entered into by the
Company are typically three years in length and call for a stipulated fee to be
paid to the Company in annual installments. The product development and
consortia agreements entered into by the Company typically contain progressive
milestones for the Company, as defined in the respective agreements over the
course of the agreement. However, the Company is not required to deliver
specified products under the agreements, and, fees earned by the Company are non
refundable. The Company recognizes revenue under such agreements on an straight
line basis over the life of the agreement.
If the Company is successful in developing products under the product
development and consortia agreements described above, a non-transferable license
is typically presented to the customer or consortia members which funded the
research and development efforts. Such licenses are typically ten years in
length. For the year ended December 31, 1994 and for the period January 1, 1995
through August 15, 1995, the Company earned $3,916.00 and $2,619,000,
respectively, under product development and consortia agreements.
(e) Litigation
The Company and its subsidiaries are subject to claims and from time to
time are named defendants in legal proceedings. In the opinion of management,
the amount of ultimate liability with respect to those actions will not
materially effect the financial position or results of operations of the
Company.
F-29
<PAGE> 95
These graphical representations illustrate typical
applications of MSI's materials science
products in various industrial
research and development areas
Materials
Discovery
Design
Engineering
Manufacturing
Petrochemicals
Semiconductors
Catalysis
Microelectronics
Automotive Paints and
Pigments
<PAGE> 96
- ------------------------------------------------------------
- ------------------------------------------------------------
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY SELLING STOCKHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................... 3
The Company................................. 3
Risk Factors................................ 6
Use of Proceeds............................. 15
Dividend Policy............................. 15
Capitalization.............................. 16
Dilution.................................... 17
Selected Consolidated Financial Data........ 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. 19
Business.................................... 27
Management.................................. 44
Certain Transactions........................ 53
Principal and Selling Stockholders.......... 54
Description of Capital Stock................ 56
Shares Eligible for Future Sale............. 58
Underwriting................................ 60
Legal Matters............................... 61
Experts..................................... 61
Additional Information...................... 61
Index to Consolidated Financial
Statements................................ F-1
</TABLE>
------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
2,500,000 SHARES
MSILOGO
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
HAMBRECHT & QUIST
VOLPE, WELTY & COMPANY LLC
ADAMS, HARKNESS & HILL, INC.
, 1997
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE> 97
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses payable by the Registrant in
connection with the sale of the Common Stock being registered. All the amounts
shown are estimates except for the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
Registration fee.......................................................... $ 11,330
NASD filing fee........................................................... 4,240
Nasdaq Stock Market Listing Application fee............................... 38,100
Blue sky qualification fees and expenses.................................. 5,000
Printing and engraving expenses........................................... 150,000
Legal fees and expenses................................................... 250,000
Accounting fees and expenses.............................................. 150,000
Transfer agent and registrar fees......................................... 6,000
Miscellaneous............................................................. 35,330
--------
Total........................................................... $650,000
========
</TABLE>
- ------------------------------
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its Directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act").
The Registrant's Amended and Restated Certificate of Incorporation and
Bylaws include provisions to (i) eliminate the personal liability of its
directors for monetary damages resulting from breaches of their fiduciary duty
to the extent permitted by Section 102(b)(7) of the General Corporation Law of
Delaware (the "Delaware Law") and (ii) require the Registrant to indemnify its
Directors and officers to the fullest extent permitted by Section 145 of the
Delaware Law, including circumstances in which indemnification is otherwise
discretionary. Pursuant to Section 145 of the Delaware Law, a corporation
generally has the power to indemnify its present and former directors, officers,
employees and agents against expenses incurred by them in connection with any
suit to which they are or are threatened to be made, a party by reason of their
serving in such positions so long as they acted in good faith and in a manner
they reasonably believed to be in or not opposed to, the best interests of the
corporation and with respect to any criminal action, they had no reasonable
cause to believe their conduct was unlawful. The Registrant believes that these
provisions are necessary to attract and retain qualified persons as Directors
and officers. These provisions do not eliminate the Directors' duty of care,
and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware Law. In
addition, each Director will continue to be subject to liability for breach of
the Director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for acts or omissions that the Director believes to be contrary to the best
interests of the Registrant or its stockholders, for any transaction from which
the Director derived an improper personal benefit, for acts or omissions
involving a reckless disregard for the Director's duty to the Registrant or its
stockholders when the Director was aware or should have been aware of a risk of
serious injury to the Registrant or its stockholders, for acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the Director's duty to the Registrant or its stockholders, for improper
transactions between the Director and the Registrant and for improper
distributions to stockholders and loans to Directors and officers. The provision
also does not affect a
II-1
<PAGE> 98
Director's responsibilities under any other law, such as the federal securities
law or state or federal environmental laws.
The Registrant has entered into indemnity agreements with each of its
Directors and executive officers that require the Registrant to indemnify such
persons against expenses, judgments, fines, settlements and other amounts
incurred (including expenses of a derivative action) in connection with any
proceeding, whether actual or threatened, to which any such person may be made a
party by reason of the fact that such person is or was a Director or an
executive officer of the Registrant or any of its affiliated enterprises,
provided that 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
Registrant and, with respect to any criminal proceeding, had no reasonable cause
to believe his conduct was unlawful. The indemnification agreements also set
forth certain procedures that will apply in the event of a claim for
indemnification thereunder.
At present, there is no pending litigation or proceeding involving a
Director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or Director.
The Registrant has an insurance policy covering the officers and Directors
of the Registrant with respect to certain liabilities, including liabilities
arising under the Securities Act or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since March 1, 1994, the Registrant has sold and issued the following
unregistered securities:
(a) On various dates through December 31, 1996, the Registrant issued
54,052 shares of its Common Stock to 61 non-officer employees pursuant to
the exercise of options granted under the 1986 Plans between May 1, 1994
and December 31, 1996. The exercise prices ranged from $1.50 to $2.00, for
aggregate consideration of $86,483. The Registrant relied on the exemption
provided by Rule 701 under the Act.
(b) On July 14, 1994, the Registrant issued and sold an aggregate of
222,764 shares of Common Stock, valued at $334,147, to certain stockholders
of BioCAD in connection with the Registrant's purchase of BioCAD. See Note
3 of Notes to MSI Consolidated Financial Statements. The Registrant relied
on the exemption provided by Section 3(a)(10) under the Act.
(c) On September 29, 1994, the Registrant issued and sold 2,222,223
shares of its Series A Convertible Preferred Stock to D. E. Shaw for an
aggregate purchase price of $6,000,000, or $2.70 per share. Upon the
closing of this offering, the shares of Series A Convertible Preferred
Stock will automatically convert into 1,111,111 shares of Common Stock. See
"Certain Transactions." The Registrant relied on the exemption provided by
Section 4(2) under the Act.
(d) On August 15, 1995, the Registrant issued and sold 2,888,279
shares of Common Stock and 1,467,825 shares of Class B Common Stock to
Corning pursuant to the Biosym Merger Agreement. See "Certain
Transactions." Upon the closing of this offering the shares of Class B
Common Stock will automatically convert into 653,721 shares of Common
Stock. The Registrant relied on the exemption provided by Section 3(a)(10)
under the Act.
(e) On November 22, 1996, the Registrant issued 34,924 shares of
Common Stock to an officer of the Registrant, pursuant to the exercise of
options granted under the 1986 Plans. The exercise price of the options
ranged from $1.50 to $2.00 per share, for aggregate consideration of
$52,386. The Registrant relied on the exemption provided by Rule 701 under
the Act.
The recipients of the above-described securities represented their
intention to acquire the securities for investment only and not with a view to
distribution thereof. Appropriate legends were affixed to the stock certificates
issued in such transactions. All recipients had adequate access, through
employment or other relationships, to information about the Registrant.
II-2
<PAGE> 99
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ ------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.(1)
3.1 Amended and Restated Certificate of Incorporation.
3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation.
3.3 Amended and Restated Bylaws.
3.4 Certificate of Amendment to Amended and Restated Certificate of Incorporation, to be
filed prior to the effectiveness of this Registration Statement.
3.5 Restated Certificate of Incorporation, to be filed and become effective upon closing
of this offering.
4.1 Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4, 3.5, 10.20 and 10.21.
5.1 Opinion of Cooley Godward LLP.
10.1 Form of Indemnity Agreement to be entered into between Registrant and its directors
and officers prior to the effectiveness of this Registration Statement.
10.2 1996 Equity Incentive Plan (the "1996 Equity Plan").
10.3 Form of Nonstatutory Stock Option Agreement of Registrant pursuant to the 1996
Equity Plan.
10.4 Form of Incentive Stock Option Agreement of Registrant pursuant to the 1996 Equity
Plan.
10.5 1996 Stock Plan.
10.6 Form of Incentive Stock Option Agreement of Registrant pursuant to the 1996 Stock
Plan.
10.7 Form of Non-Qualified Stock Option Agreement of Registrant pursuant to the 1996
Stock Plan.
10.8 1986 Incentive Stock Option Plan (Amended and Restated January 1991).
10.9 Form of Incentive Stock Option Agreement of Registrant pursuant to the 1986
Incentive Stock Option Plan.
10.10 1986 Supplemental Stock Option Plan (Amended and Restated January 1991).(1)
10.11 Employee Stock Purchase Plan.
10.12 Employee Stock Purchase Plan Offering.
10.13 Non-Employee Directors' Stock Option Plan.
10.14 Form of Nonstatutory Stock Option under the Non-Employee Directors' Stock Option
Plan.
10.15 Employment Agreement dated November 30, 1995, between the Company and Michael J.
Savage.
10.16 Employment Agreement dated November 30, 1995, between the Company and Saiid
Zarrabian.
10.17 Employment Agreement dated November 30, 1995, between the Company and David B.
Hiatt.
10.18 Employment Agreement dated September 29, 1992, between the Company and John Newsam.
10.19 Interoffice Memorandum dated June 10, 1996, related to Lissa Goldenstein's 1996
compensation, executed by the Company and Ms. Goldenstein.
10.20 Shareholders Agreement among the Company, Corning Incorporated and certain
shareholders of the Company, dated August 15, 1995.
</TABLE>
II-3
<PAGE> 100
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ ------------------------------------------------------------------------------------
<S> <C>
10.21 Amended and Restated Investor Rights Agreement by and among the Company and certain
shareholders at the Company, dated as of October 18, 1991, as amended as of February
14, 1992, July 14, 1994 and September 29, 1994.
10.22 Software License Agreement dated as of December 10, 1985, by and among the Company,
Martin Karplus and the President and Fellows of Harvard University.+
10.23 Software License Agreement dated as of September 21, 1987, by and among Axel
Brunger, Martin Karplus, the President and Fellows of Harvard University and the
Company.+
10.24 Software Development Agreement between Teijin Limited and the Company, dated as of
September 6, 1993.
10.25 Agreement and Plan of Merger, dated as of August 15, 1995, by and between Corning
Incorporated, Biosym Technologies, Inc., the Company and the Company's wholly owned
subsidiary, MSI Acquisition Inc.
10.26 Joint Venture Agreement between the Company and Teijin Limited, dated February 14,
1992, with exhibits.*+
10.27 Distributorship Agreement between the Company and Teijin Molecular Simulations
Incorporated, dated February 14, 1992, attached as Exhibit A to the Joint Venture
Agreement between the Company and Teijin Limited (Exhibit 10.26 above), as amended.+
10.28 Distribution License Agreement among the Company, Dr. Michael C. Payne, and Lynxvale
Limited, dated October 27, 1994.+
10.29 Software License Agreement among the Company, Roderick E. Hubbard, and the
University of York, dated February 13, 1986.+
10.30 Software License and Research Agreement between the Company and Timothy F. Havel,
dated November 22, 1994.+
10.31 Software License/Research Agreement between D-Mol, Inc. and the Company, as
amended.+
10.32 Value-Added Reseller Agreement between the Company and Silicon Graphics, Inc., dated
December 26, 1996.+
10.33 License Agreement between the Company and The Trustees of Columbia University in the
City of New York, dated July 1, 1996.+
10.34 Office Lease between Sorrento Tech Limited and the Company, dated as of November 1,
1984, as amended.
10.35 Underlease between Vestey Estates, the Company and the Company's United Kingdom
subsidiary, dated July 27, 1993.
10.36 Underlease between MGPH Limited, the Company and the Company's United Kingdom
subsidiary, dated February 5, 1997.(1)
21 Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-3.
27 Financial Data Schedule
</TABLE>
- ------------------------------
* Schedules omitted pursuant to Regulation S-K, Item 601(b)(2) of the
Commission. Registrant undertakes to furnish such schedules to the
Commission supplementally upon request.
+ Confidential treatment will be requested with respect to certain portions of
this exhibit. Omitted portions will be filed separately with the Securities
and Exchange Commission.
(1) To be filed by amendment.
II-4
<PAGE> 101
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to provisions described in Item 15 or otherwise, the registrant has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Act,
each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration
statement 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.
(2) That, for purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the Securities
Act of 1933, 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-5
<PAGE> 102
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, County of San Diego, State of
California, on February 7, 1997.
By: /s/ MICHAEL J. SAVAGE
------------------------------------
Michael J. Savage
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael J. Savage, David B. Hiatt and
Thomas M. Carney, and each or any one of them, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments,
exhibits thereto and other documents in connection therewith) to this
Registration Statement and any subsequent registration statement filed by the
registrant pursuant to Rule 462(b) of the Securities Act of 1933, as amended,
which relates to this Registration Statement, and to file the same, with all
exhibits thereto, and other 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 connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his 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 has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ -------------------
<S> <C> <C>
/s/ MICHAEL J. SAVAGE President, Chief Executive February 10, 1997
- ------------------------------------------ Officer and Director
Michael J. Savage (Principal Executive Officer)
/s/ DAVID B. HIATT Chief Financial Officer; February 10, 1997
- ------------------------------------------ Senior Vice President, Finance
David B. Hiatt and Administration; Secretary
and Treasurer (Principal
Financial and Accounting
Officer)
/s/ C. DEREK STATHAM, PH.D. Chairman of the Board of February 10, 1997
- ------------------------------------------ Directors
C. Derek Statham, Ph.D.
/s/ R. PIERCE BAKER Director February 10, 1997
- ------------------------------------------
R. Pierce Baker
</TABLE>
II-6
<PAGE> 103
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ -------------------
<S> <C> <C>
/s/ C. PETER W. BOOTH Director February 10, 1997
- ------------------------------------------
C. Peter W. Booth
/s/ THOMAS J. CABLE Director February 10, 1997
- ------------------------------------------
Thomas J. Cable
/s/ PETER H. ENGEL Director February 10, 1997
- ------------------------------------------
Peter H. Engel
/s/ BRUNS H. GRAYSON Director February 10, 1997
- ------------------------------------------
Bruns H. Grayson
</TABLE>
II-7
<PAGE> 104
MOLECULAR SIMULATIONS AND SUBSIDIARIES
INDEX TO SCHEDULES
<TABLE>
<S> <C>
MOLECULAR SIMULATIONS INC.
Report of Independent Public Accountants on Schedule.................................. S-2
Schedule II, Valuation and Qualifying Accounts for the Years
Ending December 31, 1994, 1995 and 1996............................................. S-3
BIOSYM TECHNOLOGIES, INC.
Report of Independent Public Accountants on Schedule.................................. S-4
Schedule II, Valuation and Qualifying Accounts for the Year ending December 31, 1994
and Period from January 1, 1995 to August 15, 1995.................................. S-5
</TABLE>
S-1
<PAGE> 105
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
We have audited in accordance with generally accepted auditing standards,
the financial statements of Molecular Simulations Incorporated and subsidiaries
included in this registration statement and have issued our report thereon dated
February 6, 1997. Our audit was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The schedule listed in the
index above is the responsibility of the company's management and is presented
for the purposes of complying with the Securities and Exchange Commissions rules
and is not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
February 6, 1997
San Diego, California
S-2
<PAGE> 106
MOLECULAR SIMULATIONS INCORPORATED AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ---------------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts on accounts
receivable
1996..................................... $ 635,000 $ 19,000 $158,000 $ 496,000
1995..................................... $ 100,000 $537,000(1) $ 2,000 $ 635,000
1994..................................... $ 156,000 $ 57,000 $113,000 $ 100,000
</TABLE>
- ---------------
(1) Includes $535,000 of acquired reserves.
S-3
<PAGE> 107
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
We have audited in accordance with generally accepted auditing standards,
the financial statements of Biosym Technologies, Inc. and subsidiaries included
in this registration statement and have issued our report thereon dated November
14, 1995. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index above is
the responsibility of the company's management and is presented for the purposes
of complying with the Securities and Exchange Commissions rules and is not part
of the basic financial statements. This schedule has been subjected to the
audited procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
February 6, 1997
San Diego, California
S-4
<PAGE> 108
SCHEDULE II
BIOSYM TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE
AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ---------------------------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts on accounts
receivable
1995*....................................... $ 303,000 $240,000 $ 8,000 $ 535,000
1994........................................ $ 319,000 $202,000 $218,000 $ 303,000
</TABLE>
- ---------------
* Represents the period from January 1, 1995 to August 15, 1995.
S-5
<PAGE> 109
EXHIBIT II
MOLECULAR SIMULATIONS INCORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
1994 1995 1996
----------- ------------ ----------
<S> <C> <C> <C>
Net income (loss)....................................... $(2,928,000) $(11,880,000) $2,597,000
Weighted Average Shares................................. 1,247,690 2,548,649 4,645,236
Common Stock Equivalents................................ 54,591 54,591 2,934,628
----------- ----------- ----------
Weighted Average Shares of Common Stock and
Equivalents........................................... 1,302,28 2,603,240 7,579,864
Net income (Loss) Per Share............................. $ (2.25) $ (4.56) $ 0.34
=========== =========== ==========
</TABLE>
S-6
<PAGE> 1
EXHIBIT 3.1
State of Delaware
OFFICE OF THE SECRETARY OF STATE PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "MOLECULAR SIMULATIONS INCORPORATED", FILED IN THIS OFFICE ON THE
FIFTEENTH DAY OF AUGUST, A.D. 1995, AT 4:15 O'CLOCK P.M.
[SEAL AFFIXED HERE] /S/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8243955
DATE: 12-17-96
<PAGE> 2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:15 PM 08/15/1995
950185198 - 2064765
RESTATED CERTIFICATE OF INCORPORATION
OF
MOLECULAR SIMULATIONS INCORPORATED
Molecular Simulations Incorporated (hereinafter called the
"Corporation"), a corporation organized and existing under the laws of the State
of Delaware, hereby certifies as follows, pursuant to Section 245 of the General
Corporation Law of the State of Delaware:
FIRST: That the Corporation was originally incorporated on June 20,
1985 as Polygen Merger Corporation, a Delaware corporation.
SECOND: That the Board of Directors of the Corporation, at a meeting
held on July 26, 1995, adopted a resolution setting forth a proposed Restated
Certificate of Incorporation of the Corporation and directed that such proposed
Restated Certificate of Incorporation be submitted to the stockholders of the
Corporation for their consideration and approval. The resolution setting forth
the proposed Restated Certificate of Incorporation is as follows:
RESOLVED: That it is advisable and in the best interests of
the Corporation that the Restated Certificate of Incorporation of the
Corporation, as amended to date, be further amended and restated so
that it reads in its entirety in substantially the form attached hereto
as Appendix I.
THIRD: That the stockholders of the Corporation duly adopted such
resolution by written consent in accordance with the provisions of Section 228
of the General Corporation Law of the State of Delaware, and written notice of
the adoption of such resolution has been given as provided in Section 228(d) of
the General Corporation Law of the State of Delaware to every stockholder
entitled to such notice.
FOURTH: That said amendment was duly adopted in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware.
<PAGE> 3
IN WITNESS WHEREOF, Molecular Simulations Incorporated has caused this
Restated Certificate of Incorporation to be signed by Michael J. Savage, its
President, and attested by David B. Hiatt, its Secretary, this 15th day of
August, 1995.
MOLECULAR SIMULATIONS INCORPORATED
By: /s/ Michael J. Savage
-----------------------------------
Michael J. Savage, President
ATTEST:
By: /s/ David B. Hiatt
- ------------------------------
David B. Hiatt, Secretary
<PAGE> 4
APPENDIX I
RESTATED
CERTIFICATE OF INCORPORATION
OF
MOLECULAR SIMULATIONS INCORPORATED
FIRST. The name of the corporation is Molecular Simulations
Incorporated (the "Corporation").
SECOND. The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, New Castle
County, Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH. The Corporation shall have authority to issue three classes of
capital stock: Common Stock, $.001 par value per share ("Common Stock"); Class B
Common Stock, $.001 par value per share ("Class B Common Stock'"); and Preferred
Stock, $.01 par value per share ("Preferred Stock"). The total number of shares
of each class of capital stock which the Corporation shall have authority to
issue is twenty-five million (25,000,000) shares of Common Stock; one million
five hundred thousand (1,500,000) shares of Class B Common Stock; and two
million two hundred twenty-two thousand two hundred twenty-three (2,222,223)
shares of Preferred Stock.
The preferences, voting powers, qualifications, special or relative
rights or privileges of the Common Stock, Class B Common Stock and Preferred
Stock are as follows.
A. COMMON STOCK AND CLASS B COMMON STOCK
1. General. The voting, dividend and liquidation rights of the holders
of the Common Stock and Class B Common Stock are subject to and qualified by the
rights of the holders of the Preferred Stock.
2. Voting. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). Except as otherwise required by law, the holders of the Class B
Common Stock shall not be entitled to vote in any meetings of stockholders (or
any written actions in lieu of meetings). There shall be no cumulative voting.
<PAGE> 5
3. Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock. No dividends may be paid or declared on the Class B
Common Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock and Class B Common
Stock will be entitled to receive all assets of the Corporation available for
distribution to its stockholders, subject to any preferential rights of any then
outstanding Preferred Stock. In any such dissolution or liquidation of the
Corporation, the assets available for distribution to the holders of Common
Stock and Class B Common Stock shall be distributed in equal amounts per share
and without preference or priority of either the Common Stock or the Class B
Common Stock over the other.
5. Conversion of Class B Common Stock.
5A. Right to Convert. Subject to the terms and conditions of this
Paragraph 5, the holder of any share or shares of Class B Common Stock shall
have the right, at its option at any time after a "Conversion Event" described
in subparagraph 5B below and prior to liquidation of the Corporation, to convert
each share of Class B Common Stock (except that upon any liquidation of the
Corporation the right of conversion shall terminate at the close of business on
the business day fixed for payment of the amount distributable on the Class B
Common Stock) into one (1) fully paid and nonassessable share of Common Stock.
No later than five (5) days after the Conversion Event, written notice shall be
mailed by the Corporation, first class postage prepaid, to each holder of record
(at the close of business on the business day next preceding the day on which
notice is given) of the Class B Common Stock at the address last shown on the
records of the Corporation for such holder, notifying such holder of the
Conversion Event and the date on which the Conversion Event occurred. Such
rights of conversion shall be exercised following a Conversion Event by the
holder of Class B Common Stock giving written notice that the holder elects to
convert a stated number of shares of Class B Common Stock into Common Stock and
by surrender of a certificate or certificates for the shares so to be converted
to the Corporation at its principal office (or such other office or agency of
the Corporation as the Corporation may designate by notice in writing to the
holders of the Class B Common Stock) at any time during its usual business hours
on the date set forth in such notice, together with a statement of the name or
names (with address) in which the certificate or certificates for shares of
Common Stock shall be issued.
5B. Conversion Events. As used in this Paragraphs, a "Conversion
Event" means the occurrence of one or more of the following:
(1) the Corporation issues additional shares of its Common
Stock or shares convertible into Common Stock to parties other than
Corning Incorporated and its transferees (whether direct or indirect),
such that after such
2
<PAGE> 6
issuance the total number of shares of Common Stock and shares
convertible into Common Stock held by Corning Incorporated and its
transferees (direct and indirect) are equal to or less than forty
percent (40%) of the total number of then issued and outstanding shares
of Common Stock and shares convertible into Common Stock of the
Corporation; or
(2) upon the consummation of any acquisition of the
Corporation or substantially all of its assets by a third party or a
merger with a third party pursuant to which (i) the Corporation is not
the surviving corporation and (ii) the shares of capital stock of the
Corporation are exchanged or converted into less than a majority of the
surviving corporation's shares of capital stock.
5C. Issuance of Certificates; Time Conversion Effected. Promptly
after the receipt of the written notice referred to in subparagraph 5A and
surrender of the certificate or certificates for the share or shares of Class B
Common Stock to be converted, the Corporation shall issue and deliver, or cause
to be issued and delivered, to the holder, registered in such name or names as
such holder may direct, a certificate or certificates for the number of shares
of Common Stock issuable upon the conversion of such share or shares of Class B
Common Stock. To the extent permitted by law, such conversion shall be deemed to
have been effected on the date on which such written notice shall have been
received by the Corporation and the certificate or certificates for such share
or shares shall have been surrendered as aforesaid, and at such time the rights
of the holder of such share or shares of Class B Common Stock shall cease, and
the person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented thereby.
5D. Subdivision or Combination of Common Stock. In the event the
Corporation should at any time or from time to time after the date of issuance
of Class B Common Stock ("Purchase Date") fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock without payment of any
consideration by such holder for the additional shares of Common Stock, then, as
of such record date (provided that such dividend, distribution, split or
subdivision is effectuated) or the date of such dividend, distribution, split or
subdivision if no record date is fixed, the number of shares of Common Stock
issuable on conversion of Class B Common Stock shall be increased in proportion
to such increase in the aggregate of shares of Common Stock outstanding. If the
number of shares of Common Stock outstanding at any time after the Purchase Date
is decreased by a combination of the outstanding shares of Common Stock, then
following the record date of such combination, the number of shares of Common
Stock issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in outstanding shares.
5E. Distribution of Common Stock Equivalents. In the event the
Corporation shall distribute to all holders of Common Stock, as a result of
their status as
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<PAGE> 7
holders of Common Stock, securities or rights convertible into, or entitling the
holder thereof to receive, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents"), then in each such case the holders
of the Class B Common Stock shall be entitled, upon conversion of their Class B
Common Stock, to a proportionate share of any such distribution of Common Stock
Equivalents as though they were the holders of the number of shares of Common
Stock into which their shares of Class B Common Stock were convertible as of the
record date fixed for the determination of the holders of Common Stock of the
Corporation entitled to receive such distribution or the date of such
distribution if no record date is fixed.
5F. Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Common Stock, provision shall be made so that
the holders of the Class B Common Stock shall thereafter be entitled to receive
upon conversion of the Class B Common Stock, the number of shares of stock or
other securities or property of the Corporation or otherwise, to which a holder
of Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 5 with respect to the rights of
the holders of the Class B Common Stock after the recapitalization to the end
that the provisions of this Section 5 (including adjustment of the number of
shares issuable upon conversion of the Class B Common Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
5G. Reservation of Common Stock. The Corporation will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Class B Common Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Class B Common Stock.
5H. Issue Tax. The issuance of certificates for shares of Common
Stock upon conversion of Class B Common Stock shall be made without charge to
the holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Class B Common Stock which is being
converted.
5I. Restriction. At any time when any shares of Class B Common Stock
are issued and outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Certificate of Incorporation, and in addition to any other vote required
by law or the Certificate of Incorporation, without the approval of the holders
of at least a majority of the then outstanding shares of Class B Common Stock,
given in writing or by vote at a meeting, consenting or voting (as the case may
be) separately as a series, the Corporation will not alter or amend the rights,
preferences or privileges of the Class B Common Stock materially and adversely.
4
<PAGE> 8
5J. Mandatory Conversion. If at any time the Corporation shall
effect a firm commitment underwritten public offering of shares of Common Stock
in which the gross proceeds to the Corporation from the sale of such shares to
the public shall be at least $10,000,000, then effective upon the closing of the
sale of such shares by the Corporation pursuant to such public offering, all
outstanding shares of Class B Common Stock shall automatically convert to shares
of Common Stock on the basis set forth in this Paragraph 5. Holders of shares of
Class B Common Stock so converted may deliver to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to such holders) during its usual
business hours, the certificate or certificates for the shares so converted. As
promptly as practicable thereafter, the Corporation shall issue and deliver to
such holder a certificate or certificates for the number of shares of Common
Stock to which such holder is entitled. Until such time as a holder of shares of
Class B Common Stock shall surrender his or its certificates therefor as
provided above, such certificates shall be deemed to represent the shares of
Common Stock to which such holder shall be entitled upon the surrender thereof.
B. PREFERRED STOCK
All of the authorized shares of Preferred Stock of the Corporation
shall be designated as Series A Convertible Preferred Stock. The Series A
Convertible Preferred Stock shall have the following rights, preferences,
powers, privileges and restrictions, qualifications and limitations.
1. Voting. Except as may be otherwise provided in these terms of the
Series A Convertible Preferred Stock or by law, the Series A Convertible
Preferred Stock shall vote together with all other classes and series of stock
of the Corporation as a single class on all actions to be taken by the
stockholders of the Corporation. Each share of Series A Convertible Preferred
Stock shall entitle the holder thereof to such number of votes per share on each
such action as shall equal the number of whole shares of Common Stock into which
each share of Series A Convertible Preferred Stock is then convertible.
2. Dividends. The holders of the Series A Convertible Preferred Stock
shall be entitled to receive, out of funds legally available therefor, dividends
at the same rate as dividends are paid with respect to the Common Stock
(treating each share of the Series A Convertible Preferred Stock as being equal
to the number of whole shares of Common Stock into which each share of Series A
Convertible Preferred Stock is then convertible). Stock dividends and the other
events described in subparagraphs 5D and 5E below shall entitle the holders of
Series A Convertible Preferred Stock to the adjustments in their conversion
rights as described in subparagraphs 5D or 5E, as the case may be, and shall not
be treated as dividends paid with respect to the Common Stock as described in
this Paragraph 2.
3. Liquidation. Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the shares of
Series A
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<PAGE> 9
Convertible Preferred Stock shall be entitled, before any distribution or
payment is made upon any stock ranking on liquidation junior to the Series A
Convertible Preferred Stock, to be paid an amount equal to the greater of (i)
$2.70 per share (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or similar recapitalization affecting such
shares), or (ii) such amount per share as would have been payable had each such
share been converted to Common Stock pursuant to Paragraph 5 immediately prior
to such liquidation, dissolution or winding up, and the holders of Series A
Convertible Preferred Stock shall not be entitled to any further payment, such
amount payable with respect to one share of Series A Convertible Preferred Stock
being sometimes referred to as the "Liquidation Payment" and with respect to all
shares of Series A Convertible Preferred Stock being sometimes referred to as
the "Liquidation Payments." If upon such liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the assets to be
distributed among the holders of Series A Convertible Preferred Stock shall be
insufficient to permit payment to the holders of Series A Convertible Preferred
Stock of the amount distributable as aforesaid, then the entire assets of the
Corporation to be so distributed shall be distributed ratably among the holders
of Series A Convertible Preferred Stock. Upon any such liquidation, dissolution
or winding up of the Corporation, after the holders of Series A Convertible
Preferred Stock shall have been paid in full the Liquidation Payments to which
they shall be entitled, the remaining net assets of the Corporation shall be
distributed to the holders of stock ranking on liquidation junior to the Series
A Convertible Preferred Stock. Written notice of such liquidation, dissolution
or winding up, stating a payment date, the amount of the Liquidation Payments
and the place where said Liquidation Payments shall be payable, shall be
delivered in person, mailed by certified or registered mail, return receipt
requested, or sent by telecopier or telex, not less than 30 days prior to the
payment date stated therein, to the holders of record of Series A Convertible
Preferred Stock, such notice to be addressed to each such holder at its address
as shown by the records of the Corporation. For purposes hereof, the Common
Stock shall rank on liquidation junior to the Series A Convertible Preferred
Stock.
4. Restrictions. At any time when any shares of Series A Convertible
Preferred Stock are issued and outstanding, except where the vote or written
consent of the holders of a greater number of shares of the Corporation is
required by law or by the Certificate of Incorporation, and in addition to any
other vote required by law or the Certificate of Incorporation, without the
approval of the holders of at least a majority of the then outstanding shares of
Series A Convertible Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a series, the
Corporation will not:
4A. Alter or amend the rights, preferences or privileges of the
Series A Convertible Preferred Stock materially and adversely;
4B. Authorize or issue any additional class or series of stock
having (i) any superior rights, privileges or preferences to the Series A
Convertible Preferred Stock, or (ii) any right to receive assets of the
Corporation on the liquidation, dissolution
6
<PAGE> 10
or winding up of the Corporation that is not junior to the rights of holders of
the Series A Convertible Preferred Stock to receive assets of the Corporation on
the liquidation, dissolution or winding up of the Corporation; or
4C. Reclassify any class or series of capital stock into a class or
series of capital stock having (i) any superior rights, privileges or
preferences to the Series A Convertible Preferred Stock, or (ii) any right to
receive assets of the Corporation on the liquidation, dissolution or winding up
of the Corporation that is not junior to the rights of holders of the Series A
Convertible Preferred Stock to receive assets of the Corporation on the
liquidation, dissolution or winding up of the Corporation.
For purposes of subparagraphs 4B and 4C above, the Corporation's Common
Stock as constituted on the date of filing these terms of the Series A
Convertible Preferred Stock shall not be deemed to have any superior rights,
privileges or preferences to the Series A Convertible Preferred Stock.
5. Conversions. The holders of shares of Series A Convertible Preferred
Stock shall have the following conversion rights:
5A. Right to Convert. Subject to the terms and conditions of this
Paragraph 5, the holder of any share or shares of Series A Convertible Preferred
Stock shall have the right, at its option at any time prior to liquidation of
the Corporation, to convert each share of Series A Convertible Preferred Stock
(except that upon any liquidation of the Corporation the right of conversion
shall terminate at the close of business on the business day fixed for payment
of the amount distributable on the Series A Convertible Preferred Stock) into
one (1) fully paid and nonassessable share of Common Stock. Such rights of
conversion shall be exercised by the holder thereof by giving written notice
that the holder elects to convert a stated number of shares of Series A
Convertible Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series A
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Common
Stock shall be issued.
5B. Issuance of Certificates; Time Conversion Effected. Promptly
after the receipt of the written notice referred to in subparagraph 5A and
surrender of the certificate or certificates for the share or shares of Series A
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of shares of Common Stock issuable upon the conversion of such share or
shares of Series A Convertible Preferred Stock. To the extent permitted by law,
such conversion shall be deemed to have been effected on the date on which such
written notice shall have been received by the Corporation and the certificate
or certificates for such share or shares shall have been surrendered as
7
<PAGE> 11
aforesaid, and at such time the rights of the holder of such share or shares of
Series A Convertible Preferred Stock shall cease, and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby.
5C. No Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series A Convertible
Preferred Stock into Common Stock and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion. At the time of each conversion, the Corporation shall pay
in cash an amount equal to all dividends (if any) declared but unpaid on the
shares of Series A Convertible Preferred Stock surrendered for conversion to the
date upon which such conversion is deemed to take place as provided in
subparagraph 5B. In case the number of shares of Series A Convertible Preferred
Stock represented by the certificate or certificates surrendered pursuant to
subparagraph 5A exceeds the number of shares converted, the Corporation shall,
upon such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series A Convertible Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted.
5D. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the number of shares of Common Stock into which the Series A Convertible
Preferred Stock was convertible immediately prior to such subdivision shall be
proportionately increased, and, conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the number of
shares of Common Stock into which the Series A Convertible Preferred Stock was
convertible immediately prior to such combination shall be proportionately
decreased.
5E. Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a share or shares
of Series A Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of the shares of Common Stock immediately theretofore receivable upon
the conversion of such share or shares of Series A Convertible Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of Common Stock
equal to the number of shares of such Common Stock immediately theretofore
receivable upon such conversion had such reorganization or reclassification not
taken place, and in any such case appropriate provisions shall be made with
respect to the rights and interests of such holder to the end that the
provisions hereof shall thereafter be applicable, as nearly as may be, in
8
<PAGE> 12
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights.
5F. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into another entity or entities, or a sale,
lease, abandonment, transfer or other disposition of all or substantially all
its assets; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by delivery
in person, certified or registered mail, return receipt requested, telecopier or
telex, addressed to each holder of any shares of Series A Convertible Preferred
Stock at the address of such holder as shown on the books of the Corporation,
(a) at least 20 days' prior written notice of the date on which the books of the
Corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect
of any such reorganization, reclassification, consolidation, merger,
disposition, dissolution, liquidation or winding up and (b) in the case of any
such reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up, at least 20 days' prior written notice
of the date when the same shall take place. Such notice in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto and such notice in accordance with the foregoing
clause (b) shall also specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger disposition, dissolution, liquidation or winding up, as the case may be.
5G. Stock to be Reserved. The Corporation will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series A Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Series A Convertible Preferred
Stock. The Corporation covenants that all shares of Common Stock which shall be
so issued shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof. The
Corporation will take all such action as may be
9
<PAGE> 13
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any requirement of
any national securities exchange upon which the Common Stock may be listed.
5H. No Reissuance of Series A Convertible Preferred Stock. Shares of
Series A Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
5I. Issue Tax. The issuance of certificates for shares of Common
Stock upon conversion of Series A Convertible Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect thereof,
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series A Convertible
Preferred Stock which is being converted.
5J. Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Series A Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series A Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Series A Convertible Preferred Stock, except
as may otherwise be required to comply with applicable securities laws.
5K. Mandatory Conversion. If at any time the Corporation shall
effect a firm commitment underwritten public offering of shares of Common Stock
in which the gross proceeds to the Corporation from the sale of such shares to
the public shall be at least $10,000,000, then effective upon the closing of the
sale of such shares by the Corporation pursuant to such public offering, all
outstanding shares of Series A Convertible Preferred Stock shall automatically
convert to shares of Common Stock on the basis set forth in this Paragraph 5.
Holders of shares of Series A Convertible Preferred Stock so converted may
deliver to the Corporation at its principal office (or such other office or
agency of the Corporation as the Corporation may designate by notice in writing
to such holders) during its usual business hours, the certificate or
certificates for the shares so converted. As promptly as practicable thereafter,
the Corporation shall issue and deliver to such holder a certificate or
certificates for the number of whole shares of Common Stock to which such holder
is entitled, together with any cash dividends to which such holder may be
entitled pursuant to subparagraph 5C. Until such time as a holder of shares of
Series A Convertible Preferred Stock shall surrender his or its certificates
therefor as provided above, such certificates shall be deemed to represent the
shares of Common Stock to which such holder shall be entitled upon the surrender
thereof.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware:
10
<PAGE> 14
A. The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal the By-Laws of the Corporation.
B. Elections of directors need not be by written ballot unless the
By-Laws of the Corporation shall so provide.
C. The books of the Corporation may be kept at such place within or
without the State of Delaware as the By-Laws of the Corporation may
provide or as may be designated from time to time by the Board of
Directors of the Corporation.
SEVENTH. The Corporation eliminates the personal liability of each
member of its Board of Directors to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided, however,
that, to the extent provided by applicable law, the foregoing shall not
eliminate the liability of a director (i) for any breach of such director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any
transaction from which such director derived an improper personal benefit. No
amendment to or repeal of this provision shall apply to or have any effect on
the liability or alleged liability of any director for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
EIGHTH. The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
11
<PAGE> 1
EXHIBIT 3.2
State of Delaware
Office of the Secretary of State PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "MOLECULAR SIMULATIONS INCORPORATED", FILED IN THIS OFFICE ON THE
TWENTIETH DAY OF FEBRUARY, A.D. 1996, AT 4:30 O'CLOCK P.M.
[SEAL AFFIXED HERE] /s/ Edward J. Freel
---------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8243958
DATE: 12-17-96
<PAGE> 2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:30 PM 02/20/1996
960048469 - 2064765
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
MOLECULAR SIMULATIONS INCORPORATED
Molecular Simulations Incorporated (hereinafter called the
"Corporation"), a corporation organized and existing under the laws of the State
of Delaware, hereby certifies as follows, pursuant to Section 242 of the General
Corporation Law of the State of Delaware:
FIRST: That the Board of Directors of the Corporation, at a meeting
held on November 20,1995, adopted a resolution setting forth a proposed
amendment to the Restated Certificate of Incorporation of the Corporation and
directed that such proposed amendment be submitted to the stockholders of the
Corporation for their consideration and approval. The resolution setting forth
the proposed amendment is as follows:
RESOLVED: That it is advisable and in the best interests of the
Corporation that the Restated Certificate of Incorporation
of the Corporation be amended in order to effect a change in
Article IV, Part A, Subparagraph 5A of the Corporation's
Restated Certificate of Incorporation by adding
substantially the following text at the end of said
Subparagraph 5A of Part A of Article IV:
"In addition, subject to the terms and conditions of this
Paragraph 5, Corning Incorporated shall have the right, at
its option at any time prior to liquidation of the
Corporation, to convert each share of Class B Common Stock
(except that upon any liquidation of the Corporation the
right of conversion shall terminate at the close of business
on the business day fixed for payment of the amount
distributable on the Class B Common Stock) held by it into
one (1) fully paid and nonassessable share of Common Stock,
provided that as a result of such conversion Corning
Incorporated does not hold beneficially or of record voting
securities of the Corporation that represent more than fifty
percent (50%) of the aggregate voting power of the total
outstanding voting securities of the Corporation."
<PAGE> 3
SECOND: That the stockholders of the Corporation duly adopted such
resolution by written consent in accordance with the provisions of Section 228
of the General Corporation Law of the State of Delaware, and written notice of
the adoption of such resolution has been given as provided in Section 228(d) of
the General Corporation Law of the State of Delaware to every stockholder
entitled to such notice.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Molecular Simulations Incorporated has caused this
Certificate of Amendment of Restated Certificate of Incorporation to be signed
by Michael J. Savage, its President, and attested by David B. Hiatt, its
Secretary, this 16th day of February, 1996.
MOLECULAR SIMULATIONS INCORPORATED
By: /s/ Michael J. Savage
------------------------------------
Michael J. Savage, President
ATTEST:
By: /s/ David B. Hiatt
-------------------------
David B. Hiatt, Secretary
<PAGE> 1
EXHIBIT 3.3
AMENDED BYLAWS OF
POLYGEN CORPORATION
(as amended as of January 22, 1992)
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I Offices ........................................................ 1
Section 1. Registered Office ................................... 1
Section 2. Other Offices ....................................... 1
ARTICLE II Corporate Seal ................................................ 1
Section 3. Corporate Seal ..................................... 1
ARTICLE III Stockholders' Meetings ....................................... 1
Section 4. Place of Meetings ................................... 1
Section 5. Annual Meeting ...................................... 2
Section 6. Special Meetings .................................... 2
Section 7. Notice of Meetings .................................. 2
Section 8. Quorum ............................................. 2
Section 9. Adjournment and Notice of Adjourned
Meetings ...................................... 3
Section 10. Voting Rights ....................................... 3
Section 11. Joint Owners of Stock ............................... 3
Section 12. List of Stockholders ................................ 4
Section 13. Action without Meeting .............................. 4
Section 14. Organization ........................................ 5
ARTICLE IV Directors ..................................................... 5
Section 15. Number and Term of Office ........................... 5
Section 16. Powers .............................................. 5
Section 17. Vacancies ........................................... 6
Section 18. Resignation ......................................... 6
Section 19. Removal ............................................. 6
Section 20. Meetings ............................................ 6
(a) Annual Meetings ................................... 6
(b) Regular Meetings .................................. 7
(c) Special Meetings .................................. 7
(d) Telephone Meetings ................................ 7
(e) Notice of Meetings ................................ 7
(f) Waiver of Notice .................................. 7
Section 21. Quorum and Voting .................................. 8
(a) Quorum ............................................ 8
(b) Majority Vote ..................................... 8
Section 22. Action without Meeting ............................. 8
Section 23. Fees and Compensation .............................. 8
i
<PAGE> 3
Section 24. Committees ......................................... 8
(a) Executive Committee ............................... 8
(b) Other Committees .................................. 9
(c) Term .............................................. 9
(d) Meetings .......................................... 9
Section 25. Organization ....................................... 10
ARTICLE V Officers ..................................................... 10
Section 26. Officers Designated ................................ 10
Section 27. Tenure and Duties of Officers ...................... 11
(a) General ........................................... 11
(b) Duties of Chairman of the Board of Directors ...... 11
(c) Duties of President ............................... 11
(d) Duties of Vice Presidents ......................... 11
(e) Duties of Secretary ............................... 12
(f) Duties of Treasurer ............................... 12
Section 28. Resignations ....................................... 12
Section 29. Removal ............................................ 13
ARTICLE VI Execution of Corporate Instruments and Voting
of Securities Owned by the Corporation ....................... 13
Section 30. Execution of Corporate Instruments ................. 13
Section 31. Voting of Securities Owned by the
Corporation ................................... 13
ARTICLE VII Shares of Stock ............................................. 14
Section 32. Form and Execution of Certificates ................. 14
Section 33. Lost Certificates .................................. 14
Section 34. Transfers .......................................... 14
Section 35. Fixing Record Dates ................................ 15
Section 36. Registered Stockholders ............................ 15
ARTICLE VIII Other Securities of the Corporation ........................ 15
Section 37. Execution of Other Securities ...................... 15
ARTICLE IX Dividends .................................................... 16
Section 38. Declaration of Dividends ........................... 16
Section 39. Dividend Reserve ................................... 16
ARTICLE X Fiscal Year ................................................... 17
Section 40. Fiscal Year ........................................ 17
ARTICLE XI Indemnification of Officers, Directors, Employees and Agents.. 17
Section 42. Indemnification in Derivative Actions .............. 17
Section 43. Indemnification upon Successful Defense ............ 18
Section 45. Authority to Advance Expenses ...................... 18
Section 46. Provisions Nonexclusive ............................ 19
ii.
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Section 47. Authority to Insure ................................ 19
Section 48. Definition of Corporation .......................... 19
Section 49. Severability ....................................... 19
ARTICLE XII Notices ..................................................... 20
Section 50. Notices ............................................ 20
(a) Notice to Stockholders ........................ 20
(b) Notice to Directors ........................... 20
(c) Address Unknown ............................... 20
(d) Affidavit of Mailing .......................... 20
(e) Time Notices Deemed Given ..................... 20
(f) Methods of Notice ............................. 21
(g) Failure to Receive Notice ..................... 21
(h) Notice to Person with Whom Communication Is
Unlawful ...................................... 21
ARTICLE XIII Amendments ................................................. 21
Section 51. Amendments ......................................... 21
iii.
<PAGE> 5
BYLAWS
OF
POLYGEN CORPORATION
(a Delaware corporation)
(as amended as of January 22, 1992)
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the corporation
in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.
Section 2. Other Offices. The corporation shall also have and maintain
an office or principal place of business in Waltham, Massachusetts, at such
place as may be fixed by the Board of Directors, and may also have offices at
such other places, both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
Corporate Seal
Section 3. Corporate Seal. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
Stockholders' Meetings
Section 4. Place of Meetings. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
<PAGE> 6
Section 5. Annual Meeting. The annual meeting of the stockholders of
the corporation for the purpose of election of Directors and for such other
business as may lawfully come before it shall be held on such date and at such
time as may be designated from time to time by the Board of Directors.
Section 6. Special Meetings. Special meetings of the stockholders of
the corporation may be called, for any purpose or purposes, by the President or
the Board of Directors at any time. Upon written request of any stockholder or
stockholders holding in the aggregate twenty percent (20%) of the voting power
of all stockholders delivered in person or sent by registered mail to the
President or Secretary, the Secretary shall call a special meeting of
stockholders to be held at the office of the corporation required to be
maintained pursuant to Section 2 hereof at such time as the Secretary may fix,
such meeting to be held not fewer than ten (10) nor more than sixty (60) days
after the receipt of such request, and if the Secretary shall neglect or refuse
to call such meeting, within seven (7) days after the receipt of such request,
the stockholder making such request may do so.
Section 7. Notice of Meetings. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not fewer than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose any meeting of stockholders may
be waived in writing, signed by the person entitled to notice thereof, either
before or after such meeting, and will be waived by any stockholder by his
attendance thereat in person or by proxy, except when the stockholder 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. Any stockholder so waiving notice of such meeting shall be bound by
the proceedings of any such meeting in all respects as if due notice thereof had
been given.
Section 8. Quorum. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. Any shares, the voting of
which at said meeting has been enjoined, or which for any reason cannot be
lawfully voted at such meeting, shall not be
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<PAGE> 7
counted to determine a quorum at such meeting. In the absence of a quorum any
meeting of stockholders may be adjourned, from time to time, by vote of the
holders of a majority of the shares represented thereat, but no other business
shall be transacted at such meeting. The stockholders present at a duly called
or convened meeting, at which a quorum is present, may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. Except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws, all action taken by the
holders of a majority of the voting power represented at any meeting at which a
quorum is present shall be valid and binding upon the corporation.
Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time by
the vote of a majority of the shares, the holders of which are present either in
person or by proxy. When a meeting is adjourned to another time or place, 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 which 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.
Section 10. Voting Rights. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote or execute consents shall have the right to do so either
in person or by an agent or agents authorized by a written proxy executed by
such person or his duly authorized agent, which proxy shall be filed with the
Secretary at or before the meeting at which it is to be used. An agent so
appointed need not be a stockholder. No proxy shall be voted on after three (3)
years from its date of creation unless the proxy provides for a longer period.
All elections of Directors shall be by written ballot, unless otherwise provided
in the Certificate of Incorporation.
Section 11. Joint Owners of Stock. If shares or other securities having
voting power stand of record in the names of
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two (2) or more persons, whether fiduciaries, members of a partnership, joint
tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2)
or more persons have the same fiduciary relationship respecting the same shares,
unless the secretary is given written notice to the contrary and is furnished
with a copy of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to voting shall
have the following effect: (a) if only one (1) votes, his act binds all; (b) if
more than one (1) votes, the act of the majority so voting binds all; (c) if
more than one (1) votes, but the vote is evenly split on any particular matter,
each faction may vote the securities in question proportionally, or may apply to
the Delaware Court of Chancery for relief as provided in Section 217(b) of the
General Corporation Law of Delaware. If the instrument filed with the Secretary
shows that any such tenancy is held in unequal interests, a majority or
even-split for the purpose of this subsection (c) shall be a majority or
even-split in interest.
Section 12. List of Stockholders. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said 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
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 13. Action without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action required by statute to be taken at any
annual or special meeting of the stockholders, or any action which may be taken
at any annual or special meeting of the 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, 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
4.
<PAGE> 9
consent shall be given to those stockholders who have not consented in writing.
Section 14. Organization. At every meeting of stockholders, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or, if the President is absent, the most senior Vice
President present, or in the absence of any such officer, a chairman of the
meeting chosen by a majority in interest of the stockholders entitled to vote,
present in person or by proxy, shall act as chairman. The Secretary, or, in his
absence, an Assistant Secretary directed to do so by the President, shall act as
secretary of the meeting.
ARTICLE IV.
Directors
Section 15. Number and Term of Office. The number of Directors which
shall constitute the whole of the Board of Directors shall be not fewer than two
(2) nor more than ten (10). The precise number of Directors shall be fixed by
the Board of Directors and the Board may change such number from time to time
within the limits set forth in this Section 15; provided, however, that a
resolution of the Board reducing the number of Directors shall not affect the
tenure of any Director then in office, each of whom shall continue to serve
until the earliest of the expiration of his term, his resignation or his removal
in the manner provided in these Bylaws. Except as provided in Section 17, the
Directors shall be elected by the stockholders at their annual meeting in each
year and shall hold office until the next annual meeting and until their
successors shall be duly elected and qualified. Directors need not be
stockholders unless required by the Certificate of Incorporation. If for any
cause, the Directors shall not have been elected at an annual meeting, they may
be elected as soon thereafter as convenient at the special meeting of the
stockholders called for that purpose in the manner provided in these Bylaws.
Section 16. Powers. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation. The Board of Directors may delegate the management of the
day-to-day operation of the business of the Corporation to a management company
or other person, provided that the business and affairs
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<PAGE> 10
of the corporation shall be managed and all corporate powers shall be exercised
under the ultimate direction of the Board of Directors.
Section 17. Vacancies. Unless otherwise provided in the Certificate of
Incorporation, vacancies and newly created directorships resulting from any
increase in the authorized number of Directors may be filled by a majority of
the Directors then in office, although less than a quorum, or by a sole
remaining Director, and each Director so elected shall hold office for the
unexpired portion of the term of the Director whose place shall be vacant and
until his successor shall have been duly elected and qualified. A vacancy in the
Board of Directors shall be deemed to exist under this Section 17 in the case of
the death, removal or resignation of any Director, or if the stockholders fail
at any meeting of stockholders at which Directors are to be elected (including
any meeting referred to in Section 19 below) to elect the number of Directors
then constituting the whole Board of Directors.
Section 18. Resignation. Any Director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. 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 for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
Section 19. Removal. At a special meeting of stockholders called for
the purpose in the manner hereinabove provided, the Board of Directors, or any
individual Director, may be removed from office, with or without cause, and a
new Director or Directors elected by a vote of stockholders holding a majority
of the outstanding shares entitled to vote at an election of Directors.
Section 20. Meetings.
(a) Annual Meetings. The annual meeting of the Board of
Directors shall be held immediately after the annual
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meeting of stockholders and at the place where such meeting is held. No notice
of an annual meeting of the Board of Directors shall be necessary and such
meeting shall be held for the purpose of electing officers and transacting such
other business as may lawfully come before it.
(b) Regular Meetings. Except as hereinafter otherwise provided, regular
meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the State
of Delaware which has been designated by resolution of the Board of Directors or
the written consent of all Directors.
(c) Special Meetings. Unless otherwise restricted by the Certificate of
Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
President or a majority of the Directors.
(d) Telephone Meetings. Any member of the Board of Directors, or of any
committee thereof, may participate in a meeting by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e) Notice of Meetings. Written notice of the time and place of all
regular and special meetings of the Board of Directors shall be given at least
one (1) day before the date of the meeting. Notice of any meeting may be waived
in writing at any time before or after the meeting and will be waived by any
Director by attendance thereat, except when the Director attends the 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.
(f) Waiver of Notice. The transaction of all business at any meeting of
the Board of Directors, or any committee thereof, however called or noticed, or
wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the Directors not present shall sign a written waiver of
notice, or a consent to holding such meeting, or an approval of the minutes
thereof. All such
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waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Section 21. Quorum and Voting.
(a) Quorum. Unless the Certificate of Incorporation
requires a greater number, a quorum of the Board of Directors shall consist of a
majority of the exact number of Directors fixed from time to time in accordance
with Section 15 of these Bylaws, but not fewer than one (1); provided, however,
at any meeting whether a quorum be present or otherwise, a majority of the
Directors present may adjourn from time to time until the time fixed for the
next regular meeting of the Board of Directors, without notice other than by
announcement at the meeting.
(b) Majority Vote. At each meeting of the Board of
Directors at which a quorum is present all questions and business shall be
determined by a vote of a majority of the Directors present, unless a different
vote be required by law, the Certificate of Incorporation or these Bylaws.
Section 22. Action without 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 of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 23. Fees and Compensation. Directors shall not receive any
stated salary for their services as Directors, but by resolution of the Board of
Directors a fixed fee, with or without expense of attendance, may be allowed for
attendance at each meeting and at each meeting of any Committee of the Board of
Directors. Nothing herein contained shall be construed to preclude any Director
from serving the corporation in any other capacity as an officer, agent,
employee, or otherwise and receiving compensation therefor.
Section 24. Committees.
(a) Executive Committee. The Board of Directors may by resolution
passed by a majority of the whole Board of Directors, appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors. The
Executive Committee, to the extent permitted by law and specifically
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granted by the Board of Directors, shall have and may exercise when the Board of
Directors is not in session all powers of the Board of Directors in the
management of the business and affairs of the corporation, including, without
limitation, the power and authority to declare a dividend or to authorize the
issuance of stock, except such committee shall not have the power or authority
to amend the Certificate of Incorporation, to adopt an agreement of merger or
consolidation, to recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, to recommend
to the stockholders of the corporation a dissolution of the corporation or a
revocation of a dissolution or to amend these Bylaws.
(b) Other Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board of Directors, from time to time appoint such
other committees as may be permitted by law. Such other committees appointed by
the Board of Directors shall consist of one (1) or more members of the Board of
Directors, and shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such committees, but in no
event shall such committees have the powers denied to the Executive Committee in
these Bylaws.
(c) Term. The members of all committees of the Board of Directors shall
serve a term coexistent with that of the Board of Directors which shall have
appointed such committee. The Board of Directors, subject to the provisions of
subsections (a) or (b) of this Section 24, may at any time increase or decrease
the number of members of a committee or terminate the existence of a committee.
The membership of a committee member shall terminate on the date of his death or
voluntary resignation. The Board of Directors may at any time for any reason
remove any individual committee member and the Board of Directors may fill any
committee vacancy created by death, resignation, removal or increase in the
number of members of the committee. The Board of Directors 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, and, in addition, in the
absence or disqualification of any 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.
(d) Meetings. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive
9.
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Committee or any other committee appointed pursuant to this Section 24 shall be
held at such times and places as are determined by the Board of Directors, or by
any such committee, and when notice thereof has been given to each member of
such committee, no further notice of such regular meetings need be given
thereafter. Special meetings of any such committee may be held at the principal
office of the corporation required to be maintained pursuant to Section 2
hereof, or at any place which has been designated from time to time by
resolution of such committee or by written consent of all members thereof, and
may be called by any Director who is a member of such committee, upon written
notice to the members of such committee of the time and place of such special
meeting given in the manner provided for the giving of written notice to members
of the Board of Directors of the time and place of special meetings of the Board
of Directors. Notice of any special meeting of any committee may be waived in
writing at any time before or after the meeting and will be waived by any
Director by attendance thereat, except when the Director attends such special
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. A majority of the authorized number of members of any such committee
shall constitute a quorum for the transaction of business, and the act of a
majority of those present at any meeting at which a quorum is present shall be
the act of such committee.
Section 25. Organization. At every meeting of the Directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the Directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
ARTICLE V
Officers
Section 26. Officers Designated. The officers of the corporation shall
be the Chairman of the Board of Directors, the President, one or more Vice
Presidents, the Secretary and the Treasurer, all of whom shall be elected at the
annual meeting of the Board of Directors. The order of the seniority of the Vice
Presidents shall be in the order of their nomination, unless otherwise
determined by the Board of Directors. The Board of
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Directors may also appoint one or more Assistant Secretaries, Assistant
Treasurers, and such other officers and agents with such powers and duties as it
shall deem necessary. The Board of Directors may assign such additional titles
to one or more of the officers as it shall deem appropriate. Any one person may
hold any number of offices of the corporation at any one time unless
specifically prohibited therefrom by law. The salaries and other compensation of
the officers of the corporation shall be fixed by or in the manner designated by
the Board of Directors.
Section 27. Tenure and Duties of Officers.
(a) General. All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors.
(b) Duties of Chairman of the Board of Directors. The Chairman
of the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time.
(c) Duties of President. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is present.
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 officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
(d) Duties of Vice Presidents. The Vice Presidents, in the
order or their seniority, may assume and perform the duties of the President in
the absence or disability of the President or whenever the office of President
is vacant. The Vice Presidents shall perform other duties commonly incident to
their office and shall also perform such other duties and have such other powers
as the Board of Directors or the President shall designate from time to time.
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(e) Duties of Secretary. The Secretary shall extend all
meetings of the stockholders and of the Board of Directors, and shall record all
acts and proceedings thereof in the minute book of the corporation. The
Secretary shall give notice in conformity with these Bylaws of all meetings of
the stockholders, and of all meetings of the board of directors and any
committee thereof requiring notice. The secretary shall perform all other duties
given him in these Bylaws and other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time. The President may direct any
Assistant Secretary in the absence or disability of the Secretary, and each
Assistant Secretary shall perform the duties of the Secretary to assume and
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time.
(f) Duties of Treasurer. The Treasurer shall keep or cause to
be kept the books of account of the corporation in a thorough and proper manner,
and shall render statements of the financial affairs of the corporation in such
form and as often as required by the Board of Directors or the President. the
Treasurer, subject to the order of the Board of Directors, shall have the
custody of all funds and securities of the corporation. The Treasurer shall
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time. The President may direct any
Assistant Treasurer to assume and perform the duties of the Treasurer in the
absence or disability of the Treasurer, and each Assistant Treasurer shall
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time.
Section 28. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective.
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Section 29. Removal. Any officer may be removed from office at any
time, either with or without cause, by the vote or written consent of a majority
of the Directors in office at the time, or by any committee or superior officers
upon whom such power of removal may have been conferred by the Board of
Directors.
ARTICLE VI
Execution of Corporate Instruments and Voting
of Securities Owned by the Corporation
Section 30. Execution of Corporate Instruments. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Treasurer or any Assistant Secretary or Assistant Treasurer. All
other instruments and documents requiring the corporate signature, but not
requiring the corporate seal, may be executed as aforesaid or in such other
manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositories on funds to
the credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Section 31. Voting of Securities Owned by the Corporation. All stock
and other securities of other Corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized to do by
resolution of the Board of Directors, or, in the
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absence of such authorization, by the Chairman of the Board of Directors, the
President, or any Vice President.
ARTICLE VII
Shares of Stock
Section 32. Form and Execution of Certificates. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Where such certificate is countersigned by a transfer agent
other than the corporation or its employee, or by a registrar other than the
corporation or its employee, any other signature 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 shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the designations,
preferences, limitations, restrictions on transfer and relative rights of the
shares authorized to be issued.
Section 33. Lost Certificates. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
Section 34. Transfers. Transfer of record of shares of stock of the
corporation shall be made only upon its books by the holders thereof, in person
or by attorney duly authorized,
14.
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and upon the surrender of a properly endorsed certificate or certificates for a
like number of shares.
Section 35. Fixing Record Dates. 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 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 fewer than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. If no record date is fixed: (a) 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; (b) 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; and
(c) 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.
Section 36. 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, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VIII
Other Securities of the Corporation
Section 37. Execution of Other Securities. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates,
may be signed by the Chairman of
15.
<PAGE> 20
the Board of Directors, the President or any Vice President, or such other
person as may be authorized by the Board of Directors, and the corporate seal
impressed thereon or a facsimile of such seal imprinted thereon and attested by
the signature of the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer; provided, however, that where any such bond, debenture or
other corporate security shall be authenticated by the manual signature of a
trustee under an indenture pursuant to which such bond, debenture or other
corporate security shall be issued, the signature of the persons signing and
attesting the corporate seal on such bond, debenture or other corporate security
may be the imprinted facsimile of the signatures of such persons. Interest
coupons appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
Dividends
Section 38. Declaration of Dividends. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to law
at any regular or special meeting. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation.
Section 39. Dividend Reserve. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the
16.
<PAGE> 21
Board of Directors shall think conducive to the interests of the corporation,
and the Board of Directors may modify or abolish any such reserve in the manner
in which it was created.
ARTICLE X
Fiscal Year
Section 40. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
Indemnification of Officers,
Directors, Employees and Agents
Section 41. General Right to Indemnification. 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 he is or was a Director, officer, employee or agent of
the corporation, or is or was serving at the request 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, shall be indemnified by the corporation against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he 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 his
conduct was unlawful. Each such person shall be indemnified to the fullest
extent permitted by Delaware law. 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 he 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 reasonable cause to
believe that his conduct was unlawful.
Section 42. Indemnification in Derivative Actions. 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
17.
<PAGE> 22
or in the right of the corporation to procure a judgment in its favor by reason
of the fact that he 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 shall be indemnified by the corporation
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and 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 for negligence or
misconduct in the performance of his duty 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.
Section 43. Indemnification upon 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 41 and 42 above, or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 44. Determination of Right to Indemnification. Any
indemnification under Sections 41 and 42 (unless ordered by a court) shall be
made by the corporation only as authorized in the specific case upon a
determination that indemnification of the Director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Sections 41 and 42. Such determination shall be made (a) by
the Board of Directors by a majority vote of a quorum consisting of Directors
who were not parties to such action, suit or proceeding, or (b) if such a quorum
is not obtainable, or even if obtainable a quorum of disinterested Directors so
directs, by independent legal counsel in a written opinion, or (c) by a majority
vote of a quorum of the stockholders.
Section 45. Authority to Advance Expenses. Expenses incurred in
defending a civil or criminal action, suit or proceeding may be paid by the
corporation in advance of the final
18.
<PAGE> 23
disposition of such action, suit or proceeding as authorized by the Board of
Directors in the specific case upon receipt of any undertaking by or on behalf
of the Director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Article.
Section 46. Provisions Nonexclusive. The indemnification provided by
this Article shall not be deemed exclusive of any other rights to which a person
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such office
and shall 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.
Section 47. Authority to Insure. The corporation is authorized 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 him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this Article.
Section 48. Definition of Corporation. For the purposes of this Article
XI, references to "the corporation" include 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 authority
to indemnify its directors, officers and employees or agents, so that any person
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,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article XI with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
Section 49. Severability. The invalidity or unenforceability of any
provision of this Article XI shall not
19.
<PAGE> 24
affect the validity or enforceability of the remaining provisions of this
Article.
ARTICLE XII
Notices
Section 50. Notices.
(a) Notice to Stockholders. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
book record of the corporation or its transfer agent.
(b) Notice to Directors. Any notice required to be given to
any Director may be given by the method stated in subsection (a), or by
telegram, except that such notice other than one which is delivered personally
shall be sent to such address as such Director shall have filed in writing with
the Secretary, or, in the absence of such filing, to the last known post office
address of such Director.
(c) Address Unknown. If no address of a stockholder or
Director to be known, notice may be sent to the office of the corporation
required to be maintained pursuant to Section 2 hereof.
(d) Affidavit of Mailing. An affidavit of mailing, executed by
a duly authorized and competent employee of the corporation or its transfer
agent appointed with respect to the class of stock affected, specifying the name
and address or the names and addresses of the stockholder or stockholders, or
Director or Directors, to whom any such notice or notices was or are given, and
the time and method of giving the same, shall be conclusive evidence of the
statements therein contained.
(e) Time Notices Deemed Given. All notices given mail, as
above provided, shall be deemed to have been given as at the time of mailing and
all notices given by telegram shall be ... to have been given as at the sending
time recorded by the telegraph company transmitting the notices.
20.
<PAGE> 25
(f) Methods of Notice. It shall not be necessary that the same
method of giving notice be employed in respect of all Directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(g) Failure to Receive Notice. The period or limitation of
time within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any Director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
to him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such Director to receive such
notice.
(h) Notice to Person with Whom Communication Is Unlawful.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.
ARTICLE XIII
Amendments
Section 51. Amendments. These Bylaws may be repealed, altered or
amended or new Bylaws adopted by the stockholders. The Board of Directors shall
also have the authority, if such authority is conferred upon the Board of
Directors by the Certificate of Incorporation, to repeal, alter or amend these
ByLaws or adopt new Bylaws (including, without limitation, the amendment of any
new Bylaw setting forth the number of Directors no shall constitute the whole
Board of Directors) subject to the power of the stockholders to change or repeal
such Bylaws and provided that the Board of Directors shall not make or alter any
21.
<PAGE> 26
Bylaws fixing the qualifications, classifications, term of office compensation
of Directors.
22.
<PAGE> 1
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
MOLECULAR SIMULATIONS INCORPORATED
Molecular Simulations Incorporated (hereinafter called the
"Corporation"), a corporation organized and existing under the laws of the State
of Delaware, hereby certifies as follows, pursuant to Section 242 of the General
Corporation Law of the State of Delaware:
FIRST: That the Board of Directors of the Corporation, at a meeting
held on ________, 1997, adopted a resolution setting forth a proposed amendment
to the Restated Certificate of Incorporation of the Corporation and directed
that such proposed amendment be submitted to the stockholders of the Corporation
for their consideration and approval. The resolution setting forth the proposed
amendment is as follows:
RESOLVED: That it is advisable and in the best
interests of the Corporation that the
Restated Certificate of Incorporation of the
Corporation be amended in order to effect a
change in Article IV of the Corporation's
Restated Certificate of Incorporation by
adding the following text immediately after
the first paragraph of Article IV:
"Effective at the time of filing with the
Secretary of State of the State of Delaware
of this Certificate of Amendment of Restated
Certificate of Incorporation (the "Effective
Time"), each share of the Corporation's
Common Stock, par value $0.001 per share,
issued and outstanding or held in treasury
at the Effective Time shall, automatically
and without any action on the part of the
respective holders thereof, be subdivided
and converted into one-half of one share of
Common Stock, par value $0.001 per share, of
the Corporation. No fractional shares will
be issued and, in lieu thereof, any holder
of less than one share of Common Stock shall
be entitled to receive cash for such
holder's fractional share based on the fair
market value per share as of the Effective
Time as determined in good faith by the
Board of Directors."
1.
<PAGE> 2
SECOND: That the stockholders of the Corporation duly adopted such
resolution by written consent in accordance with the provisions of Section 228
of the General Corporation Law of the State of Delaware, and written notice of
the adoption of such resolution has been given as provided in Section 228(d) of
the General Corporation Law of the State of Delaware to every stockholder
entitled to such notice.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Molecular Simulations Incorporated has caused this
Certificate of Amendment of Restated Certificate of Incorporation to be signed
by Michael J. Savage, its President, and attested by David B. Hiatt, its
Secretary, this ___ day of ______, 1997.
MOLECULAR SIMULATIONS INCORPORATED
By:____________________________________
Michael J. Savage, President
ATTEST:
By:__________________________________
David B. Hiatt, Secretary
2.
<PAGE> 1
EXHIBIT 3.5
RESTATED CERTIFICATE OF INCORPORATION
OF
MOLECULAR SIMULATIONS INCORPORATED
Molecular Simulations Incorporated (hereinafter called the
"Corporation"), a corporation organized and existing under the laws of the State
of Delaware, hereby certifies as follows, pursuant to Section 245 of the General
Corporation Law of the State of Delaware:
FIRST: That the Corporation was originally incorporated on June 20,
1985 as Polygen Merger Corporation, a Delaware corporation.
SECOND: That the Board of Directors of the Corporation, at a meeting
held on ___________, 1997, adopted a resolution setting forth a proposed
Restated Certificate of Incorporation of the Corporation and directed that such
proposed Restated Certificate of Incorporation be submitted to the stockholders
of the Corporation for their consideration and approval. The resolution setting
forth the proposed Restated Certificate of Incorporation is as follows:
RESOLVED: That effective upon the closing of the Corporation's first
firm commitment underwritten public offering of shares of
Common Stock in which the Corporation shall receive gross
proceeds from the sale of such shares to the public of at
least $10,000,000, it is advisable and in the best
interests of the Corporation that the Restated Certificate
of Incorporation of the Corporation, as amended to date,
be further amended and restated so that it reads in its
entirety in substantially the form attached hereto as
Appendix I.
THIRD: That the stockholders of the Corporation duly adopted such
resolution by written consent in accordance with the provisions of Section 228
of the General Corporation Law of the State of Delaware, and written notice of
the adoption of such resolution has been given as provided in Section 228(d) of
the General Corporation Law of the State of Delaware to every stockholder
entitled to such notice.
FOURTH: That said amendment was duly adopted in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware.
1.
<PAGE> 2
IN WITNESS WHEREOF, Molecular Simulations Incorporated has caused this
Restated Certificate of Incorporation to be signed by Michael J. Savage, its
President, and attested to by David B. Hiatt, its Secretary, this __ day of
_________, 1997.
MOLECULAR SIMULATIONS INCORPORATED
By:___________________________________
Michael J. Savage, President
ATTEST:
By:___________________________________
David B. Hiatt, Secretary
2.
<PAGE> 3
APPENDIX I
RESTATED
CERTIFICATE OF INCORPORATION
OF
MOLECULAR SIMULATIONS INCORPORATED
FIRST. The name of this corporation is Molecular Simulations
Incorporated (the "Corporation").
SECOND. The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, New Castle
County, Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH. The Corporation is authorized to issue one class of stock to be
designated "Common Stock." The total number of shares which the Corporation is
authorized to issue is twenty-five million (25,000,000) shares, each having a
par value of one-tenth of one cent ($0.001).
The preferences, voting powers, qualifications, special or relative
rights or privileges of the Common Stock are as follows.
1. Voting. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting.
2. Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors.
3. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders. In any such dissolution or liquidation of the Corporation, the
assets available for distribution to the holders of Common Stock shall be
distributed in equal amounts per share.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware:
3.
<PAGE> 4
A. The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal the By-Laws of the Corporation.
B. Elections of directors need not be by written ballot unless the
By-Laws of the Corporation shall so provide.
C. The books of the Corporation may be kept at such place within or
without the State of Delaware as the By-Laws of the Corporation may
provide or as may be designated from time to time by the Board of
Directors of the Corporation.
SEVENTH. The Corporation eliminates the personal liability of each
member of its Board of Directors to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided, however,
that, to the extent provided by applicable law, the foregoing shall not
eliminate the liability of a director (i) for any breach of such director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any
transaction from which such director derived an improper personal benefit. No
amendment to or repeal of this provision shall apply to or have any effect on
the liability or alleged liability or any director for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
EIGHTH. The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
4.
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
February 10, 1997
Molecular Simulations Incorporated
9685 Scranton Road
San Diego, CA 92121
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Molecular Simulations Incorporated (the "Company") of a
Registration Statement on Form S-1 (the "Registration Statement") with the
Securities and Exchange Commission, including a related prospectus filed with
the Registration Statement (the "Prospectus"), and the public offering of up to
2,875,000 shares of the Company's common stock, including up to 375,000 shares
that may be sold pursuant to the exercise of an over-allotment option, and up
to 1,065,000 shares that may be sold by certain selling stockholders
(collectively the "Shares").
In connection with this opinion, we have examined the Registration Statement
and related Prospectus, your Certificate of Incorporation and By-laws, as
amended, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a bases for this opinion. We have assumed
the genuineness and authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as copies thereof,
the due execution and delivery of all documents where due execution and
delivery are a prerequisite to the effectiveness thereof, and that the Shares
will be sold by the Underwriters at a price established by the Pricing
Committee of the Company's Board of Directors.
On the bases of the foregoing, and in reliance thereon, we are of the opinion
that the Shares to be sold by the selling shareholders are validly issued,
fully paid and non-assessable and that the Shares to be sold by the Company,
when sold and issued in accordance with the Registration Statement and related
Prospectus, will be validly issued, fully paid, and nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in
the Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ THOMAS A. COLL
---------------------
Thomas A. Coll
<PAGE> 1
EXHIBIT 10.1
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of ____________,
1997 by and between MOLECULAR SIMULATIONS INCORPORATED, a Delaware corporation
(the "Company"), and ___________ ("Agent").
RECITALS
WHEREAS, Agent performs a valuable service to the Company in his
capacity as ___________ of the Company;
WHEREAS, the stockholders of the Company have adopted Amended and
Restated Bylaws (the "Bylaws") providing for the indemnification of the
directors, officers, employees and other agents of the Company, including
persons serving at the request of the Company in such capacities with other
corporations or enterprises, as authorized by the Delaware General Corporation
Law, as amended (the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Company and its agents, officers, employees and other
agents with respect to indemnification of such persons; and
WHEREAS, in order to induce Agent to continue to serve as _________ of
the Company, the Company has determined and agreed to enter into this Agreement
with Agent;
NOW, THEREFORE, in consideration of Agent's continued service as
__________ after the date hereof, the parties hereto agree as follows:
AGREEMENT
1. SERVICES TO THE COMPANY. Agent will serve, at the will of the
Company or under separate contract, if any such contract exists, as __________
of the Company or as a director, officer or other fiduciary of an affiliate of
the Company (including any employee benefit plan of the Company) faithfully and
to the best of his ability so long as he is duly elected and qualified in
accordance with the provisions of the Bylaws or other applicable charter
documents of the Company or such affiliate; provided, however, that Agent may at
any time and for any reason resign from such position (subject to any
contractual obligation that Agent may have assumed apart from this Agreement)
and that the Company or any affiliate shall have no obligation under this
Agreement to continue Agent in any such position.
1
<PAGE> 2
2. INDEMNITY OF AGENT. The Company hereby agrees to hold harmless and
indemnify Agent to the fullest extent authorized or permitted by the provisions
of the Bylaws and the Code, as the same may be amended from time to time (but,
only to the extent that such amendment permits the Company to provide broader
indemnification rights than the Bylaws or the Code permitted prior to adoption
of such amendment).
3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Company hereby further agrees to
hold harmless and indemnify Agent:
(a) against any and all expenses (including attorneys' fees),
witness fees, damages, judgments, fines and amounts paid in settlement and any
other amounts that Agent becomes legally obligated to pay because of any claim
or claims made against or by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative (including an action by or in the right of the
Company) to which Agent is, was or at any time becomes a party, or is threatened
to be made a party, by reason of the fact that Agent is, was or at any time
becomes a director, officer, employee or other agent of Company, or is or was
serving or at any time serves at the request of the Company as a director,
officer, employee or other agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise; and
(b) otherwise to the fullest extent as may be provided to Agent by
the Company under the non-exclusivity provisions of the Code and Section 43 of
the Bylaws.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by the Company:
(a) on account of any claim against Agent for an accounting of
profits made from the purchase or sale by Agent of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any federal, state or local
statutory law;
(b) on account of Agent's conduct that was knowingly fraudulent or
deliberately dishonest or that constituted willful misconduct;
(c) on account of Agent's conduct that constituted a breach of
Agent's duty of loyalty to the Company or resulted in any personal profit or
advantage to which Agent was not legally entitled;
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<PAGE> 3
(d) for which payment is actually made to Agent under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
bylaw or agreement, except in respect of any excess beyond payment under such
insurance, clause, bylaw or agreement;
(e) if indemnification is not lawful (and, in this respect, both the
Company and Agent have been advised that the Securities and Exchange Commission
believes that indemnification for liabilities arising under the federal
securities laws is against public policy and is, therefore, unenforceable and
that claims for indemnification should be submitted to appropriate courts for
adjudication); or
(f) in connection with any proceeding (or part thereof) initiated by
Agent, or any proceeding by Agent against the Company or its directors,
officers, employees or other agents, unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by the
Board of Directors of the Company, (iii) such indemnification is provided by the
Company, in its sole discretion, pursuant to the powers vested in the Company
under the Code, or (iv) the proceeding is initiated pursuant to Section 9
hereof.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Company contained herein shall continue during the period Agent is a director,
officer, employee or other agent of the Company (or is or was serving at the
request of the Company as a director, officer, employee or other agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise) and shall continue thereafter so long as Agent shall be
subject to any possible claim or threatened, pending or completed action, suit
or proceeding, whether civil, criminal, arbitrational, administrative or
investigative, by reason of the fact that Agent was serving in the capacity
referred to herein.
6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this
Agreement to indemnification by the Company for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement and any other amounts that Agent becomes legally obligated to
pay in connection with any action, suit or proceeding referred to in Section 3
hereof even if not entitled hereunder to indemnification for the total amount
thereof, and the Company shall indemnify Agent for the portion thereof to which
Agent is entitled.
7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company of the commencement thereof;
but the omission so to notify the Company will not relieve it from any liability
which it may have to Agent
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<PAGE> 4
otherwise than under this Agreement. With respect to any such action, suit or
proceeding as to which Agent notifies the Company of the commencement thereof:
(a) the Company will be entitled to participate therein at its own
expense;
(b) except as otherwise provided below, the Company may, at its
option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Company to Agent of its
election to assume the defense thereof, the Company will not be liable to Agent
under this Agreement for any legal or other expenses subsequently incurred by
Agent in connection with the defense thereof except for reasonable costs of
investigation or otherwise as provided below. Agent shall have the right to
employ separate counsel in such action, suit or proceeding but the fees and
expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of Agent unless (i)
the employment of counsel by Agent has been authorized by the Company, (ii)
Agent shall have reasonably concluded that there may be a conflict of interest
between the Company and Agent in the conduct of the defense of such action or
(iii) the Company shall not in fact have employed counsel to assume the defense
of such action, in each of which cases the fees and expenses of Agent's separate
counsel shall be at the expense of the Company. The Company shall not be
entitled to assume the defense of any action, suit or proceeding brought by or
on behalf of the Company or as to which Agent shall have made the conclusion
provided for in clause (ii) above; and
(c) the Company shall not be liable to indemnify Agent under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent, which shall not be unreasonably withheld. The
Company shall be permitted to settle any action except that it shall not settle
any action or claim in any manner which would impose any penalty or limitation
on Agent without Agent's written consent, which may be given or withheld in
Agent's sole discretion.
8. EXPENSES. The Company shall advance, prior to the final disposition
of any proceeding, promptly following request therefor, all expenses incurred by
Agent in connection with such proceeding upon receipt of an undertaking by or on
behalf of Agent to repay said amounts if it shall be determined ultimately that
Agent is not entitled to be indemnified under the provisions of this Agreement,
the Bylaws, the Code or otherwise.
9. ENFORCEMENT. Any right to indemnification or advances granted by
this Agreement to Agent shall be enforceable by or on behalf of Agent in any
court of competent jurisdiction if (i) the claim for indemnification or advances
is denied, in whole or in part, or (ii) no disposition of such claim is made
within ninety (90) days of request
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<PAGE> 5
therefor. Agent, in such enforcement action, if successful in whole or in part,
shall be entitled to be paid also the expense of prosecuting his claim. It shall
be a defense to any action for which a claim for indemnification is made under
Section 3 hereof (other than an action brought to enforce a claim for expenses
pursuant to Section 8 hereof, provided that the required undertaking has been
tendered to the Company) that Agent is not entitled to indemnification because
of the limitations set forth in Section 4 hereof. Neither the failure of the
Company (including its Board of Directors or its stockholders) to have made a
determination prior to the commencement of such enforcement action that
indemnification of Agent is proper in the circumstances, nor an actual
determination by the Company (including its Board of Directors or its
stockholders) that such indemnification is improper shall be a defense to the
action or create a presumption that Agent is not entitled to indemnification
under this Agreement or otherwise.
10. 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 Agent, 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.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Company's Amended and
Restated Certificate of Incorporation or Bylaws, agreement, vote of stockholders
or directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office.
12. SURVIVAL OF RIGHTS.
(a) The rights conferred on Agent by this Agreement shall continue
after Agent has ceased to be a director, officer, employee or other agent of the
Company or to serve at the request of the Company as a director, officer,
employee or other agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise and shall inure to the benefit
of Agent's heirs, executors and administrators.
(b) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, 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.
13. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be
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<PAGE> 6
held to be invalid for any reason, such invalidity or unenforceability shall not
affect the validity or enforceability of the other provisions hereof.
Furthermore, if this Agreement shall be invalidated in its entirety on any
ground, then the Company shall nevertheless indemnify Agent to the fullest
extent provided by the Amended and Restated Bylaws, the Code or any other
applicable law.
14. ENTIRE AGREEMENT. This Agreement and the agreements referenced
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto pertaining to the subject matters hereof are
superseded and expressly canceled.
15. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
16. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
17. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.
18. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
19. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
(a) If to Agent, at the address indicated on the signature page
hereof.
(b) If to the Company, to
Molecular Simulations Incorporated
9685 Scranton Road
San Diego, CA 92121
or to such other address as may have been furnished to Agent by the Company.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of
the day and year first above written.
MOLECULAR SIMULATIONS INCORPORATED
By:____________________________________________
MICHAEL J. SAVAGE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AGENT
_______________________________________________
Signature
Address:
_______________________________________________
_______________________________________________
7
<PAGE> 1
EXHIBIT 10.2
MOLECULAR SIMULATIONS INCORPORATED
1996 EQUITY INCENTIVE PLAN
ADOPTED NOVEMBER 13, 1996
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to benefit from increases in value of the stock of
the Company through the granting of (i) Incentive Stock Options, (ii)
Nonstatutory Stock Options, (iii) stock bonuses, (iv) rights to purchase
restricted stock, and (v) stock appreciation rights, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof, or (iii) stock
appreciation rights granted pursuant to Section 8 hereof. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options at
the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
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<PAGE> 2
(d) "Committee" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) "Company" means Molecular Simulations Incorporated, a Delaware
corporation.
(f) "Concurrent Stock Appreciation Right" or "Concurrent Right" means a
right granted pursuant to subsection 8(b)(2) of the Plan.
(g) "Consultant" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(h) "Continuous Status as an Employee, Director or Consultant" means
that the service of an individual to the Company, whether as an Employee,
Director or Consultant, is not interrupted or terminated. The Board, in its sole
discretion, may determine whether Continuous Status as an Employee, Director or
Consultant shall be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave, or any
other personal leave; or (ii) transfers between locations of the Company or
between the Company, Affiliates or their successors.
(i) "Covered Employee" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(j) "Director" means a member of the Board.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. 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 the common
stock determined as follows and, in each case, in a manner consistent with
Section 260.140.50 of Title 10 of the California Code of Regulations:
(i) If the common stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the
2.
<PAGE> 3
National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ")
System, the Fair Market Value of a share of common stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such system or exchange (or the exchange with the greatest volume of
trading in 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 Board deems reliable;
(ii) If the common stock is quoted on the NASDAQ System (but not on
the National Market System thereof) or 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 bid and 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 Board deems reliable;
(iii) In the absence of an established market for the common
stock, the Fair Market Value shall be determined in good faith by the Board.
(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) "Independent Stock Appreciation Right" or "Independent Right" means
a right granted pursuant to subsection 8(b)(3) of the Plan.
(p) "Listing Date" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968
(q) "Non-Employee Director" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee" for purposes of Rule 16b-3.
3.
<PAGE> 4
(r) "Nonstatutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.
(s) "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.
(t) "Option" means a stock option granted pursuant to the Plan.
(u) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(v) "Optionee" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(w) "Outside Director" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(x) "Plan" means this 1996 Equity Incentive Plan.
(y) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect with respect to the Company when discretion is being
exercised regarding the Plan.
(z) "Securities Act" means the Securities Act of 1933, as amended.
(aa) "Stock Appreciation Right" means any of the various types of
rights which may be granted under Section 8 of the Plan.
(bb) "Stock Award" means any right granted under the Plan, including
any Option, any stock bonus, any right to purchase restricted stock, and any
Stock Appreciation Right.
(cc) "Stock Award Agreement" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
4.
<PAGE> 5
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(dd) "Tandem Stock Appreciation Right" or "Tandem Right" means a right
granted pursuant to subsection 8(b)(1) of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock,
a Stock Appreciation Right, or a combination of the foregoing; the provisions of
each Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive stock pursuant to a Stock
Award; whether a person shall be permitted to receive stock upon exercise of an
Independent Stock Appreciation Right; and the number of shares with respect to
which a Stock Award shall be granted to each such person.
(2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section 14.
(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee of
the Board composed of not fewer than two (2) members (the "Committee"), all of
the members of which Committee may be, in the discretion of the Board,
Non-Employee Directors and/or Outside Directors. If administration is delegated
to a Committee, the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board, including the power
to delegate to a subcommittee of two (2) or more Outside Directors any of the
administrative powers the Committee is
5.
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authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or such a subcommittee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan. Additionally,
prior to the Listing Date, and notwithstanding anything to the contrary
contained herein, the Board may delegate administration of the Plan to a
committee of one or more members of the Board and the term "Committee" shall
apply to any person or persons to whom such authority has been delegated.
Notwithstanding anything in this Section 3 to the contrary, the Board or the
Committee may delegate to a committee of one or more members of the Board the
authority to grant Stock Awards to eligible persons who (1) are not then subject
to Section 16 of the Exchange Act and/or (2) are either (i) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award, or (ii) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 13 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
shall not exceed in the aggregate three hundred thousand (300,000) shares of the
Company's common stock (as adjusted for the 1-for-2 reverse stock split to be
effected in February 1997). If any Stock Award shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full,
the stock not acquired under such Stock Award shall revert to and again become
available for issuance under the Plan. Shares subject to Stock Appreciation
Rights exercised in accordance with Section 8 of the Plan shall not be available
for subsequent issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees. Stock Awards other than Incentive
Stock Options and Stock Appreciation Rights appurtenant thereto may be granted
only to Employees , Directors or Consultants.
(b) No person shall be eligible for the grant of an Option or an award
to purchase restricted stock if, at the time of grant, such person owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or of any of its
6.
<PAGE> 7
Affiliates unless the exercise price of such Option is at least one hundred ten
percent (110%) of the Fair Market Value of such stock at the date of grant and
the Option is not exercisable after the expiration of five (5) years from the
date of grant, or in the case of a restricted stock purchase award, the purchase
price is at least one hundred percent (100%) of the Fair Market Value of such
stock at the date of grant.
(c) Subject to the provisions of Section 13 relating to adjustments
upon changes in stock, no person shall be eligible to be granted Options and
Stock Appreciation Rights covering more than three hundred thousand (300,000)
shares of the Company's common stock in any twelve (12) month period. This
subsection 5(c) shall not apply prior to the Listing Date and, following the
Listing Date, shall not apply until (i) the earliest of: (A) the first material
modification of the Plan (including any increase to the number of shares
reserved for issuance under the Plan in accordance with Section 4); (B) the
issuance of all of the shares of common stock reserved for issuance under the
Plan; (C) the expiration of the Plan; or (D) the first meeting of stockholders
at which directors are to be elected that occurs after the close of the third
calendar year following the calendar year in which occurred the first
registration of an equity security under section 12 of the Exchange Act; or (ii)
such other date required by Section 162(m) of the Code and the rules and
regulations promulgated thereunder.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted; the exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Option (whether an
Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an
exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in
7.
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cash at the time the Option is exercised, or (ii) at the discretion of the Board
or the Committee, at the time of the grant of the Option, (A) by delivery to the
Company of other common stock of the Company, (B) according to a deferred
payment arrangement, except that payment of the common stock's "par value" (as
defined in the Delaware General Corporation Law) shall not be made by deferred
payment, or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other common stock of the Company) with
the person to whom the Option is granted or to whom the Option is transferred
pursuant to subsection 6(d), or (c) in any other form of legal consideration
that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option shall
not be transferable except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order (a "QDRO"), and shall be
exercisable during the lifetime of the person to whom the Option is granted only
by such person or any transferee pursuant to a QDRO. Notwithstanding the
foregoing, the person to whom the Option is granted may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionee, shall thereafter be
entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary but in each case will provide for vesting of at
least twenty percent (20%) per year of the total number of shares subject to the
Option. The provisions of this subsection 6(e) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or
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Consultant terminates (other than upon the Optionee's death or disability), the
Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it as of the date of termination) but only within such
period of time ending on the earlier of (i) the date three (3) months following
the termination of the Optionee's Continuous Status as an Employee, Director or
Consultant (or such longer or shorter period, which shall not be less than
thirty (30) days, specified in the Option Agreement), or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionee does not exercise his or her Option within the time
specified in the Option Agreement, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for issuance
under the Plan.
An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Status as an
Employee, Director, or Consultant (other than upon the Optionee's death or
disability) would result in liability under Section 16(b) of the Exchange Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in the Option Agreement, or (ii) the tenth (10th) day
after the last date on which such exercise would result in such liability under
Section 16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionee's Continuous Status as an Employee, Director or Consultant (other than
upon the Optionee's death or disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements under
the Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in the first paragraph of this
subsection 6(f), or (ii) the expiration of a period of three (3) months after
the termination of the Optionee's Continuous Status as an Employee, Director or
Consultant during which the exercise of the Option would not be in violation of
such registration requirements.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it as of the date of
termination), but only within such period of time ending on the earlier of (i)
the date twelve (12) months following such termination (or such longer or
shorter period, which in no event shall be less than six (6) months, specified
in the Option Agreement), or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, at the date of termination, the Optionee
is not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under 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 and again
become available for issuance under the Plan.
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<PAGE> 10
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a period specified in the Option Agreement after the termination of,
the Optionee's Continuous Status as an Employee, Director or Consultant, the
Option may be exercised (to the extent the Optionee was entitled to exercise the
Option as of the date of death) by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionee's death pursuant to
subsection 6(d), but only within the period ending on the earlier of (i) the
date eighteen (18) months following the date of death (or such longer or shorter
period, which in no event shall be less than six (6) months, specified in the
Option Agreement), or (ii) the expiration of the term of such Option as set
forth in the Option Agreement. 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 revert to and again become available
for issuance under the Plan. If, after death, the Option is not exercised within
the time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance under the
Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased shall be subject to a repurchase right in favor of the Company, with
the repurchase price to be equal to the original purchase price of the stock, or
to any other restriction the Board determines to be appropriate; provided,
however, that (i) the right to repurchase at the original purchase price shall
lapse at a minimum rate of twenty percent (20%) per year over five (5) years
from the date the Option was granted, and (ii) such right shall be exercisable
only within (A) the ninety (90) day period following the termination of
employment or the relationship as a Director or Consultant, or (B) such longer
period as may be agreed to by the Company and the Optionee (for example, for
purposes of satisfying the requirements of Section 1202(c)(3) of the Code
(regarding "qualified small business stock")), and (iii) such right shall be
exercisable only for cash or cancellation of purchase money indebtedness for the
shares. Should the right of repurchase be assigned by the Company, the assignee
shall pay the Company cash equal to the difference between the original purchase
price and the stock's Fair Market Value if the original purchase price is less
than the stock's Fair Market Value.
(j) RIGHT OF REPURCHASE. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to
repurchase all or any part of the vested shares exercised pursuant to the
Option; provided, however, that (i) such repurchase right shall be exercisable
only within the ninety (90) day period following the termination of employment
or the relationship as a Director or Consultant, and (ii) such right shall be
exercisable only for cash or cancellation of purchase money indebtedness
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<PAGE> 11
for the shares at a repurchase price equal to the greater of (A) the stock's
Fair Market Value at the time of such termination or (B) the original purchase
price paid for such shares by the Optionee.
(k) RIGHT OF FIRST REFUSAL. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to exercise
a right of first refusal following receipt of notice from the Optionee of the
intent to transfer all or any part of the shares exercised pursuant to the
Option.
(l) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder, the Board
or Committee shall have the authority (but not an obligation) to include as part
of any Option Agreement a provision entitling the Optionee to a further Option
(a "Re-Load Option") in the event the Optionee exercises the Option evidenced by
the Option agreement, in whole or in part, by surrendering other shares of
Common Stock in accordance with this Plan and the terms and conditions of the
Option Agreement. Any such Re-Load Option (i) shall be for a number of shares
equal to the number of shares surrendered as part or all of the exercise price
of such Option; (ii) shall have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-Load
Option; and (iii) shall have an exercise price which is equal to one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option. Notwithstanding
the foregoing, a Re-Load Option which is granted to a 10% stockholder (as
described in subsection 5(b), shall have an exercise price which is equal to one
hundred ten percent (110%) of the Fair Market Value of the stock subject to the
Re-Load Option on the date of exercise of the original Option and shall have a
term which is no longer than five (5) years.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the time
of the grant of the original Option; provided, however, that the designation of
any Re-Load Option as an Incentive Stock Option shall be subject to the one
hundred thousand dollar ($100,000) annual limitation on exercisability of
Incentive Stock Options described in subsection 12(e) of the Plan and in Section
422(d) of the Code. There shall be no Re-Load Options on a Re-Load Option. Any
such Re-Load Option shall be subject to the availability of sufficient shares
under subsection 4(a) and the limits on the grants of Options under subsection
5(c) and shall be subject to such other terms and conditions as the Board or
Committee may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
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<PAGE> 12
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each stock
bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase Stock Award Agreement shall be such amount as the Board or Committee
shall determine and designate in such agreement, but in no event shall the
purchase price be less than eighty-five percent (85%) of the stock's Fair Market
Value on the date such award is made. Notwithstanding the foregoing, the Board
or the Committee may determine that eligible participants in the Plan may be
awarded stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company or for its benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the laws of descent
and distribution or pursuant to a QDRO satisfying the requirements of Rule 16b-3
and any administrative interpretations or pronouncements thereunder, so long as
stock awarded under such agreement remains subject to the terms of the
agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment arrangement, except that payment of the common stock's "par
value" (as defined in the Delaware General Corporation Law) shall not be made by
deferred payment, or other arrangement with the person to whom the stock is
sold; or (iii) in any other form of legal consideration that may be acceptable
to the Board or the Committee in its discretion. Notwithstanding the foregoing,
the Board or the Committee to which administration of the Plan has been
delegated may award stock pursuant to a stock bonus agreement in consideration
for past services actually rendered to the Company or for its benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee. The applicable agreement shall provide (i) that the right to
repurchase at the original purchase price shall lapse at a minimum rate of
twenty percent (20%) per year over five (5) years from the date the Stock Award
was granted, and (ii) such right shall be exercisable only (A) within the
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<PAGE> 13
ninety (90) day period following the termination of employment or the
relationship as a Director or Consultant, or (B) such longer period as may be
agreed to by the Company and the holder of the Stock Award (for example, for
purposes of satisfying the requirements of Section 1202(c)(3) of the Code
(regarding "qualified small business stock")), and (iii) such right shall be
exercisable only for cash or cancellation of purchase money indebtedness for the
shares. Should the right of repurchase be assigned by the Company, the assignee
shall pay the Company cash equal to the difference between the original purchase
price and the stock's Fair Market Value if the original purchase price is less
than the stock's Fair Market Value.
(e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire, subject to the limitations described in subsection 7(d), any or all
of the shares of stock held by that person which have not vested as of the date
of termination under the terms of the stock bonus or restricted stock purchase
agreement between the Company and such person.
8. STOCK APPRECIATION RIGHTS.
(a) The Board or Committee shall have full power and authority,
exercisable in its sole discretion, to grant Stock Appreciation Rights under the
Plan to Employees or Directors of or Consultants to, the Company or its
Affiliates. To exercise any outstanding Stock Appreciation Right, the holder
must provide written notice of exercise to the Company in compliance with the
provisions of the Stock Award Agreement evidencing such right. If a Stock
Appreciation Right is granted to an individual who is at the time of grant
subject to Section 16(b) of the Exchange Act, the Stock Award Agreement shall
incorporate all the terms and conditions at the time necessary to assure that
the subsequent exercise of such right shall qualify for the safe harbor
exemption from short-swing profit liability provided by Rule 16b-3 promulgated
under the Exchange Act (or any successor rule or regulation). Except as provided
in subsection 5(c), no limitation shall exist on the aggregate amount of cash
payments the Company may make under the Plan in connection with the exercise of
a Stock Appreciation Right.
(b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:
(1) TANDEM STOCK APPRECIATION RIGHTS. Tandem Stock Appreciation
Rights will be granted appurtenant to an Option, and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains.
Tandem Stock Appreciation Rights will require the holder to elect between the
exercise of the underlying Option for shares of stock and the surrender, in
whole or in part, of such Option for an appreciation distribution. The
13.
<PAGE> 14
appreciation distribution payable on the exercised Tandem Right shall be in cash
(or, if so provided, in an equivalent number of shares of stock based on Fair
Market Value on the date of the Option surrender) in an amount up to the excess
of (A) the Fair Market Value (on the date of the Option surrender) of the number
of shares of stock covered by that portion of the surrendered Option in which
the Optionee is vested over (B) the aggregate exercise price payable for such
vested shares.
(2) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent Rights will be
granted appurtenant to an Option and may apply to all or any portion of the
shares of stock subject to the underlying Option and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains. A
Concurrent Right shall be exercised automatically at the same time the
underlying Option is exercised with respect to the particular shares of stock to
which the Concurrent Right pertains. The appreciation distribution payable on an
exercised Concurrent Right shall be in cash (or, if so provided, in an
equivalent number of shares of stock based on Fair Market Value on the date of
the exercise of the Concurrent Right) in an amount equal to such portion as
shall be determined by the Board or the Committee at the time of the grant of
the excess of (A) the aggregate Fair Market Value (on the date of the exercise
of the Concurrent Right) of the vested shares of stock purchased under the
underlying Option which have Concurrent Rights appurtenant to them over (B) the
aggregate exercise price paid for such shares.
(3) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights will
be granted independently of any Option and shall, except as specifically set
forth in this Section 8, be subject to the same terms and conditions applicable
to Nonstatutory Stock Options as set forth in Section 6. They shall be
denominated in share equivalents. The appreciation distribution payable on the
exercised Independent Right shall be not greater than an amount equal to the
excess of (A) the aggregate Fair Market Value (on the date of the exercise of
the Independent Right) of a number of shares of Company stock equal to the
number of share equivalents in which the holder is vested under such Independent
Right, and with respect to which the holder is exercising the Independent Right
on such date, over (B) the aggregate Fair Market Value (on the date of the grant
of the Independent Right) of such number of shares of Company stock. The
appreciation distribution payable on the exercised Independent Right shall be in
cash or, if so provided, in an equivalent number of shares of stock based on
Fair Market Value on the date of the exercise of the Independent Right.
9. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) The Board or the Committee shall have the authority to effect, at
any time and from time to time, (i) the repricing of any outstanding Options
and/or any Stock Appreciation Rights under the Plan and/or (ii) with the consent
of the affected holders of
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<PAGE> 15
Options and/or Stock Appreciation Rights, the cancellation of any outstanding
Options and/or any Stock Appreciation Rights under the Plan and the grant in
substitution therefor of new Options and/or Stock Appreciation Rights under the
Plan covering the same or different numbers of shares of stock, but having an
exercise price per share not less than eighty-five percent (85%) of the Fair
Market Value (one hundred percent (100%) of the Fair Market Value in the case of
an Incentive Stock Option) or, in the case of a 10% stockholder (as described in
subsection 5(b)), not less than one hundred ten percent (110%) of the Fair
Market Value) per share of stock on the new grant date. Notwithstanding the
foregoing, the Board or the Committee may grant an Option and/or Stock
Appreciation Right with an exercise price lower than that set forth above if
such Option and/or Stock Appreciation Right is granted as part of a transaction
to which section 424(a) of the Code applies.
(b) Shares subject to an Option or Stock Appreciation Right canceled
under this Section 9 shall continue to be counted against the maximum award of
Options and Stock Appreciation Rights permitted to be granted pursuant to
subsection 5(c) of the Plan. The repricing of an Option and/or Stock
Appreciation Right under this Section 9, resulting in a reduction of the
exercise price, shall be deemed to be a cancellation of the original Option
and/or Stock Appreciation Right and the grant of a substitute Option and/or
Stock Appreciation Right; in the event of such repricing, both the original and
the substituted Options and Stock Appreciation Rights shall be counted against
the maximum awards of Options and Stock Appreciation Rights permitted to be
granted pursuant to subsection 5(c) of the Plan. The provisions of this
subsection 9(b) shall be applicable only to the extent required by Section
162(m) of the Code.
10. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such Stock Awards
unless and until such authority is obtained.
15.
<PAGE> 16
11. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
12. MISCELLANEOUS.
(a) Neither an Employee, Director or Consultant nor any person to whom
a Stock Award is transferred under subsection 6(d), 7(b), or 8(b) shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such Stock Award unless and until such person
has satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(b) Throughout the term of any Stock Award, the Company shall deliver
to the holder of such Stock Award, not later than one hundred twenty (120) days
after the close of each of the Company's fiscal years during the term of such
Stock Award, a balance sheet and an income statement. This subsection shall not
apply when issuance is limited to key employees whose duties in connection with
the Company assure them access to equivalent information.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Director, Consultant or
other holder of Stock Awards any right to continue in the employ of the Company
or any Affiliate (or to continue acting as a Director or Consultant) or shall
affect the right of the Company or any Affiliate to terminate the employment of
any Employee with or without cause the right of the Company's Board of Directors
and/or the Company's stockholders to remove any Director as provided in the
Company's ByLaws and the provisions of the Delaware General Corporation Law or
the right to terminate the relationship of any Consultant subject to the terms
of such Consultant's agreement with the Company or Affiliate.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.
(e) The Company may require any person to whom a Stock Award is
granted, or any person to whom a Stock Award is transferred pursuant to
subsection 6(d), 7(b) or 8(b), as a condition of exercising or acquiring stock
under any Stock Award, (1) to give written assurances satisfactory to the
Company as to such person's knowledge and experience in financial and business
matters and/or to employ a purchaser representative
16.
<PAGE> 17
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Stock Award; and (2) to give written assurances satisfactory to
the Company stating that such person is acquiring the stock subject to the Stock
Award for such person's own account and not with any present intention of
selling or otherwise distributing the stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (i) the
issuance of the shares upon the exercise or acquisition of stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act, or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the common stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(3) delivering to the Company owned and unencumbered shares of the common stock
of the Company.
13. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split (excluding the 1-for-2 reverse stock split to be effected
in January 1997, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the type(s) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person during any twelve (12) month period pursuant to subsection
5(c), and the outstanding Stock Awards will be appropriately adjusted in the
type(s) and number of securities and price per share of stock subject to such
outstanding Stock Awards. Such adjustments shall be made by the Board or the
Committee, the determination of which shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a "transaction not involving the receipt of consideration by the
Company".)
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<PAGE> 18
(b) In the event of: (1) a dissolution, liquidation or sale of all or
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) after the Listing Date, the acquisition by any person,
entity or group within the meaning of Section 13(d) or 14(d) of the Exchange Act
or any comparable successor provisions (excluding any employee benefit plan, or
related trust, sponsored or maintained by the Company or any Affiliate of the
Company) of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rule) of securities
of the Company representing at least fifty percent (50%) of the combined voting
power entitled to vote in the election of directors, then: (i) any surviving or
acquiring corporation shall assume any Stock Awards outstanding under the Plan
or shall substitute similar stock awards (including an award to acquire the same
consideration paid to the stockholders in the transaction described in this
subsection 13(b)) for those outstanding under the Plan, or (ii) in the event any
surviving or acquiring corporation refuses to assume such Stock Awards or to
substitute similar stock awards for those outstanding under the Plan (A) with
respect to Stock Awards held by persons then performing services as Employees,
Directors or Consultants, and subject to any applicable provisions of the
California Corporate Securities Law of 1968 and related regulations relied upon
as a condition of issuing securities pursuant to the Plan, the vesting of such
Stock Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated prior to such event and the Stock Awards
terminated if not exercised (if applicable) after such acceleration and at or
prior to such event, and (B) with respect to any other Stock Awards outstanding
under the Plan, such Stock Awards shall be terminated if not exercised (if
applicable) prior to such event.
14. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 13 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for Stock Awards under
the Plan;
(ii) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in order
for the Plan to satisfy the requirements of Section 422 of the Code); or
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<PAGE> 19
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code or to comply with the requirements of Rule 16b-3.
(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments to
the Plan intended to satisfy the requirements of Section 162(m) of the Code and
the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible Employees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.
(d) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Stock Award was
granted and (ii) such person consents in writing.
(e) The Board at any time, and from time to time, may amend the terms
of any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall not be impaired by any such amendment
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on November 12, 2006, which shall be
within ten (10) years from the date the Plan is adopted by the Board or approved
by the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the written consent of the person to whom the Stock Award was
granted.
19.
<PAGE> 20
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Stock Awards granted under the Plan shall be exercised unless and until the Plan
has been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board, and, if required, an appropriate permit has been issued by the
Commissioner of Corporations of the State of California.
20.
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EXHIBIT 10.3
NONSTATUTORY STOCK OPTION
__________, Optionee:
MOLECULAR SIMULATIONS INCORPORATED (the "Company"), pursuant to its
1996 Equity Incentive Plan (the "Plan"), has granted to you, the optionee named
above, an option to purchase shares of the common stock of the Company ("Common
Stock"). This option is not intended to qualify and will not be treated as an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"). Defined terms not
explicitly defined in this agreement but defined in the Plan shall have the same
definitions as in the Plan.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is ____________ (____).
2. VESTING. Subject to the limitations contained herein, _____________
percent (__%) of the shares will vest (become exercisable) on __________, 19__
and ____________ percent (__%) of the shares will then vest each [month/year]
thereafter until either (i) you cease to provide services to the Company for any
reason, or (ii) this option becomes fully vested.
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is
_______________________ ($____) per share, being not less than 85% of the fair
market value of the Common Stock on the date of grant of this option.
(b) METHOD OF PAYMENT. Payment of the exercise price per share is
due in full upon exercise of all or any part of each installment which has
accrued to you. You may elect, to the extent permitted by applicable statutes
and regulations, to make payment of the exercise price under one of the
following alternatives:
(i) Payment of the exercise price per share in cash (including
check) at the time of exercise;
1.
<PAGE> 2
(ii) Payment pursuant to a program developed under Regulation T
as promulgated by the Federal Reserve Board which, prior to the issuance of
Common Stock, results in either the receipt of cash (or check) by the Company or
the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds;
(iii) Provided that at the time of exercise the Company's Common
Stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of already-owned shares of Common Stock, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interests, which Common
Stock shall be valued at its fair market value on the date of exercise; or
(iv) Payment by a combination of the methods of payment
permitted by subparagraph 3(b)(i) through 3(b)(iii) above.
4. WHOLE SHARES. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Act or, if such
shares are not then so registered, the Company has determined that such exercise
and issuance would be exempt from the registration requirements of the Act.
6. TERM. The term of this option commences on __________, 19__, the
date of grant, and expires on _______________ (the "Expiration Date," which date
shall be no more than ten (10) years from the date this option is granted),
unless this option expires sooner as set forth below or in the Plan. In no event
may this option be exercised on or after the Expiration Date. This option shall
terminate prior to the Expiration Date as follows: three (3) months after the
termination of your Continuous Status as an Employee, Director or Consultant
with the Company or an Affiliate of the Company for any reason or for no reason
unless:
(a) such termination of Continuous Status as an Employee, Director
or Consultant is due to your permanent and total disability as defined in
Section 422(c)(6) of the Code, in which event the option shall expire on the
earlier of the Expiration Date set forth above or twelve (12) months following
such termination of Continuous Status as an Employee, Director or Consultant; or
(b) such termination of Continuous Status as an Employee, Director
or Consultant is due to your death or your death occurs within three (3) months
following
2.
<PAGE> 3
termination of your Continuous Status as an Employee, Director or Consultant for
any other reason, in which event the option shall expire on the earlier of the
Expiration Date set forth above or eighteen (18) months after your death; or
(c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 5 above, in
which event the option shall not expire until the earlier of the Expiration Date
set forth above or until it shall have been exercisable for an aggregate period
of three months after the termination of Continuous Status as an Employee,
Director or Consultant; or
(d) exercise of the option within three (3) months after termination
of your Continuous Status as an Employee, Director or Consultant with the
Company or with an Affiliate of the Company would result in liability under
section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act), in
which case the option will expire on the earlier of (i) the Expiration Date set
forth above, (ii) the tenth (10th) day after the last date upon which exercise
would result in such liability or (iii) six (6) months and ten (10) days after
the termination of your Continuous Status as an Employee, Director or Consultant
with the Company or an Affiliate of the Company.
However, this option may be exercised following termination of
Continuous Status as an Employee, Director or Consultant only as to that number
of shares as to which it was exercisable on the date of termination of
Continuous Status as an Employee, Director or Consultant under the provisions of
paragraph 2 of this option.
7. REPRESENTATIONS. By executing this option agreement, you hereby
warrant and represent that you are acquiring this option for your own account
and that you have no intention of distributing, transferring or selling all or
any part of this option except in accordance with the terms of this option
agreement.
8. EXERCISE.
(a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to subsection
12(e) of the Plan.
(b) By exercising this option you agree that:
(i) as a precondition to the completion of any exercise of this
option, the Company may require you to enter an arrangement providing for the
cash payment by you to the Company of any tax withholding obligation of the
Company
3.
<PAGE> 4
arising by reason of: (1) the exercise of this option; (2) the lapse of any
substantial risk of forfeiture to which the shares are subject at the time of
exercise; or (3) the disposition of shares acquired upon such exercise. You also
agree that any exercise of this option has not been completed and that the
Company is under no obligation to issue any Common Stock to you until such an
arrangement is established or the Company's tax withholding obligations are
satisfied, as determined by the Company; and
(ii) the Company (or a representative of the underwriters) may,
in connection with the first underwritten registration of the offering of any
securities of the Company under the Act, require that you not sell or otherwise
transfer or dispose of any shares of Common Stock or other securities of the
Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Act as may be requested by the Company or the representative of the
underwriters. You further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such period.
9. TRANSFERABILITY. This option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise this
option.
10. OPTION NOT A SERVICE CONTRACT. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In addition,
nothing in this option shall obligate the Company or any Affiliate of the
Company, or their respective stockholders, Board of Directors, officers, or
employees to continue any relationship which you might have as a Director or
Consultant for the Company or Affiliate of the Company.
11. NOTICES. Any notices provided for in this option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after deposit
in the United States mail, postage prepaid, addressed to you at the address
specified below or at such other address as you hereafter designate by written
notice to the Company.
4.
<PAGE> 5
12. GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, a copy of which is attached hereto and its provisions
are hereby made a part of this option, including without limitation the
provisions of Section 6 of the Plan relating to option provisions, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control.
Dated the _____ day of ____________, 19__.
Very truly yours,
MOLECULAR SIMULATIONS INCORPORATED
By_________________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
Molecular Simulations Incorporated 1996 Stock Plan
Notice of Exercise
5.
<PAGE> 6
The undersigned:
(a) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights and liabilities
with respect to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option,
it sets forth the entire understanding between the undersigned optionee and the
Company and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE _______________
(Initial)
OTHER ____________________________________
____________________________________
____________________________________
___________________________________________
OPTIONEE
Address:___________________________________
___________________________________
6.
<PAGE> 1
EXHIBIT 10.4
INCENTIVE STOCK OPTION
___________, Optionee:
MOLECULAR SIMULATIONS INCORPORATED (the "Company"), pursuant to its
1996 Equity Incentive Plan (the "Plan"), has granted to you, the optionee named
above, an option to purchase shares of the common stock of the Company ("Common
Stock"). This option is intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"). Defined terms not
explicitly defined in this agreement but defined in the Plan shall have the same
definitions as in the Plan.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is ___________ (_____).
2. VESTING. Subject to the limitations contained herein, __________
percent (__%) of the shares will vest (become exercisable) on _________, 19__
and _________ percent (__%) of the shares will then vest each [month/year]
thereafter until either (i) you cease to provide services to the Company for any
reason, or (ii) this option becomes fully vested.
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is
_____________________ ($_____) per share, being not less than the fair market
value of the Common Stock on the date of grant of this option.
(b) METHOD OF PAYMENT. Payment of the exercise price per share is
due in full upon exercise of all or any part of each installment which has
accrued to you. You may elect, to the extent permitted by applicable statutes
and regulations, to make payment of the exercise price under one of the
following alternatives:
(i) Payment of the exercise price per share in cash (including
check) at the time of exercise;
1.
<PAGE> 2
(ii) Payment pursuant to a program developed under Regulation
T as promulgated by the Federal Reserve Board which, prior to the issuance of
Common Stock, results in either the receipt of cash (or check) by the Company or
the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds;
(iii) Provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of already-owned shares of Common Stock, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interests, which Common
Stock shall be valued at its fair market value on the date of exercise; or
(iv) Payment by a combination of the methods of payment
permitted by subparagraph 3(b)(i) through 3(b)(iii) above.
4. WHOLE SHARES. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Act or, if such
shares are not then so registered, the Company has determined that such exercise
and issuance would be exempt from the registration requirements of the Act.
6. TERM. The term of this option commences on __________, 19__, the
date of grant, and expires on ___________ (the "Expiration Date," which date
shall be no more than ten (10) years from the date this option is granted),
unless this option expires sooner as set forth below or in the Plan. In no event
may this option be exercised on or after the Expiration Date. This option shall
terminate prior to the Expiration Date as follows: three (3) months after the
termination of your Continuous Status as an Employee, Director or Consultant
with the Company or an Affiliate of the Company for any reason or for no reason
unless:
(a) such termination of Continuous Status as an Employee, Director
or Consultant is due to your permanent and total disability as defined in
Section 422(c)(6) of the Code, in which event the option shall expire on the
earlier of the Expiration Date set forth above or twelve (12) months following
such termination of Continuous Status as an Employee, Director or Consultant; or
(b) such termination of Continuous Status as an Employee, Director
or Consultant is due to your death or your death occurs within three (3) months
following your termination of Continuous Status as an Employee, Director or
Consultant for any
2.
<PAGE> 3
other reason, in which event the option shall expire on the earlier of the
Expiration Date set forth above or eighteen (18) months after your death; or
(c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 5 above, in
which event the option shall not expire until the earlier of the Expiration Date
set forth above or until it shall have been exercisable for an aggregate period
of three (3) months after the termination of Continuous Status as an Employee,
Director or Consultant; or
(d) exercise of the option within three (3) months after
termination of your Continuous Status as an Employee, Director or Consultant
with the Company or with an Affiliate of the Company would result in liability
under section 16(b) of the Securities Exchange Act of 1934, in which case the
option will expire on the earlier of (i) the Expiration Date set forth above,
(ii) the tenth (10th) day after the last date upon which exercise would result
in such liability or (iii) six (6) months and ten (10) days after the
termination of your Continuous Status as an Employee, Director or Consultant
with the Company or an Affiliate of the Company.
However, this option may be exercised following termination of
Continuous Status as an Employee, Director or Consultant only as to that number
of shares as to which it was exercisable on the date of termination of
Continuous Status as an Employee, Director or Consultant under the provisions of
paragraph 2 of this option.
In order to obtain the federal income tax advantages associated with an
"incentive stock option," the Code requires that at all times beginning on the
date of grant of the option and ending on the day three (3) months before the
date of the option's exercise, you must be an employee of the Company or an
Affiliate of the Company, except in the event of your death or permanent and
total disability. The Company has provided for continued vesting or extended
exercisability of your option under certain circumstances for your benefit, but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option," particularly if you provide services to the Company or an
Affiliate of the Company as a consultant or exercise your option more than three
(3) months after the date your employment with the Company and all Affiliates of
the Company terminates.
7. REPRESENTATIONS. By executing this option agreement, you hereby
warrant and represent that you are acquiring this option for your own account
and that you have no intention of distributing, transferring or selling all or
any part of this option except in accordance with the terms of this option
agreement.
3.
<PAGE> 4
8. EXERCISE.
(a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to Section 12(e)
of the Plan.
(b) By exercising this option you agree that:
(i) as a precondition to the completion of any exercise of
this option, the Company may require you to enter an arrangement providing for
the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of this option; (2) the lapse of
any substantial risk of forfeiture to which the shares are subject at the time
of exercise; or (3) the disposition of shares acquired upon such exercise;
(ii) you will notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the shares of the Common
Stock issued upon exercise of this option that occurs within two (2) years after
the date of this option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of this option; and
(iii) the Company (or a representative of the underwriters)
may, in connection with the first underwritten registration of the offering of
any securities of the Company under the Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Act as may be requested by the Company or the representative of the
underwriters. You further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such period.
9. TRANSFERABILITY. This option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise this
option.
10. OPTION NOT A SERVICE CONTRACT. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In addition,
nothing in this option shall
4.
<PAGE> 5
obligate the Company or any Affiliate of the Company, or their respective
stockholders, Board of Directors, officers or employees to continue any
relationship which you might have as a Director or Consultant for the Company or
Affiliate of the Company.
11. NOTICES. Any notices provided for in this option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after deposit
in the United States mail, postage prepaid, addressed to you at the address
specified below or at such other address as you hereafter designate by written
notice to the Company.
12. GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, a copy of which is attached hereto and its provisions
are hereby made a part of this option, including without limitation the
provisions of Section 6 of the Plan relating to option provisions, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control.
Dated the _____ day of ______________, 19__.
Very truly yours,
MOLECULAR SIMULATIONS INCORPORATED
By__________________________________________
Duly authorized on behalf of the Board of
Directors
ATTACHMENTS:
Molecular Simulations Incorporated 1996 Stock Plan
Notice of Exercise
5.
<PAGE> 6
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE ______________________________
(Initial)
OTHER ______________________________
______________________________
______________________________
______________________________
OPTIONEE
Address:_______________________
_______________________
6.
<PAGE> 1
EXHIBIT 10.5
MOLECULAR SIMULATIONS INCORPORATED
1996 STOCK PLAN
1. PURPOSE. The purpose of the Molecular Simulations Incorporated
1996 Stock Plan (the "Plan") is to encourage key employees of Molecular
Simulations Incorporated (the "Company") and of any present or future parent or
subsidiary of the Company (collectively, "Related Corporations") and other
individuals who render services to the Company or a Related Corporation, by
providing opportunities to participate in the ownership of the Company and its
future growth through (a) the grant of options which qualify as "incentive stock
options" ("ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as
amended (the "Code"); (b) the grant of options which do not qualify as ISOs
("Non-Qualified Options"); and (c) opportunities to make direct purchases of
stock in the Company ("Purchases"). Both ISOs and Non-Qualified Options are
referred to hereafter individually as an "Option" and collectively as "Options."
Options and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation,"
respectively, as those terms are defined in Section 424 of the Code.
2. ADMINISTRATION OF THE PLAN.
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be
administered by the Board of Directors of the Company (the "Board") or
by a committee appointed by the Board (the "Committee"); provided that
the Plan shall be administered: (i) to the extent required by
applicable regulations under Section 162(m) of the Code, by two or more
"outside directors" (as defined in applicable regulations thereunder)
if the Board determines that compensation paid under the Plan pursuant
to the grant of Stock Rights should constitute "qualified
performance-based compensation" as defined in Section 162(m) and the
regulations thereunder and (ii) to the extent required by Rule 16b-3
promulgated under the Securities Exchange Act of 1934 or any successor
provision ("Rule 16b-3"), by a disinterested administrator or
administrators within the meaning of Rule 16b-3. Hereinafter, all
references in this Plan to the "Committee" shall mean the Board if no
Committee has been appointed. Subject to ratification of the grant or
authorization of each Stock Right by the Board (if so required by
applicable state law), and subject to the terms of the Plan,
1
<PAGE> 2
the Committee shall have the authority to (i) determine to whom (from
among the class of employees eligible under paragraph 3 to receive
ISOs) ISOs shall be granted, and to whom (from among the class of
individuals and entities eligible under paragraph 3 to receive
Non-Qualified Options and to make Purchases) Non-Qualified Options and
authorizations to make Purchases may be granted; (ii) determine the
time or times at which Options shall be granted or Purchases made;
(iii) determine the purchase price of shares subject to each Option or
Purchase, which prices shall not be less than the minimum price
specified in paragraph 6; (iv) determine whether each Option granted
shall be an ISO or a Non-Qualified Option; (v) determine (subject to
paragraph 7) the time or times when each Option shall become
exercisable and the duration of the exercise period; (vi) extend the
period during which outstanding Options may be exercised; (vii)
determine whether restrictions such as repurchase options are to be
imposed on shares subject to Options and Purchases and the nature of
such restrictions, if any, and (viii) interpret the Plan and prescribe
and rescind rules and regulations relating to it. If the Committee
determines to issue a Non-Qualified Option, it shall take whatever
actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such Option is not
treated as an ISO. The interpretation and construction by the Committee
of any provisions of the Plan or of any Stock Right granted under it
shall be final unless otherwise determined by the Board. The Committee
may from time to time adopt such rules and regulations for carrying out
the Plan as it may deem advisable. No member of the Board or the
Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Stock Right granted under it.
B. COMMITTEE ACTIONS. The Committee may select one of its
members as its chairman, and shall hold meetings at such time and
places as it may determine. A majority of the Committee shall
constitute a quorum and acts of a majority of the members of the
Committee at a meeting at which a quorum is present, or acts reduced to
or approved in writing by all the members of the Committee (if
consistent with applicable state law), shall be the valid acts of the
Committee. 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, or remove all members of the Committee
and thereafter directly administer the Plan.
2
<PAGE> 3
C. GRANT OF STOCK RIGHTS TO BOARD MEMBERS. Subject to the
provisions of the first sentence of paragraph 2(A) above, if
applicable, Stock Rights may be granted to members of the Board. All
grants of Stock Rights to members of the Board shall in all other
respects be made in accordance with the provisions of this Plan
applicable to other eligible persons. Consistent with the provisions of
the first sentence of Paragraph 2(A) above, members of the Board who
either (i) are eligible to receive grants of Stock Rights pursuant to
the Plan or (ii) have been granted Stock Rights may vote on any matters
affecting the administration of the Plan or the grant of any Stock
Rights pursuant to the Plan, except that no such member shall act upon
the granting to himself or herself of Stock Rights, but any such member
may be counted in determining the existence of a quorum at any meeting
of the Board during which action is taken with respect to the granting
to such member of Stock Rights.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to
employees of the Company or any Related Corporation. For purposes of this Plan
the determination of whether an optionee is an "employee" at the time of grant
of an Option shall be made in accordance with the rules contained in Code
Section 3401(c) and the regulations thereunder (or any successor provision as
provided by Treas. Reg. Section 1.421-7(h)(1) or other applicable Internal
Revenue Service guidance). Non-Qualified Options and authorizations to make
Purchases may be granted to any employee, officer or director (whether or not
also an employee) or consultant of the Company or any Related Corporation. The
Committee may take into consideration a recipient's individual circumstances in
determining whether to grant a Stock Right. The granting of any Stock Right to
any individual or entity shall neither entitle that individual or entity to, nor
disqualify such individual or entity from, participation in any other grant of
Stock Rights.
4. STOCK. The stock subject to Stock Rights shall be authorized but
unissued shares of Common Stock of the Company, par value $.001 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company in any
manner. The aggregate number of shares which may be issued pursuant to the Plan
is equal to the "Plan Share Limit" as defined below. If any Option granted under
the Plan shall expire or terminate for any reason without having been exercised
in full or shall cease for any reason to be exercisable in whole or in part or
shall be repurchased by the Company, the unpurchased shares of Common Stock
subject to such Option shall again be available for grants of Stock Rights under
the Plan.
3
<PAGE> 4
For purposes of this Plan the "Plan Share Limit" shall be determined by
the Compensation Committee as follows: (a) 3,400,000 less (b) the number of
shares for which "Old Options" have been exercised, less (c) the number of
shares subject to "Old Options" that have been granted, and have not been
exercised, have not expired, or otherwise have not terminated, plus (d) the
number of shares subject to "Old Options" that have been granted, have not been
exercised and have expired or otherwise have been terminated; provided, however,
that each of (a) through (d) is subject to adjustment as provided in paragraph
13. "Old Options" shall mean for the purposes of this Plan, any options granted
pursuant to the terms of any one of the following four stock option plans:
POLYGEN CORPORATION 1986 Incentive Stock Option Plan (Amended and Restated
January 1991); POLYGEN CORPORATION 1986 Incentive Stock Option Plan (To be used
only for California Employees); POLYGEN CORPORATION 1986 Supplemental Stock
Option Plan Adopted August 12, 1986, Approved by Stockholders August 11, 1987
(Amended and Restated January 1991); and POLYGEN CORPORATION 1986 Supplemental
Stock Option Plan (To be used only for California Employees).
Subject to adjustment as provided in paragraph 13, no employee of the
Company or any Related Corporation may be granted Options to acquire, in the
aggregate, more than 800,000 shares of Common Stock under the Plan during any
fiscal year of the Company. If any Option granted under the Plan shall expire or
terminate for any reason without having been exercised in full or shall cease
for any reason to be exercisable in whole or in part or shall be repurchased by
the Company during any fiscal year of the Company, the shares subject to such
Option shall be included in the determination of the aggregate number of shares
of Common Stock deemed to have been granted to such employee under the Plan
during such fiscal year of the Company.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the
Plan at any time on or after February 21, 1996 and prior to February 21, 2006.
The date of grant of a Stock Right under the Plan will be the date specified by
the Committee at the time it grants the Stock Right; provided, however, that
such date shall not be prior to the date on which the Committee acts to approve
the grant.
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
A. PRICE FOR NON-QUALIFIED OPTIONS AND PURCHASES. The exercise
price per share specified in the agreement relating to each
Non-Qualified Option granted, and the purchase price per share of
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<PAGE> 5
stock authorized as a Purchase, under the Plan shall in no event be
less than (i) the greater of (a) 100% of the fair value of the stock
(determined in accordance with the provisions of Rule 260.140.50 of the
California Blue Sky Regulations) at the time of grant or (b) the
minimum legal consideration required therefor under the laws of any
jurisdiction in which the Company or its successors in interest may be
organized; or (ii) in the case of any person who owns stock possessing
more than 10% of the total combined voting power or value of all
classes of stock of the Company or any Related Corporation, the
purchase price shall be at least 100% of the fair value (determined in
accordance with Rule 260.140.50) at the time of grant. The Committee
may, in its discretion, subject any Stock Right granted under the Plan
to any terms or conditions necessary for compensation recognized in
connection with the exercise of such Stock Right or the disposition of
Common Stock acquired pursuant to an exercise of such Stock Right, to
constitute qualified performance-based compensation under Section
162(m) of the Code and applicable regulations thereunder.
B. PRICE FOR ISOS. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less
than the fair market value per share of Common Stock on the date of
such grant. In the case of an ISO to be granted to an employee owning
stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Related
Corporation, the price per share specified in the agreement relating to
such ISO shall not be less than one hundred ten percent (110%) of the
fair market value per share of Common Stock on the date of grant. For
purposes of determining stock ownership under this paragraph, the rules
of Section 424(d) of the Code shall apply.
C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible
employee may be granted Options treated as ISOs only to the extent
that, in the aggregate under this Plan and all incentive stock option
plans of the Company and any Related Corporation, ISOs do not become
exercisable for the first time by such employee during any calendar
year with respect to stock having a fair market value (determined at
the time the ISOs were granted) in excess of $100,000. The Company
intends to designate any Options granted in excess of such limitation
as Non-Qualified Options.
D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option
is granted under the Plan, the Company's Common Stock is publicly
traded, "fair market value" shall be determined as of the date
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<PAGE> 6
of grant or, if the prices or quotes discussed in this sentence are
unavailable for such date, the last business day for which such prices
or quotes are available prior to the date of grant and shall mean (i)
the average (on that date) of the high and low prices of the Common
Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a national
securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the Nasdaq National Market, if the Common
Stock is not then traded on a national securities exchange; or (iii)
the closing bid price (or average of bid prices) last quoted (on that
date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the Nasdaq National
Market. If the Common Stock is not publicly traded at the time an
Option is granted under the Plan, "fair market value" shall mean the
fair value of the Common Stock as determined by the Committee after
taking into consideration all factors which it deems appropriate,
including, without limitation, recent sale and offer prices of the
Common Stock in private transactions negotiated at arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as determined
under paragraph 6(B). Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. The Option shall either be fully exercisable on the
date of grant or shall become exercisable thereafter in such
installments as the Committee may specify; provided, however, that
Options shall become exercisable at a rate of not less than 20% per
year and shall in any event be exercisable in full not later than 5
years from the date the Option is granted.
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<PAGE> 7
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination
of the Option, unless otherwise specified by the Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised
at any time or from time to time, in whole or in part, for up to the
total number of shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING. Except as otherwise explicitly
provided in any Option Agreement, in the event of: (1) a dissolution or
liquidation of the Company; (2) a merger or consolidation in which the
Company is not the surviving corporation; (3) a merger in which the
Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted
by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the total combined voting
power of the shares of the Company entitled to vote are exchanged, then
the exercisability of each Option outstanding under the Plan shall be
automatically accelerated so that each such Option shall, during the
five (5) business day period immediately prior to the specified
effective date for such dissolution, liquidation, merger,
consolidation, merger or other capital reorganization, becomes fully
exercisable with respect to the total number of shares of stock
purchasable under such Option and may be exercised for all or any
portion of such shares. However, an outstanding Option under the Plan
shall not be so accelerated if and to the extent (i) such Option is, in
connection with such dissolution, liquidation, merger, consolidation,
merger or other capital reorganization, either to be assumed by the
successor corporation or parent thereof or be replaced with a
comparable Option to purchase shares of the capital stock of the
successor corporation or parent thereof or comparable cash incentives
or (ii) the acceleration of such Option is subject to the other
applicable limitations imposed by the Board or the Committee as
provided in the Option agreement. The determination of such
comparability shall be made by the Board or the Committee and its
determination shall be final, binding and conclusive. Upon the
consummation of such dissolution, liquidation, merger, consolidation,
merger or other capital reorganization, all outstanding Options under
the Plan shall, to the extent not previously exercised or assumed by
the successor corporation or its parent company, terminate and cease to
be outstanding.
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<PAGE> 8
In addition, the Committee shall have the right to accelerate the
date that any installment of any Option becomes exercisable; provided
that the Committee shall not, without the consent of an optionee,
accelerate the permitted exercise date of any installment of any Option
granted to any employee as an ISO (and not previously converted into a
Non-Qualified Option pursuant to paragraph 16) if such acceleration
would violate the annual vesting limitation contained in Section 422(d)
of the Code, as described in paragraph 6(C).
Notwithstanding the foregoing, except as otherwise explicitly
provided in writing in an Option agreement, the exercisability of
Options shall not be accelerated (whether automatically or not) to the
extent that with respect to any "disqualified individual," there would
result a non-deductible "excess parachute payment" under the provisions
of Section 280G of the Code.
9. TERMINATION OF EMPLOYMENT. Unless otherwise specified in the
agreement relating to such Option, if an optionee ceases to be employed by the
Company and all Related Corporations other than by reason of death or disability
as defined in paragraph 10, no further installments of his or her Options shall
become exercisable after the date on which employment ceases, and his or her
Options shall terminate on the earlier of (a) three (3) months after the date of
termination of his or her employment, or (b) their specified expiration dates.
For purposes of this paragraph 9, employment shall be considered as continuing
uninterrupted during any bona fide leave of absence (such as those attributable
to illness, military obligations or governmental service) provided that the
period of such leave does not exceed 90 days or, if longer, any period during
which such optionee's right to reemployment is guaranteed by statute. A bona
fide leave of absence with the written approval of the Committee shall not be
considered an interruption of employment under this paragraph 9, provided that
such written approval contractually obligates the Company or any Related
Corporation to continue the employment of the optionee after the approved period
of absence. Options granted under the Plan shall not be affected by any change
of employment within or among the Company and Related Corporations, so long as
the optionee continues to be an employee of the Company or any Related
Corporation. Nothing in the Plan shall be deemed to give any grantee of any
Stock Right the right to be retained in employment or other service by the
Company or any Related Corporation for any period of time.
10. DEATH; DISABILITY.
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<PAGE> 9
A. DEATH. If an optionee ceases to be employed by the Company
and all Related Corporations by reason of his or her death, any Option
owned by such optionee may be exercised, to the extent otherwise
exercisable on the date of death, by the estate, personal
representative or beneficiary who has acquired the Option by will or by
the laws of descent and distribution, until the earlier of (i) the
specified expiration date of the Option or (ii) eighteen (18) months
from the date of the optionee's death.
B. DISABILITY. If an optionee ceases to be employed by the
Company and all Related Corporations by reason of his or her
disability, such optionee shall have the right to exercise any Option
held by him or her on the date of termination of employment, for the
number of shares for which he or she could have exercised it on that
date, until the earlier of (i) the specified expiration date of the
Option or (ii) twelve (12) months from the date of the termination of
the optionee's employment. For the purposes of the Plan, the term
"disability" shall mean "permanent and total disability" as defined in
Section 22(e)(3) of the Code or any successor statute.
11. ASSIGNABILITY. No Stock Right shall be assignable or transferable
by the grantee except by will, or by the laws of descent and distribution.
Except as set forth in the previous sentence, during the lifetime of a grantee
each Stock Right shall be exercisable only by such grantee.
12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options; provided, however, that any provision giving
the Company the right to repurchase Common Stock upon termination of employment
must include a repurchase price that would be presumptively reasonable under the
provisions of Rule 260.140.41(k) of the California Blue Sky Regulations. The
Committee may specify that any Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of
9
<PAGE> 10
the Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, a
grantee's rights with respect to Stock Rights granted to such grantee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the grantee and the Company relating
to such Stock Right:
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common
Stock shall be subdivided or combined into a greater or smaller number
of shares or if the Company shall issue any shares of Common Stock as a
stock dividend on its outstanding Common Stock, the number of shares of
Common Stock deliverable upon the exercise of Stock Rights shall be
appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to reflect
such subdivision, combination or stock dividend.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be
consolidated with or acquired by another entity in a merger or other
reorganization in which the holders of the outstanding voting stock of
the Company immediately preceding the consummation of such event,
shall, immediately following such event, hold, as a group, less than a
majority of the total combined voting power of the voting securities of
the surviving or successor entity, or in the event of a sale of all or
substantially all of the Company's assets or otherwise (each, an
"Acquisition"), the Committee or the board of directors of any entity
assuming the obligations of the Company hereunder (the "Successor
Board"), shall, as to outstanding Stock Rights, either (i) make
appropriate provision for the continuation of such Stock Rights by
substituting on an equitable basis for the shares then subject to such
Stock Rights either (a) the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition,
(b) shares of stock of the surviving or successor corporation or (c)
such other securities as the Successor Board deems appropriate, the
fair market value of which shall not exceed the fair market value of
the shares of Common Stock subject to such Stock Rights immediately
preceding the Acquisition; or (ii) upon written notice to the grantees,
provide that all Stock Rights must be exercised, to the extent then
exercisable or to be exercisable as a result of the Acquisition, within
a specified number of days of the date of such
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<PAGE> 11
notice, at the end of which period the Stock Rights shall terminate; or
(iii) terminate all Stock Rights in exchange for a cash payment equal
to the excess of the fair market value of the shares subject to such
Stock Rights (to the extent then exercisable or to be exercisable as a
result of the Acquisition) over the exercise price thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a
transaction described in subparagraph B above) pursuant to which
securities of the Company or of another corporation are issued with
respect to the outstanding shares of Common Stock, a grantee upon
exercising a Stock Right shall be entitled to receive for the purchase
price paid upon such exercise the securities he or she would have
received if he or she had exercised such Stock Right prior to such
recapitalization or reorganization.
D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to
ISOs shall be made only after the Committee, after consulting with
counsel for the Company, determines whether such adjustments would
constitute a "modification" of such ISOs (as that term is defined in
Section 424 of the Code) or would cause any adverse tax consequences
for the holders of such ISOs. If the Committee determines that such
adjustments made with respect to ISOs would constitute a modification
of such ISOs or would cause adverse tax consequences to the holders, it
may refrain from making such adjustments.
E. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each Stock Right will
terminate immediately prior to the consummation of such proposed action
or at such other time and subject to such other conditions as shall be
determined by the Committee.
F. ISSUANCES OF SECURITIES. 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 subject to Stock Rights. No adjustments shall
be made for dividends paid in cash or in property other than securities
of the Company.
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<PAGE> 12
G. FRACTIONAL SHARES. No fractional shares shall be issued under
the Plan and the grantee shall receive from the Company cash in lieu of
such fractional shares.
H. ADJUSTMENTS. Upon the happening of any of the events
described in subparagraphs A, B or C above, the class and aggregate
number of shares set forth in paragraph 4 hereof that are subject to
Stock Rights which previously have been or subsequently may be granted
under the Plan shall also be appropriately adjusted to reflect the
events described in such subparagraphs. The Committee or the Successor
Board shall determine the specific adjustments to be made under this
paragraph 13 and, subject to paragraph 2, its determination shall be
conclusive.
14. MEANS OF EXERCISING OPTIONS. An Option (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase price therefor either (a) in United States dollars in
cash or by check, (b) at the discretion of the Committee, through delivery of
shares of Common Stock having a fair market value equal as of the date of the
exercise to the cash exercise price of the Option, (c) at the discretion of the
Committee, by delivery of the grantee's personal recourse note bearing interest
payable not less than annually at no less than 100% of the lowest applicable
Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion
of the Committee and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the grantee's direction at the time of exercise, or (e) at the discretion
of the Committee, by any combination of (a), (b), (c) and (d) above. If the
Committee exercises its discretion to permit payment of the exercise price of an
ISO by means of the methods set forth in clauses (b), (c), (d) or (e) of the
preceding sentence, such discretion shall be exercised in writing at the time of
the grant of the ISO in question. The holder of an Option shall not have the
rights of a shareholder with respect to the shares covered by such Option until
the date of issuance of a stock certificate to such holder for such shares.
Except as expressly provided above in paragraph 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be
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<PAGE> 13
made for dividends or similar rights for which the record date is before the
date such stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on
February 21, 1996, subject to approval of the Plan by the stockholders of the
Company at the next Meeting of Stockholders or, in lieu thereof, by written
consent, in any case within 12 months of the date of adoption. If the approval
of stockholders and a "Qualification by Permit" under Section 25113(b)(1) of the
California Corporate Securities Law of 1968, as amended are not both obtained
prior to February 21, 1997, any grants of Options and authorizations to Purchase
under the Plan made prior to that date will be rescinded (and the vote of Common
Stock acquired pursuant to the exercise of such Options or authorizations to
Purchase shall not be counted in determining whether stockholder approval of the
Plan has been obtained). The Plan shall expire at the end of the day on February
20, 2006 (except as to Stock Rights outstanding on that date). Subject to the
provisions of paragraph 5 above, Stock Rights may be granted under the Plan
prior to the date of stockholder approval of the Plan. The Board may terminate
or amend the Plan in any respect at any time, except that, without the approval
of the stockholders obtained within 12 months before or after the Board adopts a
resolution authorizing any of the following actions: (a) the total number of
shares that may be issued under the Plan may not be increased (except by
adjustment pursuant to paragraph 13); (b) the benefits accruing to participants
under the Plan may not be materially increased; (c) the requirements as to
eligibility for participation in the Plan may not be materially modified; (d)
the provisions of paragraph 3 regarding eligibility for grants of ISOs may not
be modified; (e) the provisions of paragraph 6(B) regarding the exercise price
at which shares may be offered pursuant to ISOs may not be modified (except by
adjustment pursuant to paragraph 13); (f) the expiration date of the Plan may
not be extended; and (g) the Board may not take any action which would cause the
Plan to fail to comply with Rule 16b-3. Except as otherwise provided in this
paragraph 15, in no event may action of the Board or stockholders alter or
impair the rights of a grantee, without such grantee's consent, under any Option
previously granted to such grantee.
16. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS. The Committee, at
the written request or with the written consent of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of
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<PAGE> 14
such ISOs, regardless of whether the optionee is an employee of the Company or a
Related Corporation at the time of such conversion. Such actions may include,
but shall not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such ISOs. At the time of such
conversion, the Committee (with the consent of the optionee) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Committee in its discretion may determine, provided that such conditions shall
not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give
any optionee the right to have such optionee's ISOs converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Committee takes
appropriate action.
17. APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of shares pursuant to Options granted and Purchases authorized under
the Plan shall be used for general corporate purposes.
18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an
ISO granted under the Plan, each optionee agrees to notify the Company in
writing immediately after such optionee makes a Disqualifying Disposition (as
described in Sections 421, 422 and 424 of the Code and regulations thereunder)
of any stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the making of a Purchase of Common Stock for less than its
fair market value, the making of a Disqualifying Disposition (as defined in
paragraph 18), the vesting or transfer of restricted stock or securities
acquired on the exercise of an Option hereunder, or the making of a distribution
or other payment with respect to such stock or securities, the Company may
withhold taxes in respect of amounts that constitute compensation includible in
gross income. The Committee in its discretion may condition (i) the exercise of
an Option, (ii) the making of a Purchase of Common Stock for less than its fair
market value, or (iii) the vesting or transferability of restricted stock or
securities acquired by exercising an Option, on the grantee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the grantee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Committee, by the grantee's delivery of
previously held shares of Common Stock or the withholding from the shares of
Common
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<PAGE> 15
Stock otherwise deliverable upon exercise of an Option shares having an
aggregate fair market value equal to the amount of such withholding taxes.
20. GOVERNMENTAL REGULATION. The Company's obligation to sell and
deliver shares of the Common Stock under this Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by grantees of Options in connection with
the Plan.
21. GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing Options shall be governed by the laws of the State of
Delaware, or the laws of any jurisdiction in which the Company or its successors
in interest may be organized.
22. COMPLIANCE WITH CALIFORNIA BLUE SKY REGULATIONS. In addition to
the provisions of this Plan that have been incorporated solely for the purpose
of complying with certain California Blue Sky Regulations, grantees of Stock
Rights shall receive financial statements of the Company at least annually as
required by Rules 260.140.41(j), 260.140.42(g), and 260.140.46 of such
regulations.
15
<PAGE> 1
Exhibit 10.6
MOLECULAR SIMULATIONS INCORPORATED
INCENTIVE STOCK OPTION AGREEMENT
Molecular Simulations Incorporated, a Delaware corporation (the
"Company"), hereby grants as of the _______ day of ________, ____________ to
_______________ (the "Employee"), an option to purchase a maximum of [NUMBER NOT
EXCEEDING AVAILABLE SHARE LIMIT] shares (the "Option Shares") of its Common
Stock, $.001 par value ("Common Stock"), at the price of $[PRICE] per share, on
the following terms and conditions:
1. GRANT UNDER MOLECULAR SIMULATIONS INCORPORATED 1996 STOCK
PLAN. This option is granted pursuant to and is governed by the Company's 1996
Stock Plan (the "Plan") and, unless the context otherwise requires, terms used
herein shall have the same meaning as in the Plan. Determinations made in
connection with this Option pursuant to the Plan shall be governed by the Plan
as it exists on this date. If the approval of stockholders and a "Qualification
by Permit" under Section 25113(b)(1) of the California Corporate Securities Law
of 1968, as amended are not both obtained prior to February 21, 1997, this
Option shall be rescinded.
2. GRANT AS INCENTIVE STOCK OPTION; OTHER OPTIONS. This option is
intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). This option is in
addition to any other options heretofore or hereafter granted to the Employee by
the Company or any Related Corporation (as defined in the Plan), but a duplicate
original of this instrument shall not effect the grant of another option.
3. VESTING OF OPTION IF EMPLOYMENT CONTINUES. If the Employee has
continued to be employed by the Company or any Related Corporation on the
following dates, subject to the provisions of Paragraph 8(A) of the Plan, the
Employee may exercise this Option for the number of shares of Common Stock set
opposite the applicable date:
Less than one year from - [NUMBER] shares
the date hereof
One year but less than - an additional
two years from the date hereof [NUMBER] shares
<PAGE> 2
Two years but less than - an additional
three years from the date hereof [NUMBER] shares
Three years but less than - an additional
four years from the date hereof [NUMBER] shares
Four years or more - an additional
from the date hereof [NUMBER] shares
Notwithstanding the foregoing, in accordance with and subject to the provisions
of Paragraph 8(D) of the Plan, the Committee may, in its discretion, accelerate
the date that any installment of this Option becomes exercisable. In addition,
the provisions of Paragraph 8(D) of the Plan providing for automatic
acceleration of exercisability upon the occurrence of certain enumerated events
shall apply to this Option. And, according to the terms of the Plan, no
acceleration of exercisability of this Option shall occur to the extent that
with respect to any "disqualified individual," there would result a
non-deductible "excess parachute payment" under the provisions of Section 280G
of the Code.
The foregoing rights are cumulative and (subject to Sections 4 or 5 hereof if
the Employee ceases to be employed by the Company and all Related Corporations)
may be exercised on or before the date which is [NUMBER NOT EXCEEDING TEN] years
from the date this Option is granted.
4. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OTHER THAN FOR CAUSE: If the Employee ceases
to be employed by the Company and all Related Corporations, other than by reason
of death or disability as defined in Section 5 or termination for Cause as
defined in Section 4(c), no further installments of this Option shall become
exercisable after the date on which employment ceases, and this Option shall
terminate (and may no longer be exercised) after the passage of three months
from the Employee's last day of employment, but in no event later than the
scheduled expiration date. In such a case, the Employee's only rights hereunder
shall be those which are properly exercised before the termination of this
Option.
(b) TERMINATION FOR CAUSE: If the employment of the Employee
is terminated for Cause (as defined in Section 4(c)), this Option shall
terminate upon the Employee's receipt of written notice of such termination and
shall thereafter not be exercisable to any extent whatsoever.
(c) DEFINITION OF CAUSE: "Cause" shall mean conduct involving
one or more of the following: (i) the substantial and continuing failure of the
<PAGE> 3
Employee, after notice thereof, to render services to the Company or Related
Corporation in accordance with the terms or requirements of his or her
employment; (ii) disloyalty, gross negligence, willful misconduct, dishonesty or
breach of fiduciary duty to the Company or Related Corporation; (iii) the
commission of an act of embezzlement or fraud; (iv) deliberate disregard of the
rules or policies of the Company or Related Corporation which results in direct
or indirect loss, damage or injury to the Company or Related Corporation; (v)
the unauthorized disclosure of any trade secret or confidential information of
the Company or Related Corporation; or (vi) the commission of an act which
constitutes unfair competition with the Company or Related Corporation or which
induces any customer or supplier to breach a contract with the Company or
Related Corporation.
5. DEATH; DISABILITY.
(a) DEATH: If the Employee dies while in the employ of the
Company or any Related Corporation, this Option may be exercised, to the extent
otherwise exercisable on the date of his or her death, by the Employee's estate,
personal representative or beneficiary to whom this Option has been assigned
pursuant to Section 10, at any time within eighteen (18) months after the date
of death, but not later than the scheduled expiration date.
(b) DISABILITY: If the Employee ceases to be employed by the
Company and all Related Corporations by reason of his or her disability (as
defined in the Plan), this Option may be exercised, to the extent otherwise
exercisable on the date of the termination of his or her employment, at any time
within twelve (12) months after such termination, but not later than the
scheduled expiration date.
(c) EFFECT OF TERMINATION: At the expiration of the 18 month
or 12 month period provided in paragraph (a) or (b), respectively, of this
Section 5 or the scheduled expiration date, whichever is the earlier, this
Option shall terminate (and shall no longer be exercisable) and the only rights
hereunder shall be those as to which the option was properly exercised before
such termination.
6. PARTIAL EXERCISE. This option may be exercised in part at any
time and from time to time within the above limits, except that this Option may
not be exercised for a fraction of a share unless such exercise is with respect
to the final installment of stock subject to this Option and cash in lieu of a
fractional share must be paid, in accordance with Paragraph 13(G) of the Plan,
to permit the Employee to exercise completely such final installment. Any
fractional share with respect to which an installment of this Option cannot be
exercised because of the limitation contained in the preceding sentence shall
<PAGE> 4
remain subject to this Option and shall be available for later purchase by the
Employee in accordance with the terms hereof.
[NOTE THAT A SUBSEQUENT CHANGE IN THE PERMITTED PAYMENT METHODS SUBSEQUENT TO
THE DATE OF GRANT WILL BE TREATED AS A MODIFICATION OF THE ISO RESULTING IN A
RE-GRANT!]
7. PAYMENT OF PRICE.
(a) The option price shall be paid in the following manner:
(i) in cash or by check;
(ii) subject to paragraph 7(b) below, by delivery of
shares of the Company's Common Stock having a fair
market value (as determined by the Committee) equal
as of the date of exercise to the option price;
(iii) by delivery of an assignment satisfactory in form
and substance to the Company of a sufficient amount
of the proceeds from the sale of the Option Shares
and an instruction to the broker or selling agent to
pay that amount to the Company; or
(iv) at the option of the Employee, by any combination of
the foregoing.
(b) LIMITATIONS ON PAYMENT BY DELIVERY OF COMMON STOCK: If the
Employee delivers Common Stock held by the Employee ("Old Stock") to the Company
in full or partial payment of the option price, and the Old Stock so delivered
is subject to restrictions or limitations imposed by agreement between the
Employee and the Company, an equivalent number of Option Shares shall be subject
to all restrictions and limitations applicable to the Old Stock to the extent
that the Employee paid for the Option Shares by delivery of Old Stock, in
addition to any restrictions or limitations imposed by this Agreement.
Notwithstanding the foregoing, the Employee may not pay any part of the exercise
price hereof by transferring Common Stock to the Company unless such Common
Stock has been owned by the Employee free of any substantial risk of forfeiture
for at least six months.
(c) PERMITTED PAYMENT BY RECOURSE NOTE: In addition, if this
paragraph is initialed below by the person signing this Agreement on behalf of
the Company, the option price may be paid by delivery of the Employee's
[THREE]-year personal recourse promissory note bearing interest payable not
<PAGE> 5
less than annually at the applicable Federal rate, as defined in Section 1274(d)
of the Code.
----------
(initials)
8. RESTRICTIONS ON RESALE. Option Shares will be of an illiquid
nature and will be deemed to be "restricted securities" for purposes of the
Securities Act of 1933, as amended. Accordingly, such shares must be sold in
compliance with the registration requirements of such Act or an exemption
therefrom.
9. METHOD OF EXERCISING OPTION. Subject to the terms and
conditions of this Agreement, this Option may be exercised by written notice to
the Company at its principal executive office, or to such transfer agent as the
Company shall designate. Such notice shall state the election to exercise this
Option and the number of Option Shares for which it is being exercised and shall
be signed by the person or persons so exercising this Option. Such notice shall
be accompanied by payment of the full purchase price of such shares, and the
Company shall deliver a certificate or certificates representing such shares as
soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so
exercising this Option (or, if this Option shall be exercised by the Employee
and if the Employee shall so request in the notice exercising this Option, shall
be registered in the name of the Employee and another person jointly, with right
of survivorship). In the event this Option shall be exercised, pursuant to
Section 5 hereof, by any person or persons other than the Employee, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise this Option.
10. OPTION NOT TRANSFERABLE. This option is not transferable or
assignable except by will or by the laws of descent and distribution. During the
Employee's lifetime only the Employee can exercise this Option.
11. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of
this Option imposes no obligation on the Employee to exercise it.
12. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither the Plan, this
Agreement, nor the grant of this Option imposes any obligation on the Company or
any Related Corporation to continue the Employee in employment.
<PAGE> 6
13. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Employee shall
have no rights as a stockholder with respect to the Option Shares until such
time as the Employee has exercised this Option by delivering a notice of
exercise and has paid in full the purchase price for the shares so exercised in
accordance with Section 9. Except as is expressly provided in the Plan with
respect to certain changes in the capitalization of the Company, no adjustment
shall be made for dividends or similar rights for which the record date is prior
to such date of exercise.
14. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains
provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.
15. EARLY DISPOSITION. The Employee agrees to notify the Company
in writing immediately after the Employee transfers any Option Shares, if such
transfer occurs on or before the later of (a) the date two years after the date
of this Agreement or (b) the date one year after the date the Employee acquired
such Option Shares. The Employee also agrees to provide the Company with any
information concerning any such transfer required by the Company for tax
purposes.
16. WITHHOLDING TAXES. If the Company or any Related Corporation
in its discretion determines that it is obligated to withhold any tax in
connection with the exercise of this Option, or in connection with the transfer
of, or the lapse of restrictions on, any Common Stock or other property acquired
pursuant to this Option, the Employee hereby agrees that the Company or any
Related Corporation may withhold from the Employee's wages or other remuneration
the appropriate amount of tax. At the discretion of the Company or Related
Corporation, the amount required to be withheld may be withheld in cash from
such wages or other remuneration or in kind from the Common Stock or other
property otherwise deliverable to the Employee on exercise of this Option. The
Employee further agrees that, if the Company or any Related Corporation does not
withhold an amount from the Employee's wages or other remuneration sufficient to
satisfy the withholding obligation of the Company or Related Corporation, the
Employee will make reimbursement on demand, in cash, for the amount
underwithheld.
<PAGE> 7
17. LOCK-UP AGREEMENT. The Employee agrees that in connection with
an underwritten public offering of Common Stock, upon the request of the Company
or the principal underwriter managing such public offering, this Option and the
Option Shares may not be sold, offered for sale or otherwise disposed of without
the prior written consent of the Company or such underwriter, as the case may
be, for at least 270 days after the effectiveness of the Registration Statement
filed in connection with such offering, or such longer period of time as the
Board of Directors may determine if all of the Company's directors and officers
agree to be similarly bound. The lock-up agreement established pursuant to this
paragraph 19 shall have perpetual duration.
[NOTE: SECTION 18 MAY BE OMITTED.]
18. ARBITRATION. Any dispute, controversy, or claim arising out
of, in connection with, or relating to the performance of this Agreement or its
termination shall be settled by arbitration in the State of [_______], pursuant
to the rules then obtaining of the American Arbitration Association. Any award
shall be final, binding and conclusive upon the parties and a judgment rendered
thereon may be entered in any court having jurisdiction thereof.
19. PROVISION OF DOCUMENTATION TO EMPLOYEE. By signing this
Agreement the Employee acknowledges receipt of a copy of this Agreement and a
copy of the Plan.
20. MISCELLANEOUS.
(a) NOTICES: All notices hereunder shall be in writing and
shall be deemed given when sent by certified or registered mail, postage
prepaid, return receipt requested, to the address set forth below. The addresses
for such notices may be changed from time to time by written notice given in the
manner provided for herein.
(b) ENTIRE AGREEMENT; MODIFICATION: This Agreement constitutes
the entire agreement between the parties relative to the subject matter hereof,
and supersedes all proposals, written or oral, and all other communications
between the parties relating to the subject matter of this Agreement. This
Agreement may be modified, amended or rescinded only by a written agreement
executed by both parties.
(c) SEVERABILITY: The invalidity, illegality or
unenforceability of any provision of this Agreement shall in no way affect the
validity, legality or enforceability of any other provision.
<PAGE> 8
(d) SUCCESSORS AND ASSIGNS: This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, subject to the limitations set forth in Section 10
hereof.
(e) GOVERNING LAW: This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to the principles of the conflicts of laws thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 9
IN WITNESS WHEREOF, the Company and the Employee have caused this
instrument to be executed as of the date first above written.
Molecular Simulations Incorporated
_________________________________ 9685 Scranton Road
EMPLOYEE San Diego, CA 92121
____________________________
By:________________________
Print Name of Employee [NAME OF OFFICER]
____________________________
___________________________
Street Address Title
____________________________
City State Zip Code
<PAGE> 1
EXHIBIT 10.7
MOLECULAR SIMULATIONS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT
Molecular Simulations Incorporated, a Delaware corporation (the "Company"),
hereby grants as of the _____ day of _______, ___________ to __________________
(the "Optionee"), an option to purchase a maximum of [NUMBER] shares (the
"Option Shares") of its Common Stock, $.001 par value ("Common Stock"), at the
price of $[PRICE] per share, on the following terms and conditions:
1. GRANT UNDER MOLECULAR SIMULATIONS INCORPORATED 1996 STOCK PLAN. This
option is granted pursuant to and is governed by the Company's 1996 Stock Plan
(the "Plan") and, unless the context otherwise requires, terms used herein shall
have the same meaning as in the Plan. Determinations made in connection with
this Option pursuant to the Plan shall be governed by the Plan as it exists on
this date. If the approval of stockholders and a "Qualification by Permit" under
Section 25113(b)(1) of the California Corporate Securities Law of 1968, as
amended are not both obtained prior to February 21, 1997, this Option shall be
rescinded.
2. GRANT AS NON-QUALIFIED OPTION; OTHER OPTIONS. This option shall be
treated for federal income tax purposes as a Non-Qualified Option (rather than
an incentive stock option). This option is in addition to any other options
heretofore or hereafter granted to the Optionee by the Company or any Related
Corporation (as defined in the Plan), but a duplicate original of this
instrument shall not effect the grant of another option.
3. VESTING OF OPTION IF BUSINESS RELATIONSHIP CONTINUES. If the Optionee
has continued to serve the Company or any Related Corporation in the capacity of
an employee, officer, director or consultant (such service is described herein
as maintaining or being involved in a "Business Relationship with the Company")
on the following dates, subject to the provisions of Paragraph 8(A) of the Plan,
the Optionee may exercise this Option for the number of shares of Common Stock
set opposite the applicable date:
Less than one year from - [NUMBER] shares
the date hereof
One year but less than - an additional
two years from the date hereof [NUMBER] shares
Two years but less than - an additional
three years from the date hereof [NUMBER] shares
<PAGE> 2
Three years but less than - an additional
four years from the date hereof [NUMBER] shares
Four years or more - an additional
from the date hereof [NUMBER] shares
Notwithstanding the foregoing, in accordance with and subject to the provisions
of Paragraph 8(D) of the Plan, the Committee may, in its discretion, accelerate
the date that any installment of this Option becomes exercisable. In addition,
the provisions of Paragraph 8(D) of the Plan providing for automatic
acceleration of exercisability upon the occurrence of certain enumerated events
shall apply to this Option. And, according to the terms of the Plan, no
acceleration of exercisability of this Option shall occur to the extent that
with respect to any "disqualified individual," there would result a
non-deductible "excess parachute payment" under the provisions of Section 280G
of the Code.
The foregoing rights are cumulative and and (subject to Sections 4 or 5
hereof if the Optionee ceases to have a Business Relationship with the Company
or any Related Corporations) may be exercised up to and including the date which
is [NUMBER NOT EXCEEDING TEN] years from the date this Option is granted.
4. TERMINATION OF BUSINESS RELATIONSHIP.
(a) TERMINATION OTHER THAN FOR CAUSE: If the Optionee's Business
Relationship with the Company and all Related Corporations is terminated, other
than by reason of death, disability or dissolution as defined in Section 5 or
termination for Cause as defined in Section 4(c), no further installments of
this Option shall become exercisable after the date on which such Business
Relationship ceases, and this Option shall terminate (and may no longer be
exercised) after the passage of three (3) months from the date the Business
Relationship ceases, but in no event later than the scheduled expiration date.
In such a case, the Optionee's only rights hereunder shall be those which are
properly exercised before the termination of this Option.
(b) TERMINATION FOR CAUSE: If the Optionee's Business Relationship with
the Company is terminated for Cause (as defined in Section 4(c)), this Option
shall terminate upon the Optionee's receipt of written notice of such
termination and shall thereafter not be exercisable to any extent whatsoever.
(c) DEFINITION OF CAUSE: "Cause" shall mean conduct involving one or
more of the following: (i) the substantial and continuing failure of the
Optionee, after notice thereof, to render services to the Company or Related
Corporation in accordance with the terms or requirements of the Optionee's
<PAGE> 3
Business Relationship with the Company; (ii) disloyalty, gross negligence,
willful misconduct, dishonesty or breach of fiduciary duty to the Company or
Related Corporation; (iii) the commission of an act of embezzlement or fraud;
(iv) deliberate disregard of the rules or policies of the Company or Related
Corporation which results in direct or indirect loss, damage or injury to the
Company or Related Corporation; (v) the unauthorized disclosure of any trade
secret or confidential information of the Company or Related Corporation; or
(vi) the commission of an act which constitutes unfair competition with the
Company or Related Corporation or which induces any customer or supplier to
break a contract with the Company or Related Corporation.
5. DEATH; DISABILITY; DISSOLUTION.
(a) DEATH: If the Optionee is a natural person who dies while involved
in a Business Relationship with the Company, this Option may be exercised, to
the extent otherwise exercisable on the date of his or her death, by the
Optionee's estate, personal representative or beneficiary to whom this Option
has been assigned pursuant to Section 10, at any time within eighteen (18)
months after the date of death, but not later than the scheduled expiration
date.
(b) DISABILITY: If the Optionee is a natural person whose Business
Relationship with the Company is terminated by reason of his or her disability
(as defined in the Plan), this Option may be exercised, to the extent otherwise
exercisable on the date the Business Relationship was terminated, at any time
within twelve (12) months after such termination, but not later than the
scheduled expiration date.
(c) EFFECT OF TERMINATION: At the expiration of such 18 month or 12
month period provided in paragraphs (a) and (b), respectively, of this Section 5
or the scheduled expiration date, whichever is the earlier, this Option shall
terminate (and shall no longer be exercisable) and the only rights hereunder
shall be those as to which the option was properly exercised before such
termination.
(d) DISSOLUTION: If the Optionee is a corporation, partnership, trust
or other entity that is dissolved, is liquidated, becomes insolvent or enters
into a merger or acquisition with respect to which the Optionee is not the
surviving entity, at a time when the Optionee is involved in a Business
Relationship with the Company, this Option shall immediately terminate as of the
date of such event (and shall thereafter not be exercisable to any extent
whatsoever), and the only rights hereunder shall be those as to which this
Option was properly exercised before such dissolution or other event.
<PAGE> 4
6. PARTIAL EXERCISE. This option may be exercised in part at any time and
from time to time within the above limits, except that this Option may not be
exercised for a fraction of a share unless such exercise is with respect to the
final installment of stock subject to this Option and cash in lieu of a
fractional share must be paid, in accordance with Paragraph 13(G) of the Plan,
to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this Option cannot be
exercised because of the limitation contained in the preceding sentence shall
remain subject to this Option and shall be available for later purchase by the
Optionee in accordance with the terms hereof.
<PAGE> 5
7. PAYMENT OF PRICE.
(a) FORM OF PAYMENT: The option price shall be paid in the following
manner:
(i) in cash or by check;
(ii) subject to paragraph 7(b) below, by delivery of shares of the
Company's Common Stock having a fair market value (as
determined by the Committee) equal as of the date of exercise
to the option price;
(iii) by delivery of an assignment satisfactory in form and
substance to the Company of a sufficient amount of the
proceeds from the sale of the Option Shares and an
instruction to the broker or selling agent to pay that
amount to the Company; or
(iv) by any combination of the foregoing.
(b) LIMITATIONS ON PAYMENT BY DELIVERY OF COMMON STOCK: If the
Optionee delivers Common Stock held by the Optionee ("Old Stock") to the Company
in full or partial payment of the option price, and the Old Stock so delivered
is subject to restrictions or limitations imposed by agreement between the
Optionee and the Company, an equivalent number of Option Shares shall be subject
to all restrictions and limitations applicable to the Old Stock to the extent
that the Optionee paid for the Option Shares by delivery of Old Stock, in
addition to any restrictions or limitations imposed by this Agreement.
Notwithstanding the foregoing, the Optionee may not pay any part of the exercise
price hereof by transferring Common Stock to the Company unless such Common
Stock has been owned by the Optionee free of any substantial risk of forfeiture
for at least six months.
(c) PERMITTED PAYMENT BY RECOURSE NOTE: In addition, if this paragraph
is initialed below by the person signing this Agreement on behalf of the
Company, the option price may be paid by delivery of the Optionee's [THREE]-year
personal recourse promissory note bearing interest payable not less than
annually at the applicable Federal rate, as defined in Section 1274(d) of the
Code.
----------
(initials)
8. RESTRICTIONS ON TRANSFER. Option Shares will be of an illiquid nature
and will be deemed to be "restricted securities" for purposes of the Securities
Act of 1933, as amended. Accordingly, such shares must be sold in
<PAGE> 6
compliance with the registration requirements of such Act or an exemption
therefrom.
9. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Agreement, this Option may be exercised by written notice to the Company,
at the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to exercise
this Option and the number of Option Shares for which it is being exercised and
shall be signed by the person or persons so exercising this Option. Such notice
shall be accompanied by payment of the full purchase price of such shares, and
the Company shall deliver a certificate or certificates representing such shares
as soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so
exercising this Option (or, if this Option shall be exercised by the Optionee
and if the Optionee shall so request in the notice exercising this Option, shall
be registered in the name of the Optionee and another person jointly, with right
of survivorship). In the event this Option shall be exercised, pursuant to
Section 5 hereof, by any person or persons other than the Optionee, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise this Option.
10. OPTION NOT TRANSFERABLE. This option is not transferable or assignable
except by will or by the laws of descent and distribution. Except as set forth
in the preceding sentence, during the Optionee's lifetime, only the Optionee can
exercise this Option.
11. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of this
Option imposes no obligation on the Optionee to exercise it.
12. NO OBLIGATION TO CONTINUE BUSINESS RELATIONSHIP. Neither the Plan, this
Agreement, nor the grant of this Option imposes any obligation on the Company or
any Related Corporation to continue to maintain a Business Relationship with the
Optionee.
13. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Optionee shall have no
rights as a stockholder with respect to the Option Shares until such time as the
Optionee has exercised this Option by delivering a notice of exercise and has
paid in full the purchase price for the number of shares for which this Option
is to be so exercised in accordance with Section 9. Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to such date of exercise.
<PAGE> 7
14. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains provisions
covering the treatment of options in a number of contingencies such as stock
splits and mergers. Provisions in the Plan for adjustment with respect to stock
subject to options and the related provisions with respect to successors to the
business of the Company are hereby made applicable hereunder and are
incorporated herein by reference.
15. WITHHOLDING TAXES. If the Company or any Related Corporation in its
discretion determines that it is obligated to withhold any tax in connection
with the exercise of this Option, or in connection with the transfer of, or the
lapse of restrictions on, any Common Stock or other property acquired pursuant
to this Option, the Optionee hereby agrees that the Company or any Related
Corporation may withhold from the Optionee's wages or other remuneration the
appropriate amount of tax. At the discretion of the Company or Related
Corporation, the amount required to be withheld may be withheld in cash from
such wages or other remuneration or in kind from the Common Stock or other
property otherwise deliverable to the Optionee on exercise of this Option. The
Optionee further agrees that, if the Company or Related Corporation does not
withhold an amount from the Optionee's wages or other remuneration sufficient to
satisfy the withholding obligation of the Company or Related Corporation, the
Optionee will make reimbursement on demand, in cash, for the amount
underwithheld.
16. LOCK-UP AGREEMENT. The Optionee agrees that in connection with an
underwritten public offering of Common Stock, upon the request of the Company or
the principal underwriter managing such public offering, this Option and the
Option Shares may not be sold, offered for sale or otherwise disposed of without
the prior written consent of the Company or such underwriter, as the case may
be, for at least 270 days after the effectiveness of the Registration Statement
filed in connection with such offering, or such longer period of time as the
Board of Directors may determine if all of the Company's directors and officers
agree to be similarly bound. The lock-up agreement established pursuant to this
paragraph 18 shall have perpetual duration.
[NOTE: SECTION 17 MAY BE OMITTED.]
17. ARBITRATION. Any dispute, controversy, or claim arising out of, in
connection with, or relating to the performance of this Agreement or its
termination shall be settled by arbitration in the State of [_______], pursuant
to the rules then obtaining of the American Arbitration Association. Any award
shall be final, binding and conclusive upon the parties and a judgment rendered
thereon may be entered in any court having jurisdiction thereof.
<PAGE> 8
18. PROVISION OF DOCUMENTATION TO OPTIONEE. By signing this Agreement the
Optionee acknowledges receipt of a copy of this Agreement and a copy of the
Plan.
19. MISCELLANEOUS.
(a) NOTICES: All notices hereunder shall be in writing and shall be
deemed given when sent by certified or registered mail, postage prepaid, return
receipt requested, to the address set forth below. The addresses for such
notices may be changed from time to time by written notice given in the manner
provided for herein.
(b) ENTIRE AGREEMENT; MODIFICATION: This Agreement constitutes the
entire agreement between the parties relative to the subject matter hereof, and
supersedes all proposals, written or oral, and all other communications between
the parties relating to the subject matter of this Agreement. This Agreement may
be modified, amended or rescinded only by a written agreement executed by both
parties.
(c) SEVERABILITY: The invalidity, illegality or unenforceability of any
provision of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision.
(d) SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, subject to the limitations set forth in Section 10 hereof.
(e) GOVERNING LAW: This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Delaware, without giving effect to
the principles of the conflicts of laws thereof. The preceding choice of law
provision shall apply to all claims, under any theory whatsoever, arising out of
the relationship of the parties contemplated herein.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
instrument to be executed as of the date first above written.
Molecular Simulations Incorporated
____________________________ 9685 Scranton Road
OPTIONEE San Diego, CA 92121
____________________________ By:_______________________________
Print Name of Optionee [NAME OF OFFICER]
<PAGE> 9
____________________________ __________________________________
Street Address Title
____________________________
City State Zip Code
<PAGE> 10
MOLECULAR SIMULATIONS INCORPORATED
NON-QUALIFIED STOCK OPTION
__________, Optionee
Molecular Simulations Incorporated (formerly Polygen Corporation) (the
"Company"), pursuant to its 1986 Supplemental Stock Option Plan (the "Plan"),
has this day granted to you, the optionee named above, an option to purchase
shares of the common stock of the Company ("Common Stock"). This option is not
intended to qualify as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
_______ (______). Subject to the limitations contained herein, this option shall
be exercisable with respect to each installment shown below on or after the date
of vesting applicable to such installment, as follows:
Number of Shares Date of Earliest Exercise
(Installment) (Vesting)
________ [Month] [Day], 19__
________ [Month] [Day], 19__
________ [Month] [Day], 19__
________ [Month] [Day], 19__
2. (a) The exercise price of this option is $____ per share, being not
less than the fair market value of the Common Stock on the date of grant of this
option.
(b) Payment of the exercise price per share is due in full in cash upon
exercise of all or any part of each installment which has become exercisable by
you.
3. The minimum number of shares with respect to which this option may be
exercised at any one time is one hundred (100).
4. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this option are
then registered under the Securities Act of 1933, as amended (the "Act"), or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Act.
1
<PAGE> 11
5. The term of this option commences on the date hereof and, unless sooner
terminated as set forth below or in the Plan, terminates on [Month] [Day],
[Year]. This option shall terminate prior to the expiration of its term as
follows: ________ after you cease to be a director, consultant or other service
provider of the Company or an Affiliate of the Company (as defined in the Plan)
for any reason or for no reason. However, this option may be exercised following
cessation of your services as a director, consultant or other service provider
of the Company only as to that number of shares as to which it was exercisable
on the date of such cessation under the provisions of paragraph 1 of this
option.
6. Because this option does not qualify as an incentive stock option under
the federal tax laws, the optionee may recognize compensation income in
connection with the acquisition of one or more optioned shares hereunder. The
optionee must make appropriate arrangements for the satisfaction of all federal,
state or local income tax withholding requirements and federal social security
employee tax requirements applicable to such compensation income.
7. This option may be exercised, to the extent specified above, by
delivering a notice of exercise in substantially the form attached hereto,
together with the exercise price, to the Secretary of the Company or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to subparagraph 5 (f) of the Plan.
8. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
9. In the event of: (1) a dissolution or liquidation of the Company; (2) a
merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, then the exercisability of this option shall be
automatically accelerated so that such option shall, during the five (5)
business day period immediately prior to the specified effective date for such
dissolution, liquidation, merger, consolidation, reverse merger or other capital
reorganization, become fully exercisable with respect to the total number of
shares of stock purchasable under such option and may be exercised for all or
any portion of such shares. However, this option shall not be so accelerated if
and to the extent such option is, in connection with such dissolution,
liquidation, merger, consolidation, reverse merger or other capital
reorganization, either to be assumed by the successor corporation or parent
thereof or to be replaced with the comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof or comparable cash
incentives. The determination of such comparability shall be made by the Board
or the Committee and its determination shall be final, binding and conclusive.
Upon the consummation of such dissolution, liquidation, merger, consolidation,
reverse merger or other capital reorganization, this option under the Plan
shall, to the extent not
2
<PAGE> 12
previously exercised or assumed by the successor corporation or its parent
company, terminate and cease to be outstanding.
10. Nothing in this option shall be deemed to create in any way whatsoever
any obligation on your part to continue in the service of the Company, or of the
Company to continue any service relationship with you.
11. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
12. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 5 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated: ___________ Very truly yours,
MOLECULAR SIMULATIONS INCORPORATED
By__________________________________
Duly authorized on behalf of the
Board of Directors
The undersigned acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan.
__________________________________
[Name]
Address: _____________________
_____________________
Attachments: 1986 Supplemental Stock Option Plan
Form of Notice of Exercise
3
<PAGE> 13
NOTICE OF EXERCISE
Molecular Simulations Incorporated Date of
9685 Scranton Road Exercise: ________________
San Diego, CA 92121
Re: Non-Qualified Stock Option Grant
Gentlemen:
This constitutes notice under my stock option that I elect to
purchase the number of shares for the price set forth below.
Stock option dated: __________________________
Number of shares as
to which option is
exercised: __________________________
Total exercise price: $__________________________
Cash payment delivered
herewith: $__________________________
I agree to provide such additional documents as Molecular
Simulations Incorporated may require pursuant to the terms of its Supplemental
Stock Option Plan.
Very truly yours,
__________________________
4
<PAGE> 1
EXHIBIT 10.8
POLYGEN CORPORATION
1986 INCENTIVE STOCK OPTION PLAN
(Amended and Restated January 1991)
1. PURPOSE.
(a) The purpose of this Plan (the "Plan") is to provide a
means by which selected employees of Polygen Corporation (the "Company") and its
Affiliates, as defined in subparagraph 1(b), may be given an opportunity to
purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now holding key positions, to secure and retain the services
of persons capable of filling such positions, and to provide incentives for such
persons to exert maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the Plan
be incentive stock options as that term is used in Section 422 of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors
(the "Board") of the Company unless and until the Board delegates administration
to a committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the
persons eligible under the Plan shall be granted options; when and how the
option shall be granted; the provisions of each option granted (which need not
be identical), including the time or times during the term of each option within
which all or portions of such option may be exercised; and the number of shares
for which an option shall be granted to each such person.
1.
<PAGE> 2
(ii) To construe and interpret the Plan and options
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(iii) To amend this Plan as provided in paragraph 10.
(iv) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient to promote the best
interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than three (3) members of the Board (the
"Committee"), all of the members of which Committee shall be disinterested
persons, if required and as defined by the provisions of subparagraph 2(d). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Additionally, prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
notwithstanding anything to the contrary contained herein, the Board may
delegate administration of the Plan to any person or persons and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated.
(d) The term "disinterested person," as used in this Plan,
shall mean an administrator of the Plan, whether a member of the Board or of any
Committee to which responsibility for administration of the Plan has been
delegated pursuant to subparagraph 2(c), who is not at the time he or she
exercises discretion in administering the Plan eligible and has not at any time
within one year prior thereto been eligible for selection as a person to whom
stock may be allocated or to whom stock options or stock appreciation rights may
be granted pursuant to the Plan or any other plan of the Company or any of its
Affiliates entitling the participants therein to acquire stock, stock options or
stock appreciation rights of the Company or any of its Affiliates. Any such
person shall otherwise comply with the requirements of Rule 16b-3 promulgated
under the Exchange Act, as from time to time in effect.
(e) Any requirement that an administrator of the Plan be a
"disinterested person" shall not apply prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act.
2.
<PAGE> 3
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
options granted under the Plan shall not exceed in the aggregate seven million
(7,000,000) shares of the Company's common stock; provided, however, that such
aggregate number of shares shall be reduced to reflect the number of shares of
the Company's common stock that have been sold pursuant to, or may be sold
pursuant to outstanding options granted under, the Company's 1986 Supplemental
Stock Option Plan to the same extent as if such sales had been made or options
had been granted pursuant to this Plan and shall be further reduced to reflect
the number of shares of the Company's common stock that have heretofore been, or
may hereafter be, sold pursuant to the Polygen 1985 Employee Stock Purchase
Plan. If any option granted under the Plan shall for any reason expire or
otherwise terminate without having been exercised in full, the stock not
purchased under such option shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued stock or
reacquired stock, bought on the market or otherwise.
4. ELIGIBILITY.
(a) Options may be granted only to employees (including
officers) of the Company or its Affiliates. A director of the Company shall not
be eligible for the benefits of the Plan unless such director is also an
employee (including an officer) of the Company or any Affiliate.
(b) A director shall in no event be eligible for the benefits
of the Plan unless and until such director is expressly declared eligible to
participate in the Plan by action of the Board or the Committee, and only if, at
any time discretion is exercised by the Board in the selection of a director as
a person to whom options may be granted, or in the determination of the number
of shares which may be covered by options granted to a director, a majority of
the Board and a majority of the directors acting in such matter are
disinterested persons, as defined in subparagraph 2(d). The Board shall
otherwise comply with the requirements of Section 16b-3 promulgated under the
Exchange Act, as from time to time in effect. This subparagraph 4(b) shall not
apply prior to the date of the first registration of an equity security of the
Company under Section 12 of the Exchange Act.
(c) No person shall be eligible for the grant of an option
under the Plan if, at the time of grant, such person owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates unless the option price is at least one hundred ten
percent (110%) of the fair market value of such stock at
3.
<PAGE> 4
the date of grant and the term of the option does not exceed five (5) years from
the date of grant.
5. OPTION PROVISIONS.
Each option shall be in such form and shall contain such terms and
conditions as the Board or the Committee shall deem appropriate. The provisions
of separate options need not be identical, but each option shall include
(through incorporation of provisions hereof by reference in the option or
otherwise) the substance of each of the following provisions:
(a) The term of any option shall not be greater than ten (10)
years from the date it was granted.
(b) The exercise price of each option shall be not less than
one hundred percent (100%) of the fair market value of the stock subject to the
option on the date the option is granted.
(c) The purchase price of stock acquired pursuant to an option
shall be paid, to the extent permitted by applicable statutes and regulations,
either (i) in cash at the time the option is exercised, or (ii) at the
discretion of the Board or the Committee, either at the time of grant or
exercise of the option (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the option is transferred
pursuant to subparagraph (d), or (C) in any other form of legal consideration
that may be acceptable to the Board or Committee in their discretion.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at no less than the minimum rate
of interest necessary to avoid the treatment as interest, under any applicable
provision of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(d) An option shall not be transferable except by will or by
the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the option is granted only by such person.
(e) The total number of shares of stock subject to an option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). From time to time during each of such installment periods, the
option may be exercised with respect to some or all of the shares allotted to
any prior period as to which the option was not fully exercised. During the
remainder of the term of the option (if its term extends beyond the end of the
installment periods), the option may be exercised from time to time
4.
<PAGE> 5
with respect to any shares then remaining subject to the option. The provisions
of this Section 5(e) are subject to any option provisions governing the minimum
number of shares as to which an option may be exercised.
(f) Except to the extent now or hereafter permitted by Section
422 of the Code, no incentive stock option granted under the Plan prior to
January 1, 1987 may be exercised while there remains outstanding (within the
meaning of subsection (c)(7) of such Section 422) any other pre-1987 incentive
stock option which was granted at an earlier date to the optionee to purchase
stock in the Company or in any other corporation which is on the date of grant
of the later option an Affiliate of the Company or a predecessor corporation of
any such corporation.
(g) The following dollar limitations shall be in effect for
options granted under the Plan:
(i) Pre-1987 Grants. The aggregate fair market value
(determined as of the respective date or dates of grant) of the shares of stock
which may be made the subject of incentive stock options granted under the Plan
(or any other option plan of the Company or an Affiliate of the Company) to any
employee in any one calendar year prior to the 1987 calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000), plus any unused
Carryover to such pre-1987 calendar year. For purposes of the preceding
limitation, the term "Carryover" means one-half (1/2) of the amount by which the
sum of One Hundred Thousand Dollars ($100,000) exceeds the aggregate fair market
value (determined as of the respective date or dates of grant) of the shares of
stock for which the employee was previously granted incentive stock options
under the Plan or any other option plan of the Company or an Affiliate of the
Company) in each calendar year after 1980 and prior to 1987. The unused
Carryover shall be available for each of the three (3) pre-1987 calendar years
immediately following the calendar year in which the Carryover arises and shall
increase the basic $100,000 limitation otherwise applicable to the employee for
each such pre-1987 calendar year by an amount equal to the Carryover, less the
portion thereof used in prior calendar years. Incentive stock options granted
the employee during any pre-1987 calendar year shall first be applied against
the basic $100,000 limitation in effect for such calendar year and then applied
against any of the employee's unused carryovers to such calendar year, in the
order in which such Carryovers arose in prior calendar years.
(ii) Post-1986 Grants. The aggregate fair market
value (determined as of the respective date or dates of grant) of the shares of
stock for which one or more options granted after December 31, 1986 to any
employee under the Plan (or any other option plan of the Company or any
Affiliate of the Company) may for the first time become exercisable as incentive
stock options during any one post-1986 calendar year shall not exceed the sum of
One Hundred Thousand Dollars ($100,000).
5.
<PAGE> 6
Accordingly, to the extent that the aggregate fair market value (determined as
of the respective date or dates of grant) of the shares of stock for which one
or more post-1986 options otherwise intended to be incentive stock options first
become exercisable by an individual in any one calendar year exceeds the sum of
$100,000, such options will be treated as non-qualified stock options and will
not qualify for favorable tax treatment with respect to the excess amount of
shares purchased thereunder. To the extent the employee holds two or more such
post-1986 options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability thereof as
incentive stock options shall be applied on the basis of the order in which such
options are granted.
(h) The Company may require any optionee, or any person to
whom an option is transferred under subparagraph 5(d), as a condition of
exercising any such option: (1) to give written assurances satisfactory to the
Company as to the optionee's knowledge and experience in financial and business
matters and/or to employ a purchaser representative who has such knowledge and
experience in financial and business matters, and that he is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the option; and (2) to give written assurances satisfactory
to the Company stating that such person is acquiring the stock subject to the
option for such person's own account and not with any present intention of
selling or otherwise distributing the stock. These requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (i) the
issuance of the shares upon the exercise of the option has been registered under
a then currently effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or (ii), as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws.
(i) An option shall terminate three (3) months after
termination of the optionee's employment with the Company or an Affiliate,
unless (i) the termination of employment of the optionee is due to such person's
permanent and total disability, within the meaning of Section 422(c)(9) of the
Code, in which case the option may, but need not, provide that it may be
exercised at any time within one (1) year following such termination of
employment; or (ii) the optionee dies while in the employ of the Company or an
Affiliate, or within not more than three (3) months after termination of such
employment, in which case the option may, but need not, provide that it may be
exercised at any time within eighteen (18) months following the death of the
optionee by the person or persons to whom the optionee's rights under such
option pass by will or by the laws of descent and distribution; or (iii) the
option by its terms specifies either (a) that it shall terminate sooner than
three (3) months after termination of the optionee's employment, or (b) that it
may be exercised more than three (3) months after termination of the optionee's
employment with the Company or an Affiliate. This subparagraph 5(i) shall not be
construed to extent the term of any option or to permit anyone to exercise the
option after
6.
<PAGE> 7
expiration of its term, nor shall it be construed to increase the number of
shares as to which any option is exercisable from the amount exercisable on the
date of termination of the optionee's employment.
(j) The option may, but need not, include a provision whereby
the optionee may elect at any time during the term of his or her employment with
the Company or any Affiliate to exercise the option as to any part or all of the
shares subject to the option prior to the stated vesting date of the option or
of any installment or installments specified in the option. Any shares so
purchased from any unvested installment or option may be subject to a repurchase
right in favor of the Company or to any other restriction the Board or the
Committee determines to be appropriate.
6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under this Plan,
the Company shall keep available at all times the number of shares of stock
required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the options granted
under the Plan; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any option granted
under the Plan or any stock issued or issuable pursuant to any such option. If,
after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority that counsel for the Company deems
necessary for the lawful issuance and sale of stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell stock upon
exercise of such options unless and until such authority is obtained.
7. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
(a) The Board or the Committee shall have the power to
accelerate the time during which an option may be exercised, or the time during
which an option or any portion thereof will vest pursuant to subparagraph 5(e),
notwithstanding the provisions in the option stating the time during which it
may be exercised or the time during which it will vest.
7.
<PAGE> 8
(b) Neither an optionee nor any person to whom an option is
transferred under subparagraph 5(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
option unless and until such person has satisfied all requirements for exercise
of the option pursuant to its terms.
(c) Throughout the term of any option granted pursuant to this
Plan, the Company shall make available to the holder of such option, not later
than 120 days after the close of each of the Company's fiscal years during the
option term, upon request, such financial and other information regarding the
Company as comprises the annual report to the stockholders of the Company
provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or option
granted pursuant thereto shall confer upon any eligible participant or optionee
any right to continue in the employ of the Company or any Affiliate or shall
affect the right of the Company or any Affiliate to terminate the employment of
any eligible participant or optionee with or without cause.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Board shall make
appropriate adjustments in the class and maximum number of shares subject to the
Plan and the class and number of shares and price per share of stock subject to
outstanding options.
(b) In the event of: (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then the exercisability of each option
outstanding under the Plan shall be automatically accelerated so that each such
option shall, during the five (5) business day period immediately prior to the
specified effective date for such dissolution, liquidation, merger,
consolidation, reverse merger or other capital reorganization, become fully
exercisable with respect to the total number of shares of stock purchasable
under such option and may be exercised for all or any portion of such shares.
However, an outstanding option under the Plan shall not be so accelerated if and
to the extent (i) such option is, in connection with such dissolution,
liquidation, merger, consolidation, reverse merger or other capital
reorganization, either
8.
<PAGE> 9
to be assumed by the successor corporation or parent thereof or be replaced with
a comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof or comparable cash incentives or (ii) the
acceleration of such option is subject to the other applicable limitations
imposed by the Board or Committee. The determination of such comparability shall
be made by the Board or the Committee and its determination shall be final,
binding and conclusive. Upon the consummation of such dissolution, liquidation,
merger, consolidation, reverse merger or other capital reorganization, all
outstanding options under the Plan shall, to the extent not previously exercised
or assumed by the successor corporation or its parent company, terminate and
cease to be outstanding.
(c) In connection with any such dissolution, liquidation,
merger, consolidation, reverse merger or other capital reorganization, the
exercise of any accelerated pre-1987 incentive stock option shall remain subject
to the applicable limitations of subparagraph 5(f) and the exercisability as an
incentive stock option of any accelerated post-1986 option shall be subject to
the applicable dollar limitation of subparagraph 5(g)(ii).
(d) The grant of options under this Plan shall in no way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
10. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend
the Plan. However, except as provided in paragraph 9 relating to adjustments
upon changes in stock, no amendment shall be effective unless approved by the
vote of a majority of the outstanding shares of stock of the Company entitled to
vote, or by the written consent of the holders of the outstanding shares
entitled to vote to the extent necessary under applicable laws to obtain
incentive stock option treatment under Section 422 of the Code, within twelve
(12) months before or after the adoption of the amendment, where the amendment
will:
(i) Increase the number of shares reserved for
options under the Plan; or
(ii) Materially modify the requirements as to
eligibility for participation in the Plan.
(b) It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable to provide optionees
with the maximum benefits provided or to be provided under the provisions of the
Code and the
9.
<PAGE> 10
regulations promulgated thereunder relating to employee incentive stock options
and/or to bring the Plan and/or options granted under it into compliance
therewith.
(c) Rights and obligations under any option granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan, except with the consent of the person to whom the option was granted.
11. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate ten (10) years from the date
the Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No options may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) Rights and obligations under any option granted while the
Plan is in effect shall not be altered or impaired by suspension or termination
of the Plan, except with the consent of the person to whom the option was
granted.
12. EFFECTIVE DATE OF THE PLAN. The Plan was initially adopted by the
Board on August 12, 1986 and was approved by the Company's stockholders on
August 11, 1987. It was subsequently amended effective January 1, 1987 and
November 10, 1988. This January 1991 Amendment and Restatement of the Plan
increases the number of shares available for issuance under the Plan by two
million five hundred thousand (2,500,000) shares. This amendment and restatement
shall become effective when adopted by the Board, but no options granted based
on the increase to the number of shares issuable under the Plan shall be
exercised unless and until the increase has been approved by the vote of the
holders of a majority of the outstanding shares of stock of the Company entitled
to vote, or by the written consent of the holders of the outstanding shares of
stock of the Company entitled to vote to the extent necessary under applicable
laws to obtain incentive stock option treatment under Section 422 of the Code,
and, if required, appropriate permits, authorizations or approvals have been
issued by applicable state securities law authorities.
10.
<PAGE> 1
EXHIBIT 10.9
MOLECULAR SIMULATIONS INCORPORATED
INCENTIVE STOCK OPTION
__________, Optionee
Molecular Simulations Incorporated (formerly Polygen Corporation) (the
"Company"), pursuant to its 1986 Incentive Stock Option Plan (the "Plan"), has
this day granted to you, the optionee named above, an option to purchase shares
of the common stock of the Company ("Common Stock"). This option is intended to
qualify as an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
_________. Subject to the limitations contained herein, this option shall be
exercisable with respect to each installment shown below on or after the date of
vesting applicable to such installment, as follows:
Number of Shares Date of Earliest Exercise
(Installment) (Vesting)
______ [Month] [Day], 19__
______ [Month] [Day], 19__
______ [Month] [Day], 19__
______ [Month] [Day], 19__
2. (a) the exercise price of this option is _______ ($____) per share,
being not less than the fair market value of the Common Stock on the date of
grant of this option.
(b) payment of the exercise price per share is due in full in cash
upon exercise of all or any part of each installment which has become
exercisable by you.
3. The minimum number of shares with respect to which this option may
be exercised at any one time is one hundred (100), except as to an installment
subject to exercise, as set forth in paragraph 1, which amounts to fewer than
one hundred (100) shares, in which case, as to the exercise of that installment,
the number of shares in such installment shall be the minimum number of shares.
4. Notwithstanding anything to the contrary contained herein, this
option may not be exercised if (a) the shares issuable upon exercise of this
option are not then registered under the Securities Act of 1933, as amended (the
"Act"), and (b) the Company
ISO Agmt. 1
<PAGE> 2
has determined that such exercise and issuance would not be exempt from the
registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on [Month]
[Day], [Year] (which date shall be no more than ten (10 ) years from the date
this option is granted). This option shall terminate prior to the expiration of
its term as follows: three (3) months after the termination of your employment
with the Company or an affiliate of the Company (as defined in the Plan) for any
reason or for no reason unless (a) such termination of employment is due to your
permanent and total disability (within the meaning of Section 22 (e) (3) of the
Code), in which event the option shall terminate on the earlier of the
termination date set forth above or one (1) year following such termination of
employment; or (b) such termination of employment is due to your death, in which
event the option shall terminate on the earlier of the termination date set
forth above or eighteen (18) months after your death; or (c) during any part of
such three (3) month period the option is not exercisable solely because of the
condition set forth in paragraph 4 above, in which event the option shall not
terminate until the earlier of the termination date set forth above or until it
shall have been exercisable for an aggregate period of three (3) months after
the termination of employment. However, this option may be exercised following
termination of employment only as to that number of shares as to which it was
exercisable on the date of termination of employment under the provisions of
paragraph 1 of this option.
6. (a) Except to the extent the exercisability of this option is
otherwise to be accelerated in accordance with paragraph 9 below, this option
shall not become exercisable in the calendar year in which granted if (and to
the extent) the aggregate fair market value (determined at the grant date) of
the Company's Common Stock for which this option would otherwise first become
exercisable in such calendar year would, when added to the aggregate fair market
value (determined as of the respective date or dates of grant) of the Company's
Common Stock for which this option or one or more other post-1986 incentive
stock options granted to the optionee prior to the grant date (whether under the
Plan or any other option plan of the Company or an affiliate of the Company)
first become exercisable during the same calendar year, exceed $100,000 in the
aggregate. To the extent the exercisability of this option is deferred by reason
of the foregoing limitation, the deferred portion will first become exercisable
in the first calendar year or years thereafter in which the $100,000 limitation
of this subparagraph 6 (a) would not be contravened.
(b) Should the exercisability of this option be accelerated in
accordance with subparagraph 9 (b) of the Plan, then this option shall qualify
for favorable tax law treatment as an incentive stock option under the federal
tax laws only to the extent the aggregate fair market value (determined at the
grant date) of the Company's Common Stock for which this option first becomes
exercisable in the calendar year in which acceleration (in accordance with
paragraph 9 below) occurs does not, when added to the aggregate fair market
value (determined as of the respective date or dates of grant) of the Company's
Common Stock for which this option or one or more other post-1986 incentive
stock options granted to the optionee prior to the grant date (whether under the
Plan or
ISO Agmt. 2
<PAGE> 3
any other option plan of the Company or any affiliate of the Company) first
become exercisable during the same calendar year, exceed $100,000 in the
aggregate.
(c) To the extent this option should fail to qualify as an incentive
stock option under the federal tax laws, the optionee will recognize
compensation income in connection with the acquisition of one or more optioned
shares hereunder, and the optionee must make appropriate arrangements for the
satisfaction of all federal, state or local income tax withholding requirements
and federal social security employee tax requirements applicable to such
compensation income.
7. This option may be exercised, to the extent specified above, by
delivering a notice of exercise together with the exercise price to the
Secretary of the Company, or to such other person as the Company may designate,
during regular business hours, together with such additional documents as the
Company may then require pursuant to subparagraph 5 (h) of the Plan.
8. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
9. In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then the exercisability of this option
shall be automatically accelerated so that such option shall, during the five
(5) business day period immediately prior to the specified effective date for
such dissolution, liquidation, merger, consolidation, reverse merger or other
capital reorganization, become fully exercisable with respect to the total
number of shares of stock purchasable under such option and may be exercised for
all or any portion of such shares. However, this option shall not be so
accelerated if and to the extent such option is, in connection with such
dissolution, liquidation, merger, consolidation, reverse merger or other capital
reorganization, either to be assumed by the successor corporation or parent
thereof or to be replaced with the comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof or comparable cash
incentives. The determination of such comparability shall be made by the Board
or the Committee and its determination shall be final, binding and conclusive.
The exercisability of this option shall also be automatically accelerated,
whether or not the option is to be assumed, if optionee's employment is
terminated (other than a termination for Good Cause) within the thirty day
period ending on the date of consummation of such dissolution, liquidation,
merger, consolidation, reverse merger or other capital reorganization. "Good
Cause" shall be deemed to exist if Company reasonably believes that Optionee has
engaged in dishonesty, disclosed confidential information, committed willful
misconduct, fraud, or insubordination, or failed to perform his or her duties in
a satisfactory fashion. Upon the consummation of such dissolution, liquidation,
merger, consolidation, reverse merger or other capital reorganization, this
option under the Plan shall, to the extent not previously
ISO Agmt. 3
<PAGE> 4
exercised or assumed by the successor corporation or its parent company,
terminate and cease to be outstanding.
10. This option is not an employment contract and nothing in this
option shall be deemed to create in any way whatsoever any obligation on your
part to continue in the employ of the Company, or of the Company to continue
your employment with the Company.
11. Any notices provided for in this option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
12. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 5 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated: _____________ Very truly yours,
MOLECULAR SIMULATIONS INCORPORATED
By______________________________________
Duly authorized on behalf of the
Board of Directors
The undersigned acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan.
_________________________________________
(signature)
_________________________________________
(print name)
Address _________________________________________
_________________________________________
Attachments: 1986 Incentive Stock Option Plan
Form of Notice of Exercise
ISO Agmt. 4
<PAGE> 5
NOTICE OF EXERCISE
Molecular Simulations Incorporated Date of
9685 Scranton Road Exercise:_______________________
San Diego, CA 92121
Re: Incentive Stock Option Grant
To Whom It May Concern:
This constitutes notice under my stock option that I elect to
purchase the number of shares for the price set forth below.
Stock option dated: __________________________
Number of shares as
to which option is
exercised: __________________________
Total exercise price: $ ___________________
Cash payment delivered
herewith: $ ______________________
I agree to provide such additional documents as Molecular
Simulations Incorporated may require pursuant to the terms of its Incentive
Stock Option Plan.
Very truly yours,
______________________________
(signature)
______________________________
(print name)
ISO Agmt. 5
<PAGE> 1
EXHIBIT 10.11
MOLECULAR SIMULATIONS INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN
ADOPTED FEBRUARY 3, 1997
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of Molecular Simulations Incorporated, a
Delaware corporation (the "Company"), and its Affiliates, as defined in
subparagraph 1(b), which are designated as provided in subparagraph 2(b), may be
given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an "employee
stock purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
1.
<PAGE> 2
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company and its Affiliates.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate fifty thousand (50,000) shares
of the Company's common stock (the "Common Stock") after giving effect to the 1
for 2 reverse stock split to be effected in February 1997. If any right granted
under the Plan shall for any reason terminate without having been exercised, the
Common Stock not purchased under such right shall again become available for the
Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or provide
for the grant of rights to purchase Common Stock of the Company under the Plan
to eligible employees (an "Offering") on a date or dates (the "Offering
Date(s)") selected by the Board or the Committee. Each Offering shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate, which shall comply with the requirements of Section
423(b)(5) of the Code that all employees granted rights to purchase stock under
the Plan shall have the same rights and privileges. The provisions of separate
Offerings need not be identical, but each Offering shall include
2.
<PAGE> 3
(through incorporation of the provisions of this Plan by reference in the
Offering or otherwise) the period during which the Offering shall be effective,
which period shall not exceed twenty-seven (27) months beginning with the
Offering Date, and the substance of the provisions contained in paragraphs 5
through 8, inclusive.
(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be greater than two (2)
years. In addition, unless otherwise determined by the Board or the Committee
and set forth in the terms of the applicable Offering, no employee of the
Company or any Affiliate shall be eligible to be granted rights under the Plan,
unless, on the Offering Date, such employee's customary employment with the
Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right;
(ii) the period of the Offering with respect to such right shall
begin on its Offering Date and end coincident with the end of such Offering; and
3.
<PAGE> 4
(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before the
end of the Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage
designated by the Board or the Committee not exceeding fifteen percent (15%) of
such employee's Earnings (as defined in subparagraph 7(a)) during the period
which begins on the Offering Date (or such later date as the Board or the
Committee determines for a particular Offering) and ends on the date stated in
the Offering, which date shall be no later than the end of the Offering. The
Board or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock effected in accordance with such Offering.
(b) In connection with each Offering made under this Plan, the Board or
the Committee shall specify a maximum number of shares which may be purchased by
any employee as well as a maximum aggregate number of shares which may be
purchased by all eligible employees pursuant to such Offering. In addition, in
connection with each
4.
<PAGE> 5
Offering which contains more than one Purchase Date, the Board or the Committee
may specify a maximum aggregate number of shares which may be purchased by all
eligible employees on any given Purchase Date under the Offering. If the
aggregate purchase of shares upon exercise of rights granted under the Offering
would exceed any such maximum aggregate number, the Board or the Committee shall
make a pro rata allocation of the shares available in as nearly a uniform manner
as shall be practicable and as it shall deem to be equitable.
(c) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings during the
Offering. "Earnings" is defined as an employee's regular salary or wages
(including amounts thereof elected to be deferred by the employee, that would
otherwise have been paid, under any cash or deferred arrangement established by
the Company), which shall include commissions and overtime pay, but shall
exclude bonuses, incentive pay, profit sharing, other remuneration paid directly
to the employee, the cost of employee benefits paid for by the Company or an
Affiliate, education or tuition reimbursements, imputed income arising under any
group insurance or benefit program, traveling expenses, business and moving
expense reimbursements, income received in connection with stock options,
contributions made by the Company or an Affiliate under any employee benefit
plan, and similar items of compensation. The payroll deductions made for each
participant shall be credited to an account for such participant under the Plan
and shall be deposited with the general funds of the Company or an Affiliate. A
participant may reduce (including to zero), increase or begin such payroll
deductions after the beginning of any Offering only as provided for in the
Offering. A participant may make additional payments into his or her account
only if specifically provided for in the Offering and only if the participant
has not had the maximum amount withheld during the Offering.
5.
<PAGE> 6
(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering. Upon
such withdrawal from the Offering by a participant, the Company shall distribute
to such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated employee all of his or her accumulated
payroll deductions (reduced to the extent, if any, such deductions have been
used to acquire stock for the terminated employee), under the Offering, without
interest.
(d) Rights granted under the Plan shall not be transferable, and,
except as provided in paragraph 14, shall be exercisable only by the person to
whom such rights are granted.
8. EXERCISE.
(a) On each date specified therefor in the relevant Offering ("Purchase
Date"), each participant's accumulated payroll deductions and other additional
payments specifically provided for in the Offering (without any increase for
interest) will be applied to the purchase of whole shares of stock of the
Company, up to the maximum number of shares permitted pursuant to the terms of
the Plan and the applicable Offering, at the purchase price specified in the
Offering. No fractional shares shall be issued upon the exercise of rights
granted under the Plan. The amount, if any, of accumulated payroll deductions
remaining in each participant's account after the purchase of shares which is
less than the amount required to purchase one share of stock on the final
Purchase Date of an Offering shall be held in each such participant's account
for the purchase of shares under the next Offering under the Plan, unless such
participant withdraws from such next Offering, as provided in subparagraph 7(b),
or is no longer eligible to be granted rights under the Plan, as provided in
paragraph 5, in which case such amount shall be distributed to the participant
after such final Purchase Date, without interest. The amount, if any, of
accumulated payroll deductions remaining in any participant's account after the
purchase
6.
<PAGE> 7
of shares which is equal to the amount required to purchase whole shares of
stock on the final Purchase Date of an Offering shall be distributed in full to
the participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the Plan (including rights granted thereunder) is covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended (the
"Securities Act") and the Plan is in material compliance with all applicable
state, foreign and other securities and other laws applicable to the Plan. If on
a Purchase Date in any Offering hereunder the Plan is not so registered, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and in such compliance, except that
the Purchase Date shall not be delayed more than twelve (12) months and the
Purchase Date shall in no event be more than twenty-seven (27) months from the
Offering Date. If on the Purchase Date of any Offering hereunder, as delayed to
the maximum extent permissible, the Plan is not registered and in such
compliance, no rights granted under the Plan or any Offering shall be exercised
and all payroll deductions accumulated during the Offering (reduced to the
extent, if any, such deductions have been used to acquire stock) shall be
distributed to the participants, without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the rights granted under the
Plan. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such rights unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and
7.
<PAGE> 8
until the participant's stockholdings acquired upon exercise of rights under the
Plan are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
rights will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding rights.
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then: (i) any surviving corporation
shall assume outstanding rights or substitute similar rights for those under the
Plan, (ii) such rights shall continue in full force and effect, or (iii)
participants' accumulated payroll deductions shall be used to purchase Common
Stock immediately prior to the transaction described above and the participants'
rights under the ongoing Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for rights under the
Plan;
(ii) Modify the provisions as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in order
for the Plan to obtain employee stock purchase plan treatment under Section 423
of the Code or to comply with the requirements of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended ("Rule 16b-3")); or
8.
<PAGE> 9
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted or except as necessary to
comply with any laws or governmental regulation.
14. 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 the end of an
Offering but prior to delivery to him 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 during an Offering.
(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.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. No rights
may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any rights granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
as expressly
9.
<PAGE> 10
provided in the Plan or with the consent of the person to whom such rights were
granted or except as necessary to comply with any laws or governmental
regulation.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon the effectiveness of the Company's
initial public offering of shares of common stock, but no rights granted under
the Plan shall be exercised unless and until the Plan has been approved by the
stockholders of the Company.
10.
<PAGE> 1
EXHIBIT 10.12
MOLECULAR SIMULATIONS INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN OFFERING
1. GRANT; OFFERING DATE.
(a) The Board of Directors of Molecular Simulations Incorporated (the
"Company"), pursuant to the Company's Employee Stock Purchase Plan (the "Plan"),
hereby authorizes the grant of rights to purchase shares of the common stock of
the Company ("Common Stock") to all Eligible Employees (an "Offering"). The
first Offering shall begin simultaneously with the initial public offering of
the Company's Common Stock, or the effective date of such initial public
offering (the "Effective Date") and end on [March 31, 1999] (the "Initial
Offering"). Thereafter, an Offering shall begin on [April 1st], every two years,
beginning with calendar year 1999, and shall end on the day prior to the second
anniversary of its Offering Date. The first day of an Offering is that
Offering's "Offering Date." If an Offering Date does not fall on a day during
which the Company's Common Stock is actively traded, then the Offering Date
shall be the next subsequent day during which the Company's Common Stock is
actively traded.
(b) Prior to the commencement of any Offering, the Board of Directors
(or the Committee described in subparagraph 2(c) of the Plan, if any) may change
any or all terms of such Offering and any subsequent Offerings. The granting of
rights pursuant to each Offering hereunder shall occur on each respective
Offering Date unless, prior to such date (a) the Board of Directors (or such
Committee) determines that such Offering shall not occur, or (b) no shares
remain available for issuance under the Plan in connection with the Offering.
2. ELIGIBLE EMPLOYEES.
(a) All employees of the Company and each of its Affiliates (as defined
in the Plan) incorporated in the United States shall be granted rights to
purchase Common Stock under each Offering on the Offering Date of such Offering,
(an "Eligible Employee"). Notwithstanding the foregoing, no employee who is
disqualified by subparagraph 5(c) or 5(d) of the Plan shall be an Eligible
Employee or be granted rights under an Offering. An employee need not otherwise
satisfy the employment requirements of subparagraph 5(a) (that is, an employee
need not be customarily employed for at least twenty (20) hours per week and at
least five (5) months per calendar year) to be an Eligible Employee granted
rights under the Offering.
(b) Notwithstanding the foregoing, each person who first becomes an
Eligible Employee during any Offering will, on the day after the first Purchase
Date (that is, on October 1 or April 1) coincident with or next following the
date such person first satisfies
<PAGE> 2
any service requirement to become an Eligible Employee, receive a right under
such Offering, which right shall thereafter be deemed to be a part of the
Offering. Such right shall have the same characteristics as any rights
originally granted under the Offering except that:
(i) the date on which such right is granted shall be the "Offering
Date" of such right for all purposes, including determination of the exercise
price of such right; and
(ii) the Offering for such right shall begin on its Offering Date
and end coincident with the end of the ongoing Offering.
3. RIGHTS.
(a) Subject to the limitations contained herein and in the Plan, on
each Offering Date each Eligible Employee shall be granted the right to purchase
the number of shares of Common Stock purchasable with up to fifteen percent
(15%) of such employee's Earnings paid during the period of such Offering
beginning after such Eligible Employee first commences participation; provided,
however, that no employee may purchase Common Stock in a particular year with
more than fifteen percent (15%) of such employee's Earnings in such year under
all ongoing Offerings under the Plan and all other Company plans intended to
qualify as "employee stock purchase plans" under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"). "Earnings" for this purpose means
an employee's regular salary or wages (including amounts the employee elected to
defer, but which would otherwise have been paid under a 401(k) plan or similar
arrangement), commissions and overtime pay. The maximum number of shares of
Common Stock an Eligible Employee may purchase on any Purchase Date in an
Offering shall be such number of shares as has a fair market value (determined
as of the Offering Date for such Offering) equal to (x) $25,000 multiplied by
the number of calendar years in which the right under such Offering has been
outstanding at any time, minus (y) the fair market value of any other shares of
Common Stock (determined as of the relevant Offering Date with respect to such
shares) which, for purposes of the limitation of Section 423(b)(8) of the Code,
are attributed to any of such calendar years in which the right is outstanding.
The amount in clause (y) of the previous sentence shall be determined in
accordance with regulations applicable under Section 423(b)(8) of the Code based
on (i) the number of shares previously purchased with respect to such calendar
years pursuant to such Offering or any other Offering under the Plan, or
pursuant to any other Company plans intended to qualify as "employee stock
purchase plans" under Section 423 of the Code, and (ii) the number of shares
subject to other rights outstanding on the Offering Date for such Offering
pursuant to the Plan or any other such Company plan.
<PAGE> 3
(b) The maximum aggregate number of shares available to be purchased by
all Eligible Employees under an Offering on any Purchase Date shall be the
number of shares remaining available under the Plan on the applicable Purchase
Date. If the aggregate purchase of shares of Common Stock upon exercise of
rights granted under the Offering would exceed the maximum aggregate number of
shares available, the Board shall make a pro rata allocation of the shares
available in a uniform and equitable manner.
4. PURCHASE PRICE.
The purchase price of the Common Stock under the Offering shall be the
lesser of eighty-five percent (85%) of the fair market value of the Common Stock
on the Offering Date or eighty-five percent (85%) of the fair market value of
the Common Stock on the Purchase Date, in each case rounded up to the nearest
whole cent per share. For the Initial Offering, the fair market value of the
Common Stock at the time when the Offering commences shall be the price per
share at which shares of Common Stock are first sold to the public in the
Company's initial public offering as specified in the final prospectus with
respect to that offering.
5. PARTICIPATION.
(a) Except as otherwise provided in this paragraph 5, an Eligible
Employee may elect to participate in an Offering on the Offering Date or as of
any following October 1 or April 1 (each an "Enrollment Date"). An Eligible
Employee shall become a participant in an Offering by delivering an agreement
authorizing payroll deductions. Such deductions may be in whole percentages
only, with a minimum percentage of one percent (1%), and a maximum percentage of
fifteen percent (15%). A participant may not make additional payments into his
or her account. The agreement shall be made on such enrollment form as the
Company provides, and must be delivered to the Company before the applicable
Offering Date or Enrollment Date to be effective for that Offering (or the
remaining portion of that Offering), unless a later time for filing the
enrollment form is set by the Board for all Eligible Employees with respect to a
given Offering Date or Enrollment Date. As to the Initial Offering, the time for
filing an enrollment form and commencing participation for individuals who are
Eligible Employees on the Offering Date for the Initial Offering shall be
determined by the Company and communicated to such Eligible Employees.
(b) A participant may not increase his or her participation level
during the course of an Offering, except effective as of the next Enrollment
Date (the May 1 or November 1) first following the requested increase. A
participant may reduce (including to zero) his or her participation level only
once during any six month period ending on a Purchase Date by delivering a
notice to the Company in such form and at such time as the Company provides.
Notwithstanding the foregoing, a participant may make a second
<PAGE> 4
reduction during such six month period if such second reduction is to zero. A
participant may withdraw from an Offering and receive his or her accumulated
payroll deductions from the Offering (reduced to the extent, if any, such
deductions have been used to acquire Common Stock for the participant on any
prior Purchase Dates), without interest, at any time prior to the end of the
Offering by delivering a withdrawal notice to the Company in such form as the
Company provides; provided, however, that a participant may not so withdraw
during the ten (10) day period immediately preceding a Purchase Date.
6. PURCHASES.
Subject to the limitations contained herein, on each Purchase Date,
each participant's accumulated payroll deductions (without any increase for
interest) shall be applied to the purchase of whole shares of Common Stock, up
to the maximum number of shares permitted under the Plan and the Offering.
"Purchase Date" shall be defined as each March 31 (excluding March 31, 1997) and
September 30. If a Purchase Date does not fall on a market trading day, then the
Purchase Date shall be the nearest prior day during which the Company's Common
Stock is actively traded.
7. TERMINATION.
Rights granted under the Offering shall terminate immediately upon
cessation of any participating employee's employment with the Company and any
designated Affiliate, for any reason, and the Company shall distribute to such
terminated employee all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
terminated employee), under the Offering, without interest.
8. NOTICES AND AGREEMENTS.
Any notices or agreements provided for in an Offering or the Plan shall
be given in writing, in a form provided by the Company, and unless specifically
provided for in the Plan or this Offering shall be deemed effectively given upon
receipt or, in the case of notices and agreements delivered by the Company, five
(5) days after deposit in the United States mail, postage prepaid.
9. EXERCISE CONTINGENT ON STOCKHOLDER APPROVAL.
The rights granted under an Offering are subject to the approval of the
Plan by the stockholders as required for the Plan to obtain treatment as a
tax-qualified employee stock purchase plan under Section 423 of the Code and to
comply with the requirements of the exemption from potential liability under
Section 16(b) of the Securities Exchange Act of
<PAGE> 5
1934, as amended (the "Exchange Act"), set forth in Rule 16b-3 promulgated under
the Exchange Act.
10. OFFERING SUBJECT TO PLAN.
Each Offering is subject to all the provisions of the Plan, and its
provisions are hereby made a part of the Offering, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of an Offering and those of the Plan (including
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan), the provisions of the Plan
shall control.
<PAGE> 1
EXHIBIT 10.13
MOLECULAR SIMULATIONS INCORPORATED
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED ON FEBRUARY 3, 1997
1. PURPOSE.
(a) The purpose of the Non-Employee Directors' Stock Option Plan (the
"Plan") is to provide a means by which certain directors of Molecular
Simulations Incorporated, a Delaware corporation (the "Company"), who are not
otherwise employees of the Company or of any Affiliate of the Company
("Non-Employee Directors"), will be given an opportunity to purchase stock of
the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
certain persons now serving as Non-Employee Directors of the Company, to secure
and retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(b).
1.
<PAGE> 2
(b) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate twenty-five thousand (25,000)
shares of the Company's common stock as adjusted for the 1 for 2 reverse stock
split to be effected in February 1997 (the "Stock Split"). If any option granted
under the Plan shall for any reason expire or otherwise terminate without having
been exercised in full, the stock not purchased under such option shall again
become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to Non-Employee Directors of the Company.
2.
<PAGE> 3
5. NON-DISCRETIONARY GRANTS.
(a) Each person who, after the effective date of the Company's initial
public offering of shares of Common Stock pursuant to a registration statement
on Form S-1 filed with the Securities and Exchange Commission (the "Effective
Date"), for the first time becomes a Non-Employee Director automatically shall
be granted, upon the date of his or her initial election to be a Non-Employee
Director by the Board or stockholders of the Company, a one-time option to
purchase ____________ (______) shares (as adjusted for the Stock Split) of
common stock of the Company on the terms and conditions set forth herein.
(b) On the date of each annual meeting of the stockholders of the
Company after the Effective Date (other than any such annual meeting held in
1997), each person who is elected at such annual meeting to serve as a
Non-Employee Director (other than a person who receives a grant under
subparagraph 5(a) on or during the three-month period preceding such date)
automatically shall be granted an option to purchase ______________ (______)
shares (as adjusted for the Stock Split) of common stock of the Company on the
terms and conditions set forth herein.
6. OPTION PROVISIONS.
Each option shall be subject to the following terms and conditions:
(a) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ten (10) years
from the date of grant (the "Expiration Date"). If the optionee's service as a
Non-Employee Director or
3.
<PAGE> 4
employee of or consultant to the Company or any Affiliate terminates for any
reason or for no reason, the option shall terminate on the earlier of the
Expiration Date or the date three (3) months following the date of termination
of all such service; provided, however, that if such termination of service is
due to the optionee's death, the option shall terminate on the earlier of the
Expiration Date or eighteen (18) months following the date of the optionee's
death. In any and all circumstances, an option may be exercised following
termination of the optionee's service as a Non-Employee Director or employee of
or consultant to the Company or any Affiliate only as to that number of shares
as to which it was exercisable under the provisions of subparagraph 6(e) on the
date of termination of all such service.
(b) The exercise price of each option shall be one hundred percent
(100%) of the fair market value of the stock subject to such option on the date
such option is granted.
(c) Payment of the exercise price of each option is due in full in cash
upon any exercise, provided that an option may be exercised pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which results in the receipt of cash (or check) by the Company prior to the
issuance of shares of the Company's common stock.
(d) An option shall be transferable if permitted by its terms, and
shall be exercisable during the lifetime of the person to whom the option is
granted only by the optionee (or by his or her guardian or legal representative)
or, if the option so permits, a transferee. Notwithstanding the foregoing, the
optionee may, by delivering written notice to
4.
<PAGE> 5
the Company in a form satisfactory to the Company, designate a third party who,
in the event of the death of the optionee, shall thereafter be entitled to
exercise the option.
(e) The option shall become exercisable (vest) in annual installments
over a period of four years from the date of grant, with twenty-five percent
(25%) of the shares vesting on each one-year anniversary of the grant date;
provided that the optionee has, during the entire period prior to such vesting
date, continuously served as a Non-Employee Director or employee of or
consultant to the Company or any Affiliate of the Company, whereupon such option
shall become fully exercisable in accordance with its terms with respect to that
portion of the shares represented by that installment.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising any
such option: (i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then-currently-effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii), as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then-applicable securities laws.
5.
<PAGE> 6
(g) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options. 8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
6.
<PAGE> 7
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Throughout the term of any option granted pursuant to the Plan, the
Company shall make available to the holder of such option, not later than one
hundred twenty (120) days after the close of each of the Company's fiscal years
during the option term, upon request, such financial and other information
regarding the Company as comprises the annual report to the shareholders of the
Company provided for in the Bylaws of the Company and such other information
regarding the Company as the holder of such option may reasonably request.
(c) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the service
of the Company or any Affiliate or shall affect any right of the Company, its
Board or shareholders or any Affiliate to terminate the service of any
Non-Employee Director with or without cause.
(d) No Non-Employee Director, individually or as a member of a group,
and no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of
7.
<PAGE> 8
common stock, if any, as shall have been reserved for him pursuant to an option
granted to him.
(e) In connection with each option granted pursuant to the Plan, it
shall be a condition precedent to the Company's obligation to issue or transfer
shares to a Non-Employee Director, or to evidence the removal or lapse of any
restrictions on transfer, that such Non-Employee Director make arrangements
satisfactory to the Company to insure that the amount of any federal or other
withholding tax required to be withheld with respect to such sale or transfer,
or such removal or lapse, is made available to the Company for timely payment of
such tax.
(f) As used in this Plan, "fair market value" means, as of any date,
the value of the common stock of the Company 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, the fair market value of a share of common stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in 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 Board deems reliable;
(ii) If the common stock is quoted on Nasdaq (but not on the
National Market thereof) or 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
8.
<PAGE> 9
between the bid and 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 Board deems reliable;
(iii) In the absence of an established market for the common stock,
the fair market value shall be determined in good faith by the Board.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options (provided that no such adjustment
shall be made by reason of the Stock Split).
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) any other capital reorganization (including a sale of
stock of the Company to a single purchaser or single group of affiliated
purchasers)
9.
<PAGE> 10
after which less than fifty percent (50%) of the outstanding voting shares of
the new or continuing corporation are owned by stockholders of the Company
immediately before such transaction, the time during which options outstanding
under the Plan may be exercised shall be accelerated to permit the optionee to
exercise all such options in full prior to such event, and the options shall
terminate if not exercised prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan,
provided, however, that the Board shall not amend the plan more than once every
six (6) months with respect to the provisions of the Plan which relate to the
amount, price and timing of grants, other than to comport with changes in the
Code or applicable regulations or rulings thereunder. Except as provided in
paragraph 10 relating to adjustments upon changes in stock, no amendment shall
be effective unless approved by the stockholders of the Company within twelve
(12) months before or after the adoption of the amendment, where the amendment
will:
(i) Increase the number of shares which may be issued under the
Plan;
(ii) Modify the requirements as to eligibility for participation
in the Plan (to the extent such modification requires stockholder approval in
order for the Plan to comply with the requirements of Rule 16b-3); or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to comply with the
requirements of Rule 16b-3 or Section 162(m) of the Internal Revenue Code.
10.
<PAGE> 11
(b) Rights and obligations under any option granted before any
amendment of the Plan shall not be impaired by such amendment unless (i) the
Company requests the consent of the person to whom the option was granted and
(ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on the date that is ten (10) years
after the Effective Date. No options may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom the option was granted.
(c) The Plan shall terminate upon the occurrence of any of the events
described in Section 10(b) above.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) The Plan shall become effective on the Effective Date, subject to
the condition that the Plan be approved by the stockholders of the Company.
(b) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.
11.
<PAGE> 1
EXHIBIT 10.14
NONSTATUTORY STOCK OPTION
(NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN)
___________, Optionee:
MOLECULAR SIMULATIONS INCORPORATED (the "Company"), pursuant to its
Non-Employee Directors' Stock Option Plan (the "Plan") has on _________________
granted to you, the optionee named above, an option to purchase shares of the
common stock of the Company ("Common Stock"). This option is not intended to
qualify and will not be treated as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's
Non-Employee Directors (as defined in the Plan).
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
____________ (________). Subject to the limitations contained herein, this
option shall become exercisable (vest) as follows:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
2. The exercise price of this option is _____________ ($___) per share,
being the fair market value (as defined in the Plan) of the Common Stock on the
date of grant of this option.
3. (a) This option may be exercised, to the extent specified in the Plan,
by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require
pursuant to paragraph 6 of the Plan. This option may not be exercised for any
number of shares which would require the issuance of anything other than whole
shares.
(b) By exercising this option you agree that the Company may require
you to enter an arrangement providing for the cash payment by you to the
Company of any tax withholding obligation of the Company arising by reason of
the exercise of this option or the lapse of any substantial risk of forfeiture
to which the shares are subject at the time of exercise.
1.
<PAGE> 2
4. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
5. This option shall be transferable upon the delivery by you to the
Company of such documents as the Company may reasonably request.
6. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated
and adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated as of ______________.
Very truly yours,
MOLECULAR SIMULATIONS INCORPORATED
By: __________________________________
Duly authorized on behalf
of the Board of Directors
2.
<PAGE> 3
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with
respect to this option are set forth in the option and the Plan;
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the
undersigned under stock options plans of the Company, and (ii) the following
agreements only:
NONE ____________________________
(Initial)
OTHER____________________________
____________________________
____________________________
___________________________________
___________
Optionee
___________________________________
Address
___________________________________
___________________________________
3.
<PAGE> 1
Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS IS AN AGREEMENT, made as of this 30th day of November 1995, by and
between Molecular Simulations Inc., a Delaware corporation (hereafter "MSI"),
and Michael J. Savage, presently residing at 2055 Seaview, Del Mar, California
92014 (hereafter "Employee").
WITNESSETH:
WHEREAS, Employee has previously been employed by MSI in an important
capacity and MSI and Employee now wish to enter into an agreement of employment
that will constitute the sole and exclusive agreement relating to the employment
of Employee by MSI.
NOW, THEREFORE, in consideration of the foregoing premises, and the
mutual covenants, terms and conditions set forth herein, it is hereby agreed
between MSI and Employee as follows:
ARTICLE I. Employment
1.1 MSI shall employ Employee, and Employee shall continue to accept
employment with and work for MSI, in a full-time capacity commencing on the date
of this Agreement and continuing until Employee's employment with MSI is
terminated as provided herein (this period is sometimes referred to herein as
the "Term"). Such employment shall be in the capacity of President and Chief
Executive Officer of MSI. MSI shall assign to Employee, and Employee shall
accept and diligently perform to the reasonable satisfaction of MSI, those
duties assigned to such employee by MSI.
1.2 During the Term, Employee shall not, directly or indirectly, alone
or as a member of a partnership, or as an officer, director, employee, agent or
shareholder of any other person, firm or business organization, engage in any
other business activity or pursuit for compensation requiring Employee's
personal services during the period of Employee's employment hereunder without
the prior written consent of MSI acting through its Board of Directors; provided
however nothing in this Agreement shall preclude Employee from: (i) engaging in
religious, charitable, nonprofit or community activities; or (ii) serving on the
board of directors of any company, provided that such board membership is
approved by MSI's Board of Directors, such approval not to be unreasonably
withheld; or (iii) managing Employee's personal investments so long as
Employee's activities in any case do not interfere with the performance of
Employee's duties or responsibilities under this Agreement.
ARTICLE II. Compensation
2.1 Employee shall be compensated at an annual base salary of $170,000
during the Term of this Agreement. The MSI Board of Directors shall review and
may, at its sole discretion, increase this annual base salary from time to time
during the Term of this Agreement or any extension thereof to reflect salary
increases granted generally to other MSI Employees.
2.2 The Employee's base salary shall be paid periodically in the same
manner as it is paid to other executive employees of MSI, but in no event less
frequently than monthly. Base salary and other compensation shall be subject to
such withholdings as required by law or otherwise agreed to by Employee.
2.3 During the Term, in addition to all other amounts payable under
Section 2, the Employee shall be eligible to receive a target bonus of (i)
$100,000 for the period ending December 31, 1996 and (ii) $100,000 per annum for
each successive twelve month period thereafter ending December 31 ("Year End"),
provided the Employee continues to be employed by MSI on such Year End. The MSI
Board of Directors shall review and may, at its sole discretion, increase this
annual target bonus from time to time during the Term of this Agreement or any
extension thereof. Such bonus for 1996 shall be based on the achievement of the
revenue and income goals for MSI set forth on Exhibit A hereto, and such bonus
will be adjusted upwardly or downwardly based on performance against such goals
in the
<PAGE> 2
manner described in Exhibit A. For 1997 and beyond, such bonus shall be based on
the achievement of the revenue, income and/or other goals for MSI established
promptly and reasonably by the Compensation Committee of the Board of Directors
of MSI. The amount of bonus payments payable to the Employee under this Section
2.3 and the satisfaction of the goals and objectives set forth in Exhibit A or
any amendment thereto shall be determined promptly and reasonably by MSI's Board
of Directors or Compensation Committee and, if earned, such bonus payments shall
be paid within 120 days after each Year End. Such bonus payments shall be
subject to all applicable federal, state and local withholding, payroll and
other taxes, as required by law.
2.4 Employee shall be entitled to receive stock options to purchase an
additional four hundred ninety-two thousand five hundred ninety-three (492,593)
shares of MSI's common stock (the "Additional Options") on the terms and
conditions described below. The shares subject to the Additional Options will
vest over a four year period (25% on August 15,1996 and an additional 25% on
each anniversary thereafter with all such shares vested as of August 15, 1999)
so long as Employee is an employee or consultant of MSI. In addition to the
standard term for exercise of options under MSI's stock option plan, if
Employee's employment with MSI is terminated without Cause (as defined in
Section 7.1 below), Employee will have three (3) years to exercise the portion
of the Additional Options which had vested at the time of such termination of
employment. Other terms and conditions of the Additional Options will be as
provided by MSI's Board of Directors pursuant to MSI's stock option plan.
ARTICLE III. Executive Benefits
3.1 During the Term of this Agreement, Employee shall be entitled to
participate in MSI's group life insurance plans as they may be amended and in
force from time to time during the Term, and shall, with his or her dependents,
be entitled to health insurance coverage under MSI health insurance plans upon
the same basis as provided to other executive employees of MSI.
3.2 MSI shall provide to Employee vacation, insurances (other than as
provided for in Paragraph 3.1) and fringe benefits no less favorable to Employee
than MSI may from time to time make available to its employees generally on a
pro rata basis or on a basis proportional with Employee's annual salary
hereunder as it may be appropriate with respect to the particular plan.
3.3 Employee may incur reasonable business expenses in the course of
employment hereunder for which Employee shall be eligible for reimbursement or
advances for such expenses in accordance with MSI's policy for business travel
expenses for its executive employees generally.
3.4 Following Employee's relocation to MSI's new headquarters in San
Diego, California, Employee shall not be required without Employee's consent to
accept any: (a) further transfer to a place of business that is more than 35
miles from the headquarters location of MSI, except in connection with a
movement of MSI's principal place of business or headquarters to a location
within the City of San Diego or the County of San Diego, California, or (b) any
temporary assignment which would require Employee to be absent from Employee's
home for more than thirty (30) consecutive days, provided that no such temporary
assignment shall require Employee to be absent from Employee's home for more
than sixty (60) days in any one-year period, excluding normal business travel.
3.5 MSI shall reimburse the Employee for the reasonable relocation
expenses incurred directly by the Employee in connection with his or her
employment by MSI as follows: reasonable out-of-pocket expenses associated with
the Employee's relocation of his residence to a location within the San Diego,
California area, including costs of moving household furnishings, personal
effects, storage costs and insurance; travel expenses associated with a
reasonable number of "house hunting" trips; up to $12,000 toward the costs of
renting temporary housing in San Diego; and closing costs associated with the
purchase of a residence in the San Diego area (provided such purchase occurs
during the Term but not more than two years from the date of this Agreement)
including title insurance, plot surveys, bank origination and application fees,
legal fees, home inspection fees, appraisal fees, and up to one and one-half
points toward a mortgage. In addition, MSI will reimburse Employee for any
incremental income
2
<PAGE> 3
tax actually owed by the Employee as a result of any reimbursement payments
under this Section 3.5, and such other expenses as MSI's Board of Directors
approves in advance. Employee agrees to claim all applicable tax deductions
associated with such expenses so as to minimize the incremental income tax to be
reimbursed by MSI.
The Employee hereby agrees that all such expenses to be reimbursed to
the Employee under this Section 3.5 by MSI shall be reasonable and that the
Employee shall use his best efforts to minimize the costs by obtaining, in each
instance, terms which are as favorable as those which the Employee would
negotiate if he were to pay for such expenses directly himself. Further, the
Employee agrees to provide suitable and accurate documentation evidencing such
costs incurred, and MSI shall provide reimbursement within a reasonable time
after the receipt of such documentation.
3.6 In addition to the amounts payable under Section 3.5 above, MSI
agrees to pay Employee a one time relocation bonus of $50,000 promptly after
execution of this Agreement. MSI will also reimburse Employee for any
incremental taxes on income actually owed by the Employee as a result of such
relocation bonus. If Employee voluntarily ceases his employment with MSI during
the one year period following his relocation to the San Diego area, Employee
agrees to repay such relocation bonus amount and the relocation expense
reimbursements described in Section 3.5 to MSI within ten (10) days after his
termination of employment. Employee agrees that MSI may deduct and offset all or
part of such amount from any amounts otherwise owed by MSI to Employee at the
time of termination of employment, including salary, severance pay, commissions,
bonuses and expense reimbursements.
3.7 In the event Employee's employment with MSI is terminated without
Cause (as defined in Section 7.1 below) within one year after his relocation to
the San Diego area, MSI agrees to reimburse Employee for reasonable moving and
transportation expenses associated with Employee's relocation to Massachusetts,
including costs of moving household furnishings and personal effects, storage
costs and insurance.
ARTICLE IV. Invention Disclosure, Patent Assignment and Copyright
4.1 Employee shall promptly disclose to MSI all inventions conceived or
developed by Employee solely or jointly with another during the Term of this
Agreement and for six months thereafter, which are related to the MSI Business,
as described below, on such forms as MSI may require from time to time. Such
disclosure shall be kept confidential by MSI during MSI's review and thereafter
if MSI determines that the invention is not the property of MSI. Employee hereby
assigns to MSI all right, title and interest in and to any such inventions
relating to the MSI Business (including any actually or demonstratively
anticipated research and development of MSI) which are conceived or made by
Employee solely or jointly with any other person, during the course of
employment with MSI. For purposes of this Agreement, the MSI Business includes
the development, distribution, licensing or sale of algorithms, computer-based
techniques or software for modeling (including graphical display), analysis or
storage of chemical or biological structures, properties, processes or related
information, and any other business in which MSI engages or plans to engage (as
evidenced in business plans or other written materials) during the Term.
4.2 All rights in development (including without limitation software,
source codes, object codes, subroutines, file formats, user interfaces,
algorithms, molecular structures and compositions, business methods and trade
secrets), reports, records and other documents prepared by Employee during the
Term and which relate to the MSI Business or are within the scope of employment
hereunder shall vest exclusively with MSI, and Employee upon MSI's request will
execute any assignments necessary to protect MSI's (or its assignees) interests
in such intellectual property rights and documents and shall assist MSI (or its
assignees) in securing patent protection, if available, or Federal copyright
registration for any inventions included in such property rights or documents.
Employee has not developed or conceived of any invention related to the MSI
Business as of the date of this Agreement that is not owned by MSI.
3
<PAGE> 4
4.3 Employee hereby acknowledges that this provision constitutes
written notification that this Agreement does not require any assignment of any
inventions or rights or interests therein which fully qualify as an invention
under Section 2870(b) of the California Labor Code. Sections 2870, 2871 and 2872
of the California Labor Code are attached as Exhibit B.
ARTICLE V. Non-Solicitation
5.1 Employee shall not, during the Term and for a period of two years
thereafter, engage in any activity which is intended directly or indirectly to
solicit, encourage, induce or attract to the employ of Employee or any other
business any person who is then an employee of or consultant (other than
consultants providing general services, such as accountants, which are not
directly related to the development, production or marketing of MSI products or
technologies) to MSI or offer any employment, consulting or ownership interest
to any person who is an employee of or consultant to MSI.
ARTICLE VI. Confidentiality
6.1 Employee will during the course of employment be privy to
information belonging to MSI which information is valuable to MSI and which
information MSI holds in confidence. Employee undertakes with respect to
information Employee understands, or reasonably should believe to be
confidential to MSI, or as to which Employee has been specifically advised by
MSI that it regards to be confidential, not to disclose to third parties or use
such information during the Term and after the expiration or termination of this
Agreement for any reason, except in connection with the performance of duties as
an Employee of MSI pursuant to this Agreement. At the expiration of this
Agreement or termination of employment hereunder, Employee will, at MSI's
request, return to MSI all written confidential information (including that
contained on any computer media) received from MSI and destroy any
transcriptions or copies Employee may have of such information, unless an
alternative method of disposition is approved by MSI in writing. Employee's
obligations under this Article VI shall be in addition to any other
confidentiality or nondisclosure obligations of Employee to MSI at law or under
any other agreement. Employee's obligations under this Article VI shall not
extend to information which (i) was or is publicly available, (ii) became
available to Employee from a third party which was not, to Employee's knowledge,
bound by any obligation of confidentiality to MSI or (iii) was independently
developed by Employee without violating Employee's obligations hereunder.
ARTICLE VII. Termination and Termination of Responsibilities
7.1 Employee shall be subject to termination of Employee's employment
by MSI only for Cause as defined below, or disability which prevents Employee
from working for longer than three (3) months or as expressly provided in
Section 7.3 below. Notwithstanding any dispute over whether a termination was
properly for Cause, MSI may bar Employee from access to MSI's offices,
facilities and business records after giving Employee notice of termination for
Cause provided that in the event of a dispute concerning MSI's finding of Cause
which is the subject matter of a proceeding under Section 8.7, Employee and
Employee's legal representative shall have access to business records relevant
to such findings of Cause to the extent provided in Section 8.7. "Cause" shall
mean: (i) Employee's Material Breach of this Agreement (as defined below) which
continues uncured for more than thirty (30) days after notice by MSI, (ii)
unexcused absence for more than two consecutive weeks (other than for reasons
relating to Employee's illness or vacation), (iii) Employee's dishonesty or
willful misconduct with respect to MSI, (iv) Employee's drug or alcohol abuse
for which treatment is refused (unless, within 30 days of MSI's notice to obtain
treatment, Employee produces a doctor's letter that Employee is not abusing
drugs or alcohol), or (v) conviction of Employee for a felony. For purposes of
clause (i) above, a "Material Breach of this Agreement" shall mean Employee's
breach of Articles 1.2, IV, V or VI above, or Employee's failure to follow the
lawful directions of MSI's Board of Directors.
7.2 Except as may be otherwise provided in applicable MSI benefit
plans, MSI shall not be liable to Employee for any salary or benefits
continuation beyond the date of Employee's death (except as expressly provided
herein), termination for disability (except as expressly provided herein),
4
<PAGE> 5
voluntary termination of employment with MSI or upon MSI's rightful termination
of Employee for Cause, except as may be required by law.
7.3 Employee's employment may be terminated by MSI without Cause or
Employee's consent for any reason or no reason by furnishing Employee with
written notice ("Notice") of the fact setting forth the effective date that
Employee's employment is to be terminated and provided that in such event:
(a) Employee will be entitled to receive his 1996 base salary
during each of the two years following the effective date of
his termination of employment (the "Severance Period").
(b) Employee shall be allowed to continue participation in MSI
health and life insurance plans until the earlier of the end
of the first eighteen months of the Severance Period or until
Employee is covered by a successor employer's comparable
benefit plans. If MSI's insurers do not permit such continued
participation, then MSI shall reimburse Employee for the costs
of procuring comparable health and life insurance (if Employee
is eligible for such coverage) during the Severance Period, up
to two times the annual amount that MSI paid for such
insurance on Employee during the year prior to termination of
employment.
(c) The Company shall continue to pay all costs related to the
Employee's continued family medical coverage under the
Consolidated Budget Reconciliation Act of 1985 (COBRA) until
the earlier of the end of the first eighteen months of the
Severance Period or until such costs are covered by a
successor employer. The "Qualifying Event" for purposes of
COBRA shall be Employee's effective date of termination of
employment.
If Employee's employment is terminated under this Section 7.3, MSI will use its
best efforts to provide Employee with the opportunity to resign immediately
before the effective date of the Notice described in the first paragraph of this
Section 7.3, but Employee's resignation under those circumstances will have the
same effect under this Agreement as if Employee's employment were
terminated under this Section 7.3; provided any such resignation must be in
writing and acknowledge (which acknowledgment may be in a separate writing) that
this Section 7.3 is applicable in accordance with its terms. If Employee's
employment is terminated under this Section 7.3, MSI may bar Employee from
access to MSI's offices, facilities and business records.
7.4 If the Employee's employment with MSI is terminated because of a
consolidation, merger, reorganization, or sale of all, or substantially all, of
the assets or capital stock of MSI or other business combination in which MSI is
not the surviving entity (a "Change of Control") at any time within a period
commencing two months before and ending twelve months after a Change of Control,
and the Employee is not offered employment by the acquiring corporation in a
comparable position relating to a comparably sized business unit, at a
comparable target compensation (defined for this purpose as then current annual
salary plus then current target annual bonus available to be earned by Employee)
with comparable severance benefits as described in Section 7.3 above, in the
Employee's location at that time or other location acceptable to Employee, or if
Employee's employment is terminated without Cause (as defined in Section 7.3
hereof) at any time within a period commencing two months before and ending
twelve months after a Change of Control, then MSI or the acquiring corporation,
as the case may be, shall be obligated to: (a) pay the severance amount and
provide the Employee with medical and health insurance benefits as set forth in
Section 7.3, and (b) accelerate the vesting of Employee's Additional Options
such that 50% of the then unvested shares of all options for the purchase of MSI
common stock held by Employee become vested. If the Employee is offered
employment by the acquiring corporation in a comparable position relating to a
comparably sized business unit, and at a comparable target compensation with
comparable severance benefits as described in Section 7.3 above, in the
Employee's location at that time or other location acceptable to Employee,
5
<PAGE> 6
neither MSI nor the acquiring corporation shall be obligated to provide the
severance payments or medical and health insurance benefits as described in
Section 7.3 of this Agreement or to accelerate the vesting of Employee's
unvested options (except as may otherwise be provided under MSI's stock option
plans). Anything contained in this Section 7.4 to the contrary notwithstanding,
the Employee shall not be entitled to any severance or other termination benefit
if the Employee has either (i) terminated such employment voluntarily, or (ii)
has been terminated by MSI or any acquiring corporation "for Cause" pursuant to
Section 7.1.
7.5 If the Employee's target compensation (defined for this purpose as
annual salary plus target annual bonus available to be earned by Employee) for
any year during the Term is less than ninety percent (90%) of the Employee's
target compensation for 1996 , except in connection with a reduction in
compensation applicable to MSI employees generally, then the Employee shall have
the right to declare such reduction in target compensation as a constructive
termination of his employment without Cause under Section 7.3. In such event
Employee shall be entitled, within thirty (30) days after the effective date of
such reduction in target compensation, to provide MSI with written notice of
such constructive termination of employment, in which case Employee's employment
with MSI shall cease and MSI shall be obligated to pay the severance amount and
provide the insurance benefits set forth in Section 7.3.
ARTICLE VIII. Miscellaneous
8.1 This agreement shall be governed by and subject to the internal
laws of the State of California.
8.2 The failure of MSI or Employee to insist in any one or more
instances upon performance of any terms, covenants and conditions of this
Agreement, shall not be construed as a waiver or relinquishing of any rights
granted hereunder or of the future performance of any such terms, covenants or
conditions.
8.3 All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
mailed, registered or certified mail, postage prepaid;
If to MSI: Molecular Simulations Inc.
9685 Scranton Road
San Diego, CA 92121-3752
If to Employee: Michael J. Savage
2055 Seaview
Del Mar, CA 92014
or at such other address or addresses as any such party may have furnished to
the other party in writing.
8.4 This Agreement is for personal services and is therefore not
assignable by Employee but is assignable by MSI only to a successor of
substantially the entire business of MSI.
8.5 This Agreement, including the Exhibits attached hereto and the
documents referred to herein, shall constitute the entire agreement between the
parties hereto with respect to the subject matter hereof (except as otherwise
expressly provided herein) and expressly supersedes all oral or written
promises relating to the subject matter hereof. This Agreement may not be
changed, modified or any right under it waived in any manner except by written
instrument signed by both parties expressing the plan and intention to modify
this Agreement. No principle of construction or interpretation shall be applied
to construe this Agreement or any part of it against the party which drafted the
Agreement.
6
<PAGE> 7
8.6 Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective in a jurisdiction where such enforcement is
sought but only to the extent of such prohibition on unenforceability without
invalidity of the remaining provisions hereof and without affecting the validity
or enforceability of such provision in any other jurisdiction.
8.7 Any dispute with respect to any aspect hereof which cannot be
settled by the parties shall be settled by arbitration in the City of San Diego
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof. Except as specifically provided herein, the arbitration
shall proceed in accordance with the laws of the State of California. The party
requesting arbitration shall give a written demand for arbitration to the other
party by registered or certified mail. The demand shall set forth a statement of
the nature of the dispute, the amount involved and the remedies sought. No later
than twenty (20) calendar days after the demand for arbitration is served, the
parties shall jointly select and appoint a retired judge of the San Diego
Superior Court to act as the arbitrator. In the event the parties do not agree
on the selection of an arbitrator, the party seeking arbitration shall apply to
the San Diego County Superior Court for the appointment of a retired judge of
that court to serve as arbitrator. As rules for the arbitration the arbitrator
shall apply the provisions of Sections 1282 through 1284.2 of the California
Code of Civil Procedure, and the parties may pursue discovery in accordance with
California Code of Civil Procedure Section 1283.05 which shall however be
limited to no more than two depositions taken by each party and the production
of only those documents directly relevant to the dispute. No later than (10)
calendar days after the arbitrator is appointed, the arbitrator shall schedule
the arbitration for a hearing to commence on a mutually convenient date. The
hearing shall commence no later than one hundred twenty (120) calendar days
after the arbitrator is appointed and shall continue from day to day until
completed. All discovery shall be completed no later than the commencement of
the arbitration hearing or one hundred twenty (120) calendar days after the date
that a proper demand for arbitration is served, whichever occurs earlier unless
upon a showing of good cause the arbitrator extends or shortens that period. The
arbitrator shall issue his or her award in writing no later than twenty (20)
calendar days after the conclusion of the hearing. The arbitration award shall
be final and binding regardless of whether one of the parties fails or refuses
to participate in the arbitration. The arbitrator is empowered to hear all
disputes between the parties concerning the subject matter hereof, and the
arbitrator may award monetary damages, specific performance, injunctive relief,
rescission and restitution. The arbitrator shall have no authority to award
exemplary or punitive damages under any circumstance. Either party may request
that the arbitrator submit written findings of fact and conclusions of law. The
prevailing party in any arbitration under this Section 8.7 shall be entitled to
be paid by the other party all of the prevailing party's costs and expenses,
including reasonable attorneys' fees, incurred in connection with the
arbitration.
8.8 This Agreement shall become effective upon its execution by both
parties.
IN WITNESS WHEREOF, MSI has executed this Agreement by its duly
authorized officer and has caused its corporate seal to be affixed, and Employee
has individually executed this Agreement intending to be legally bound, as of
the date hereof.
MOLECULAR SIMULATIONS INC. "Employee": MICHAEL J. SAVAGE
Signature: /s/ C.D. Statham Signature: /s/ Michael J. Savage
---------------------------- ---------------------
Printed Name: C. Derek Statham
-------------------------
Title: Chairman
--------------------------------
7
<PAGE> 8
EXHIBIT A
MSI'S 1996 REVENUE AND INCOME GOALS
AND
METHODOLOGY FOR CALCULATING BONUS PAYMENTS
For purposes of 1996 bonus calculations, the financial goals of MSI are set
forth below in terms of Margin and Operating Profit. Margin is Revenue less Cost
of Sales and Operating Profit is Gross Profit of MSI after deducting operating
expenses but before the calculating the effect of interest (both income and
expense), taxes, etc. The goals for 1996 are Margin of $41,261,000 and Operating
Profit of $5,050,000.
The bonus is calculated based on the following formula, examples of which are
included on the attached page. No bonus is payable if Margin is less than 75% of
Target Margin, or $30,946,000. If Margin for 1996 exceeds the 75% threshold
($30,946,000), the incremental Margin above the 75% threshold (up to the 100%
threshold - $41,261,000) is multiplied by the Margin factor set forth opposite
the 75% threshold. If Margin does not reach the 100% threshold ($41,261,000),
this product is the bonus amount payable based on performance against the Margin
goal. This bonus amount is subject to downward adjustment for failure to achieve
the Operating Profit goal as described below.
In addition, if Margin for 1996 exceeds the 100% threshold ($41,261,000), the
incremental Margin above the 100% threshold is multiplied by the Margin factor
set forth opposite the 100% threshold, and this product is added to the product
calculated for Margin between 75% and 100% of the Margin goal. In that event,
the sum of these two products is the bonus amount payable based on performance
against the Margin goal. However, this bonus amount is also subject to downward
adjustment for failure to achieve the Operating Profit goal as described below.
If Operating Profit equals or exceeds the Target Operating Profit, there is no
adjustment to the bonus amount calculated based on the Margin achieved and
factors applied. However, if Operating Profit is below the Target Operating
Profit, then the bonus amount calculated based on Margin is reduced by the
product of: (a) the Operating Profit shortfall multiplied by (b) the factor set
forth opposite the Operating Profit goal; provided, however, that, the bonus
amount may not be less than zero.
<PAGE> 9
EXHIBIT B
CALIFORNIA LABOR CODE PROVISIONS
Section 2870. Employment Agreements; Assignment of Rights.
(a) Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's equipment,
supplies, facilities, or trade secret information except for those inventions
that either:
(1) relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer; or
(2) result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against public policy of this
state and is unenforceable.
Section 2871. Conditions of Employment or Continued Employment; Disclosure of
Inventions.
No employer shall require a provision made void and unenforceable by Section
2870 as a condition of employment or continued employment. Nothing in this
article shall be construed to forbid or restrict the right of an employer to
provide in contracts of employment for disclosure, provided that any such
disclosures be received in confidence, of all of the employee's inventions made
solely or jointly with others during the term of his or her employment, a review
process by the employer to determine such issues as may arise, and for full
title to certain patents and inventions to be in the United States, as required
by contracts between the employer and the United States or any of its agencies.
Section 2872. Notice to Employee; Burden of Proof.
If an employment agreement entered into after January 1, 1980 contains a
provision requiring the employee to assign or offer to assign any of his or her
rights in any invention to his or her employer, the employer must also, at the
time the agreement is made, provide a written notification to the employee that
the agreement does not apply to an invention which qualifies fully under the
provisions of Section 2870. In any suit or action arising thereunder, the burden
of proof shall be on the employee claiming the benefits of its provisions.
<PAGE> 10
MOLECULAR SIMULATIONS INC.
1996 SR MGT INCENTIVE PLAN - MICK SAVAGE
BASED ON THE FOLLOWING ANNUAL TARGETS:
<TABLE>
<S> <C>
MARGIN = $41,261
OP PROFIT = $5,050
</TABLE>
<TABLE>
<CAPTION>
TARGET INCENTIVE LEVEL
----------------------
$100K
-----
<S> <C> <C>
MARGIN FACTOR
Applies above: 20,631
30,946 0.009694
41,261 0.021505
OP PROFIT FACTOR
Factor applies below: 5,050 0.025000
- ----------------------------------
INCENTIVE SCENARIOS:
- ----------------------------------
SCENARIO 1: AT PLAN
- -------------------
Margin Incentive at: 41,261 100
Op Profit Incentive at: 5,050 0
------
100
SCENARIO 2: 90% MARGIN, $1M BELOW OP PROFIT
- -------------------------------------------
Margin Incentive at: 37,135 60
Op Profit Incentive at: 4,050 (25)
------
35
SCENARIO 3: AT PLAN MARGIN, $2M BELOW OP PROFIT
- ------------------------------------------------
Margin Incentive at: 41,261 100
Op Profit Incentive at: 3,050 (50)
------
50
SCENARIO 4: $2M ABOVE MARGIN, $1M ABOVE OP PROFIT
- -------------------------------------------------
Margin Incentive at: 43,261 143
Op Profit Incentive at: 6,050
------
143
SCENARIO 5: $4M ABOVE MARGIN, $2M ABOVE OP PROFIT
- -------------------------------------------------
Margin Incentive at: 45,261 186
Op Profit Incentive at: 7,050
------
186
SCENARIO 6: $5M ABOVE MARGIN, $2.5M ABOVE OP PROFIT
- ---------------------------------------------------
Margin Incentive at: 46,261 208
Op Profit Incentive at: 7,550
------
208
</TABLE>
<PAGE> 11
1996 INCENTIVE COMP. PLAN SUMMARY (SAVAGE): TARGET INCENTIVE: $100,000
PROFIT (NBIT) INCENTIVE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
NBIT % of Target Relative Com- Commission Rate
Variance Incentive Earned mission Rate Formula
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
($2,000,000) -50.0% 1.00 (0.5*Target Incntv/$2,000,000)
$0 0.0% 1.00 (0.5*Target Incntv/$2,000,000)
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Commission Cumulative
NBIT ACTUAL Rate Earnings Earnings
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$3,050,000 -0.025000 ($50,000) ($50,000)
$5,050,000 -0.025000 $0 $0
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
===========================
$2M INCENTIVE $ 50,000
===========================
TARGET Op Income $5,050,000
===========================
</TABLE>
MARGIN INCENTIVE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Actual Margin % of Target Relative Com- Commission Rate
as % of Annual Target Incentive Earned mission Rate Formula
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0 - 50% 0% 0.00
50 - 75% 0% 0.00
75 - 100% 100% 4.00 (1)/(0.25)*(Target Incntv/Target Margin)
100% + 8.87 2.2 times previous rate
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Commission Cumulative
ACTUAL MARGIN Rate Earnings Earnings
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$0 - $20,630,500 $ 0 $ 0
greater than 20,630,500 - 30,946,750 0.000000 $ 0 $ 0
greater than 30,945,750 - 41,261,000 0.009694 $100,000 $100,000
greater than 41,261,000 0.021505
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
===========================
TARGET INCENTIVE $ 100,000
===========================
TARGET MARGIN $41,261,000
===========================
</TABLE>
<PAGE> 1
Exhibit 10.16
EMPLOYMENT AGREEMENT
THIS IS AN AGREEMENT, made as of this 30th day of November 1995, by and
between Molecular Simulations Inc., a Delaware corporation (hereafter "MSI"),
and Saiid Zarrabian, presently residing at 14 Vinebrook Road, Westford, MA 01886
(hereafter "Employee").
WITNESSETH:
WHEREAS, Employee has previously been employed by MSI in an important
capacity and MSI and Employee now wish to enter into an agreement of employment
that will constitute the sole and exclusive agreement relating to the employment
of Employee by MSI.
NOW, THEREFORE, in consideration of the foregoing premises, and the mutual
covenants, terms and conditions set forth herein, it is hereby agreed between
MSI and Employee as follows:
ARTICLE I. Employment
1.1 MSI shall employ Employee, and Employee shall continue to accept
employment with and work for MSI, in a full-time capacity commencing on the date
of this Agreement and continuing until Employee's employment with MSI is
terminated as provided herein (this period is sometimes referred to herein as
the "Term"). Such employment shall be in the capacity of Chief Operating Officer
of MSI. MSI shall assign to Employee, and Employee shall accept and diligently
perform to the reasonable satisfaction of MSI, those duties assigned to such
employee by MSI.
1.2 During the Term, Employee shall not, directly or indirectly, alone or
as a member of a partnership, or as an officer, director, employee, agent or
shareholder of any other person, firm or business organization, engage in any
other business activity or pursuit for compensation requiring Employee's
personal services during the period of Employee's employment hereunder without
the prior written consent of MSI acting through its Board of Directors; provided
however nothing in this Agreement shall preclude Employee from: (i) engaging in
religious, charitable, nonprofit or community activities; or (ii) serving on the
board of directors of any company, provided that such board membership is
approved by MSI's Board of Directors, such approval not to be unreasonably
withheld; or (iii) managing Employee's personal investments so long as
Employee's activities in any case do not interfere with the performance of
Employee's duties or responsibilities under this Agreement.
ARTICLE II. Compensation
2.1 Employee shall be compensated at an annual base salary of $162,500
during the Term of this Agreement. The MSI Board of Directors shall review and
may, at its sole discretion, increase this annual base salary from time to time
during the Term of this Agreement or any extension thereof to reflect salary
increases granted generally to other MSI Employees.
2.2 The Employee's base salary shall be paid periodically in the same
manner as it is paid to other executive employees of MSI, but in no event less
frequently than monthly. Base salary and other compensation shall be subject to
such withholdings as required by law or otherwise agreed to by Employee.
2.3 During the Term, in addition to all other amounts payable under Section 2,
the Employee shall be eligible to receive a target bonus of (i) $75,000 for the
period ending December 31, 1996 and (ii) $75,000 per annum for each successive
twelve month period thereafter ending December 31 ("Year End"), provided the
Employee continues to be employed by MSI on such Year End. The MSI Board of
Directors shall review and may, at its sole discretion, increase this annual
target bonus from time to time during the Term of this Agreement or any
extension thereof. Such bonus for 1996 shall be based on the achievement of the
revenue and income goals for MSI set forth on Exhibit A hereto, and such bonus
will be adjusted upwardly or downwardly based on performance against such goals
in the manner described in Exhibit A. For 1997 and beyond, such bonus shall be
based on the achievement of the revenue, income and/or other goals for MSI
established promptly and reasonably by the
<PAGE> 2
Compensation Committee of the Board of Directors of MSI. The amount of bonus
payments payable to the Employee under this Section 2.3 and the satisfaction of
the goals and objectives set forth in Exhibit A or any amendment thereto shall
be determined promptly and reasonably by MSI's Board of Directors or
Compensation Committee and, if earned, such bonus payments shall be paid within
120 days after each Year End. Such bonus payments shall be subject to all
applicable federal, state and local withholding, payroll and other taxes, as
required by law.
2.4 Employee shall be entitled to receive an incentive stock option to
purchase an additional two hundred seventy-one thousand nine hundred eighty
(271,980) shares of MSI's common stock (the "Additional Option") on the terms
and conditions described below. The shares subject to the Additional Option will
vest over a four year period (25% on August 15,1996 and an additional 25% on
each anniversary thereafter with all such shares vested as of August 15, 1999)
so long as Employee is an employee or consultant of MSI. In addition to the
standard term for exercise of options under MSI's stock option plan, if
Employee's employment with MSI is terminated without Cause (as defined in
Section 7.1 below), Employee will have three (3) years to exercise the portion
of the Additional Option which had vested at the time of such termination of
employment. Other terms and conditions of the Additional Option will be as
provided by MSI's Board of Directors pursuant to MSI's stock option plan.
ARTICLE III. Executive Benefits
3.1 During the Term of this Agreement, Employee shall be entitled to
participate in MSI's group life insurance plans as they may be amended and in
force from time to time during the Term, and shall, with his or her dependents,
be entitled to health insurance coverage under MSI health insurance plans upon
the same basis as provided to other executive employees of MSI.
3.2 MSI shall provide to Employee vacation, insurances (other than as
provided for in Paragraph 3.1) and fringe benefits no less favorable to Employee
than MSI may from time to time make available to its employees generally on a
pro rata basis or on a basis proportional with Employee's annual salary
hereunder as it may be appropriate with respect to the particular plan.
3.3 Employee may incur reasonable business expenses in the course of
employment hereunder for which Employee shall be eligible for reimbursement or
advances for such expenses in accordance with MSI's policy for business travel
expenses for its executive employees generally.
3.4 Following Employee's relocation to MSI's new headquarters in San
Diego, California, Employee shall not be required without Employee's consent to
accept any: (a) further transfer to a place of business that is more than 35
miles from the headquarters location of MSI, except in connection with a
movement of MSI's principal place of business or headquarters to a location
within the City of San Diego or the County of San Diego, California, or (b) any
temporary assignment which would require Employee to be absent from Employee's
home for more than thirty (30) consecutive days, provided that no such temporary
assignment shall require Employee to be absent from Employee's home for more
than sixty (60) days in any one-year period, excluding normal business travel.
3.5 MSI shall reimburse the Employee for the reasonable relocation
expenses incurred directly by the Employee in connection with his or her
employment by MSI as follows: reasonable out-of-pocket expenses associated with
the Employee's relocation of his residence to a location within the San Diego,
California area, including costs of moving household furnishings, personal
effects, storage costs and insurance; closing costs and commissions to real
estate brokers associated with the sale of the Employee's residence (provided
such sale occurs during the Term but not more than two years from the date of
this Agreement); travel expenses associated with a reasonable number of "house
hunting" trips; up to $12,000 toward the costs of renting temporary housing in
San Diego (prior to the sale or rental of Employee's residence in Westford,
Massachusetts, MSI will reimburse Employee in full for temporary housing rental
and after the sale or rental of such residence will reimburse Employee the
excess of his monthly rental payment in the San Diego area over his former
monthly mortgage payment for his Massachusetts residence, subject in all cases
to the $12,000 maximum reimbursement); and closing costs associated with the
purchase of a residence in the San Diego area (provided such purchase occurs
during the Term but not more than two years from the date of this Agreement)
including title insurance,
2
<PAGE> 3
plot surveys, bank origination and application fees, legal fees, home inspection
fees, appraisal fees, and up to one and one-half points toward a mortgage. In
addition, MSI will reimburse Employee for any incremental income tax actually
owed by the Employee as a result of any reimbursement payments under this
Section 3.5, and such other expenses as MSI's Board of Directors approves in
advance. Employee agrees to claim all applicable tax deductions associated with
such expenses so as to minimize the incremental income tax to be reimbursed by
MSI.
The Employee hereby agrees that all such expenses to be reimbursed to
the Employee under this Section 3.5 by MSI shall be reasonable and that the
Employee shall use his best efforts to minimize the costs by obtaining, in each
instance, terms which are as favorable as those which the Employee would
negotiate if he were to pay for such expenses directly himself. Further, the
Employee agrees to provide suitable and accurate documentation evidencing such
costs incurred, and MSI shall provide reimbursement within a reasonable time
after the receipt of such documentation.
3.6 In addition to the amounts payable under Section 3.5 above, MSI
agrees to pay Employee a one time relocation bonus of $57,000 promptly after
execution of this Agreement. MSI will also reimburse Employee for any
incremental taxes on income actually owed by the Employee as a result of such
relocation bonus. If Employee voluntarily ceases his employment with MSI during
the one year period following his relocation to the San Diego area, Employee
agrees to repay such relocation bonus amount and the relocation expense
reimbursements described in Section 3.5 to MSI within ten (10) days after his
termination of employment. Employee agrees that MSI may deduct and offset all or
part of such amount from any amounts otherwise owed by MSI to Employee at the
time of termination of employment, including salary, severance pay, commissions,
bonuses and expense reimbursements.
3.7 In the event Employee's employment with MSI is terminated without
Cause (as defined in Section 7.1 below) within one year after his relocation to
the San Diego area, MSI agrees to reimburse Employee for reasonable moving and
transportation expenses associated with Employee's relocation to Massachusetts,
including costs of moving household furnishings and personal effects, storage
costs and insurance.
ARTICLE IV. Invention Disclosure, Patent Assignment and Copyright
4.1 Employee shall promptly disclose to MSI all inventions conceived or
developed by Employee solely or jointly with another during the Term of this
Agreement and for six months thereafter, which are related to the MSI Business,
as described below, on such forms as MSI may require from time to time. Such
disclosure shall be kept confidential by MSI during MSI's review and thereafter
if MSI determines that the invention is not the property of MSI. Employee hereby
assigns to MSI all right, title and interest in and to any such inventions
relating to the MSI Business (including any actually or demonstratively
anticipated research and development of MSI) which are conceived or made by
Employee solely or jointly with any other person, during the course of
employment with MSI. For purposes of this Agreement, the MSI Business includes
the development, distribution, licensing or sale of algorithms, computer-based
techniques or software for modeling (including graphical display), analysis or
storage of chemical or biological structures, properties, processes or related
information, and any other business in which MSI engages or plans to engage (as
evidenced in business plans or other written materials) during the Term.
4.2 All rights in development (including without limitation software,
source codes, object codes, subroutines, file formats, user interfaces,
algorithms, molecular structures and compositions, business methods and trade
secrets), reports, records and other documents prepared by Employee during the
Term and which relate to the MSI Business or are within the scope of employment
hereunder shall vest exclusively with MSI, and Employee upon MSI's request will
execute any assignments necessary to protect MSI's (or its assignees) interests
in such intellectual property rights and documents and shall assist MSI (or its
assignees) in securing patent protection, if available, or Federal copyright
registration for any inventions included in such property rights or documents.
Employee has not developed or conceived of any invention related to the MSI
Business as of the date of this Agreement that is not owned by MSI.
3
<PAGE> 4
4.3 Employee hereby acknowledges that this provision constitutes
written notification that this Agreement does not require any assignment of any
inventions or rights or interests therein which fully qualify as an invention
under Section 2870(b) of the California Labor Code. Sections 2870, 2871 and 2872
of the California Labor Code are attached as Exhibit B.
ARTICLE V. Non-Solicitation
5.1 Employee shall not, during the Term and for a period of one year
thereafter, engage in any activity which is intended directly or indirectly to
solicit, encourage, induce or attract to the employ of Employee or any other
business any person who is then an employee of or consultant (other than
consultants providing general services, such as accountants, which are not
directly related to the development, production or marketing of MSI products or
technologies) to MSI or offer any employment, consulting or ownership interest
to any person who is an employee of or consultant to MSI.
ARTICLE VI. Confidentiality
6.1 Employee will during the course of employment be privy to
information belonging to MSI which information is valuable to MSI and which
information MSI holds in confidence. Employee undertakes with respect to
information Employee understands, or reasonably should believe to be
confidential to MSI, or as to which Employee has been specifically advised by
MSI that it regards to be confidential, not to disclose to third parties or use
such information during the Term and after the expiration or termination of this
Agreement for any reason, except in connection with the performance of duties as
an Employee of MSI pursuant to this Agreement. At the expiration of this
Agreement or termination of employment hereunder, Employee will, at MSI's
request, return to MSI all written confidential information (including that
contained on any computer media) received from MSI and destroy any
transcriptions or copies Employee may have of such information, unless an
alternative method of disposition is approved by MSI in writing. Employee's
obligations under this Article VI shall be in addition to any other
confidentiality or nondisclosure obligations of Employee to MSI at law or under
any other agreement. Employee's obligations under this Article VI shall not
extend to information which (i) was or is publicly available, (ii) became
available to Employee from a third party which was not, to Employee's knowledge,
bound by any obligation of confidentiality to MSI or (iii) was independently
developed by Employee without violating Employee's obligations hereunder.
ARTICLE VII. Termination and Termination of Responsibilities
7.1 Employee shall be subject to termination of Employee's employment
by MSI only for Cause as defined below, or disability which prevents Employee
from working for longer than three (3) months or as expressly provided in
Section 7.3 below. Notwithstanding any dispute over whether a termination was
properly for Cause, MSI may bar Employee from access to MSI's offices,
facilities and business records after giving Employee notice of termination for
Cause provided that in the event of a dispute concerning MSI's finding of Cause
which is the subject matter of a proceeding under Section 8.7, Employee and
Employee's legal representative shall have access to business records relevant
to such findings of Cause to the extent provided in Section 8.7. "Cause" shall
mean: (i) Employee's Material Breach of this Agreement (as defined below) which
continues uncured for more than thirty (30) days after notice by MSI, (ii)
unexcused absence for more than two consecutive weeks (other than for reasons
relating to Employee's illness or vacation), (iii) Employee's dishonesty or
willful misconduct with respect to MSI, (iv) Employee's drug or alcohol abuse
for which treatment is refused (unless, within 30 days of MSI's notice to obtain
treatment, Employee produces a doctor's letter that Employee is not abusing
drugs or alcohol), or (v) conviction of Employee for a felony. For purposes of
clause (i) above, a "Material Breach of this Agreement" shall mean Employee's
breach of Articles 1.2, IV, V or VI above, or Employee's failure to follow the
lawful directions of MSI's Board of Directors.
7.2 Except as may be otherwise provided in applicable MSI benefit
plans, MSI shall not be liable to Employee for any salary or benefits
continuation beyond the date of Employee's death (except as expressly provided
herein), termination for disability (except as expressly provided herein),
voluntary termination of employment with MSI or upon MSI's rightful termination
of Employee for Cause, except as may be required by law.
4
<PAGE> 5
7.3 Employee's employment may be terminated by MSI without Cause or
Employee's consent for any reason or no reason by furnishing Employee with
written notice ("Notice") of the fact setting forth the effective date that
Employee's employment is to be terminated and provided that in such event:
(a) Employee will be entitled to receive his 1996 base salary
during the one year period following the effective date of his
termination of employment (the "Severance Period").
(b) Employee shall be allowed to continue participation in MSI
health and life insurance plans until the earlier of the end
of the first eighteen months of the Severance Period or until
Employee is covered by a successor employer's comparable
benefit plans. If MSI's insurers do not permit such continued
participation, then MSI shall reimburse Employee for the costs
of procuring comparable health and life insurance (if Employee
is eligible for such coverage) during the Severance Period, up
to two times the annual amount that MSI paid for such
insurance on Employee during the year prior to termination of
employment.
(c) The Company shall continue to pay all costs related to the
Employee's continued family medical coverage under the
Consolidated Budget Reconciliation Act of 1985 (COBRA) until
the earlier of the end of the first eighteen months of the
Severance Period or until such costs are covered by a
successor employer. The "Qualifying Event" for purposes of
COBRA shall be Employee's effective date of termination of
employment.
If Employee's employment is terminated under this Section 7.3, MSI will use its
best efforts to provide Employee with the opportunity to resign immediately
before the effective date of the Notice described in the first paragraph of this
Section 7.3, but Employee's resignation under those circumstances will have the
same effect under this Agreement as if Employee's employment were
terminated under this Section 7.3; provided any such resignation must be in
writing and acknowledge (which acknowledgment may be in a separate writing) that
this Section 7.3 is applicable in accordance with its terms. If Employee's
employment is terminated under this Section 7.3, MSI may bar Employee from
access to MSI's offices, facilities and business records.
7.4 If the Employee's employment with MSI is terminated because of a
consolidation, merger, reorganization, or sale of all, or substantially all, of
the assets or capital stock of MSI or other business combination in which MSI is
not the surviving entity (a "Change of Control") at any time within a period
commencing two months before and ending twelve months after a Change of Control,
and the Employee is not offered employment by the acquiring corporation in a
comparable position relating to a comparably sized business unit, at a
comparable target compensation (defined for this purpose as then current annual
salary plus then current target annual bonus available to be earned by Employee)
with comparable severance benefits as described in Section 7.3 above, in the
Employee's location at that time or other location acceptable to Employee, or if
Employee's employment is terminated without Cause (as defined in Section 7.3
hereof) at any time within a period commencing two months before and ending
twelve months after a Change of Control, then MSI or the acquiring corporation,
as the case may be, shall be obligated to: (a) pay the severance amount and
provide the Employee with medical and health insurance benefits as set forth in
Section 7.3, and (b) accelerate the vesting of Employee's Additional Options
such that 50% of the then unvested shares of all options for the purchase of MSI
common stock held by Employee become vested. If the Employee is offered
employment by the acquiring corporation in a comparable position relating to a
comparably sized business unit, and at a comparable target compensation with
comparable severance benefits as described in Section 7.3 above, in the
Employee's location at that time or other location acceptable to Employee,
neither MSI nor the acquiring corporation shall be obligated to provide the
severance payments or medical and health insurance benefits as described in
Section 7.3 of this Agreement or to accelerate the vesting of Employee's
unvested options (except as may otherwise be provided under MSI's stock option
plans). Anything contained in this Section 7.4 to the contrary notwithstanding,
the Employee shall not
5
<PAGE> 6
be entitled to any severance or other termination benefit if the Employee has
either (i) terminated such employment voluntarily, or (ii) has been terminated
by MSI or any acquiring corporation "for Cause" pursuant to Section 7.1.
7.5 If the Employee's target compensation (defined for this purpose as
annual salary plus target annual bonus available to be earned by Employee) for
any year during the Term is less than ninety percent (90%) of the Employee's
target compensation for 1996 , except in connection with a reduction in
compensation applicable to MSI employees generally, then the Employee shall have
the right to declare such reduction in target compensation as a constructive
termination of his employment without Cause under Section 7.3. In such event
Employee shall be entitled, within thirty (30) days after the effective date of
such reduction in target compensation, to provide MSI with written notice of
such constructive termination of employment, in which case Employee's employment
with MSI shall cease and MSI shall be obligated to pay the severance amount and
provide the insurance benefits set forth in Section 7.3.
ARTICLE VIII. Miscellaneous
8.1 This agreement shall be governed by and subject to the internal
laws of the State of California.
8.2 The failure of MSI or Employee to insist in any one or more
instances upon performance of any terms, covenants and conditions of this
Agreement, shall not be construed as a waiver or relinquishing of any rights
granted hereunder or of the future performance of any such terms, covenants or
conditions.
8.3 All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
mailed, registered or certified mail, postage prepaid;
If to MSI: Molecular Simulations Inc.
9685 Scranton Road
San Diego, CA 92121-3752
If to Employee: Saiid Zarrabian
14 Vinebrook Road
Westford, MA 01886
or at such other address or addresses as any such party may have furnished to
the other party in writing.
8.4 This Agreement is for personal services and is therefore not
assignable by Employee but is assignable by MSI only to a successor of
substantially the entire business of MSI.
8.5 This Agreement, including the Exhibits attached hereto and the
documents referred to herein, shall constitute the entire agreement between the
parties hereto with respect to the subject matter hereof (except as otherwise
expressly provided herein) and expressly supersedes all oral or written promises
relating to the subject matter hereof. This Agreement may not be changed,
modified or any right under it waived in any manner except by written instrument
signed by both parties expressing the plan and intention to modify this
Agreement. No principle of construction or interpretation shall be applied to
construe this Agreement or any part of it against the party which drafted the
Agreement.
8.6 Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective in a jurisdiction where such enforcement is
sought but only to the extent of such prohibition on unenforceability without
invalidity of the remaining provisions hereof and without affecting the validity
or enforceability of such provision in any other jurisdiction.
6
<PAGE> 7
8.7 Any dispute with respect to any aspect hereof which cannot be
settled by the parties shall be settled by arbitration in the City of San Diego
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof. Except as specifically provided herein, the arbitration
shall proceed in accordance with the laws of the State of California. The party
requesting arbitration shall give a written demand for arbitration to the other
party by registered or certified mail. The demand shall set forth a statement of
the nature of the dispute, the amount involved and the remedies sought. No later
than twenty (20) calendar days after the demand for arbitration is served, the
parties shall jointly select and appoint a retired judge of the San Diego
Superior Court to act as the arbitrator. In the event the parties do not agree
on the selection of an arbitrator, the party seeking arbitration shall apply to
the San Diego County Superior Court for the appointment of a retired judge of
that court to serve as arbitrator. As rules for the arbitration the arbitrator
shall apply the provisions of Sections 1282 through 1284.2 of the California
Code of Civil Procedure, and the parties may pursue discovery in accordance with
California Code of Civil Procedure Section 1283.05 which shall however be
limited to no more than two depositions taken by each party and the production
of only those documents directly relevant to the dispute. No later than (10)
calendar days after the arbitrator is appointed, the arbitrator shall schedule
the arbitration for a hearing to commence on a mutually convenient date. The
hearing shall commence no later than one hundred twenty (120) calendar days
after the arbitrator is appointed and shall continue from day to day until
completed. All discovery shall be completed no later than the commencement of
the arbitration hearing or one hundred twenty (120) calendar days after the date
that a proper demand for arbitration is served, whichever occurs earlier unless
upon a showing of good cause the arbitrator extends or shortens that period. The
arbitrator shall issue his or her award in writing no later than twenty (20)
calendar days after the conclusion of the hearing. The arbitration award shall
be final and binding regardless of whether one of the parties fails or refuses
to participate in the arbitration. The arbitrator is empowered to hear all
disputes between the parties concerning the subject matter hereof, and the
arbitrator may award monetary damages, specific performance, injunctive relief,
rescission and restitution. The arbitrator shall have no authority to award
exemplary or punitive damages under any circumstance. Either party may request
that the arbitrator submit written findings of fact and conclusions of law. The
prevailing party in any arbitration under this Section 8.7 shall be entitled to
be paid by the other party all of the prevailing party's costs and expenses,
including reasonable attorneys' fees, incurred in connection with the
arbitration.
8.8 This Agreement shall become effective upon its execution by both
parties.
IN WITNESS WHEREOF, MSI has executed this Agreement by its duly
authorized officer and has caused its corporate seal to be affixed, and Employee
has individually executed this Agreement intending to be legally bound, as of
the date hereof.
MOLECULAR SIMULATIONS INC. "Employee": SAIID ZARRABIAN
Signature: /s/ Michael J. Savage Signature: /s/ Saiid Zarrabian
------------------------ ------------------------
Printed Name: Michael J. Savage
---------------------
Title: CEO
---------------------------
7
<PAGE> 8
EXHIBIT A
MSI'S 1996 REVENUE AND INCOME GOALS
AND
METHODOLOGY FOR CALCULATING BONUS PAYMENTS
For purposes of 1996 bonus calculations, the financial goals of MSI are set
forth below in terms of Margin and Operating Profit. Margin is Revenue less Cost
of Sales and Operating Profit is Gross Profit of MSI after deducting operating
expenses but before the calculating the effect of interest (both income and
expense), taxes, etc. The goals for 1996 are Margin of $41,261,000 and Operating
Profit of $5,050,000.
The bonus is calculated based on the following formula, examples of which are
included on the attached page. No bonus is payable if Margin is less than 75% of
Target Margin, or $30,946,000. If Margin for 1996 exceeds the 75% threshold
($30,946,000), the incremental Margin above the 75% threshold (up to the 100%
threshold - $41,261,000) is multiplied by the Margin factor set forth opposite
the 75% threshold. If Margin does not reach the 100% threshold ($41,261,000),
this product is the bonus amount payable based on performance against the Margin
goal. This bonus amount is subject to downward adjustment for failure to achieve
the Operating Profit goal as described below.
In addition, if Margin for 1996 exceeds the 100% threshold ($41,261,000), the
incremental Margin above the 100% threshold is multiplied by the Margin factor
set forth opposite the 100% threshold, and this product is added to the product
calculated for Margin between 75% and 100% of the Margin goal. In that event,
the sum of these two products is the bonus amount payable based on performance
against the Margin goal. However, this bonus amount is also subject to downward
adjustment for failure to achieve the Operating Profit goal as described below.
If Operating Profit equals or exceeds the Target Operating Profit, there is no
adjustment to the bonus amount calculated based on the Margin achieved and
factors applied. However, if Operating Profit is below the Target Operating
Profit, then the bonus amount calculated based on Margin is reduced by the
product of: (a) the Operating Profit shortfall multiplied by (b) the factor set
forth opposite the Operating Profit goal; provided, however, that, the bonus
amount may not be less than zero.
<PAGE> 9
EXHIBIT B
CALIFORNIA LABOR CODE PROVISIONS
Section 2870. Employment Agreements; Assignment of Rights.
(a) Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's equipment,
supplies, facilities, or trade secret information except for those inventions
that either:
(1) relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer; or
(2) result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against public policy of this
state and is unenforceable.
Section 2871. Conditions of Employment or Continued Employment; Disclosure of
Inventions.
No employer shall require a provision made void and unenforceable by Section
2870 as a condition of employment or continued employment. Nothing in this
article shall be construed to forbid or restrict the right of an employer to
provide in contracts of employment for disclosure, provided that any such
disclosures be received in confidence, of all of the employee's inventions made
solely or jointly with others during the term of his or her employment, a review
process by the employer to determine such issues as may arise, and for full
title to certain patents and inventions to be in the United States, as required
by contracts between the employer and the United States or any of its agencies.
Section 2872. Notice to Employee; Burden of Proof.
If an employment agreement entered into after January 1, 1980 contains a
provision requiring the employee to assign or offer to assign any of his or her
rights in any invention to his or her employer, the employer must also, at the
time the agreement is made, provide a written notification to the employee that
the agreement does not apply to an invention which qualifies fully under the
provisions of Section 2870. In any suit or action arising thereunder, the burden
of proof shall be on the employee claiming the benefits of its provisions.
<PAGE> 10
MOLECULAR SIMULATIONS INC.
1996 SR MGT INCENTIVE PLAN - SAIID ZARRABIAN
BASED ON THE FOLLOWING ANNUAL TARGETS:
MARGIN = $41,261
OP PROFIT = $5,050
<TABLE>
<CAPTION>
TARGET INCENTIVE LEVEL
$75K
----------------------
<S> <C> <C>
MARGIN FACTOR
Applies above: 20,631
30,946 0.007271
41,261 0.016129
OP PROFIT FACTOR
Factor applies below: 5,050 0.018750
- -------------------------------------
INCENTIVE SCENARIOS:
- -------------------------------------
SCENARIO 1: AT PLAN
Margin Incentive at: 41,261 75
Op Profit Incentive at: 5,050 0
-----
75
SCENARIO 2: 90% MARGIN, $1M BELOW OP PROFIT
Margin Incentive at: 37,135 45
Op Profit Incentive at: 4,050 (19)
-----
26
SCENARIO 3: AT PLAN MARGIN, $2M BELOW OP PROFIT
Margin Incentive at: 41,261 75
Op Profit Incentive at: 3,050 (38)
-----
38
SCENARIO 4: $2M ABOVE MARGIN, $1M ABOVE OP PROFIT
Margin Incentive at: 43,261 107
Op Profit Incentive at: 6,050
-----
107
SCENARIO 5: $4M ABOVE MARGIN, $2M ABOVE OP PROFIT
Margin Incentive at: 45,261 140
Op Profit Incentive at: 7,050
-----
140
SCENARIO 6: $5M ABOVE MARGIN, $2.5M ABOVE OP PROFIT
Margin Incentive at: 46,261 156
Op Profit Incentive at: 7,550
-----
156
</TABLE>
<PAGE> 11
1996 INCENTIVE COMP. PLAN SUMMARY (ZARRABIAN): TARGET INCENTIVE: $75,000
PROFIT (NBIT) INCENTIVE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NBIT % of Target Relative Com- Commission Rate Commission Cumulative
Variance Incentive Earned mission Rate Formula NBIT ACTUAL Rate Earnings Earnings
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
($2,000,000) -50.0% 1.00 (0.5*Target Incntv/$2,000,000) $3,050,000 -0.018750 ($37,500) ($37,500)
$0 0.0% 1.00 (0.5*Target Incntv/$2,000,000) $5,050,000 -0.018750 $0 $0
- -----------------------------------------------------------------------------------------------------------------------------------
==========
$2M INCENTIVE $37,500
==========
TARGET Op Income $5,050,000
==========
</TABLE>
MARGIN INCENTIVE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Actual Margin % of Target Relative Com- Commission Rate
as % of Annual Target Incentive Earned mission Rate Formula
<S> <C> <C> <C>
0 - 50% 0% 0.00
50 - 75% 0% 0.00
75 - 100% 100% 4.00 (1)/(0.25)*(Target Incntv/Target Margin)
100% + 8.87 2.2 times previous rate
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------
Commission Cumulative
ACTUAL MARGIN Rate Earnings Earnings
- -------------------------------------------------------------------------------------
<C> <C> <C> <C>
$0 - $20,630,500 $ 0 $ 0
(less than)20,630,500 - 30,946,750 0.000000 $ 0 $0
(less than)30,945,750 - 41,261,000 0.007271 $75,000 $75,000
(less than)41,261,000 0.016129
- ------------------------------------------------------------------------------------
===========
TARGET INCENTIVE $75,000
===========
===========
TARGET MARGIN $41,261,000
===========
</TABLE>
<PAGE> 1
EXHIBIT 10.17
EMPLOYMENT AGREEMENT
THIS IS AN AGREEMENT, made as of this 30th day of November 1995, by and
between Molecular Simulations Inc., a Delaware corporation (hereafter "MSI"),
and David B. Hiatt, presently residing at 12 Linmoor Terrace, Lexington, MA
02173 (hereafter "Employee").
WITNESSETH:
WHEREAS, Employee has previously been employed by MSI in an important
capacity and MSI and Employee now wish to enter into an agreement of employment
that will constitute the sole and exclusive agreement relating to the employment
of Employee by MSI.
NOW, THEREFORE, in consideration of the foregoing premises, and the
mutual covenants, terms and conditions set forth herein, it is hereby agreed
between MSI and Employee as follows:
ARTICLE I. Employment
1.1 MSI shall employ Employee, and Employee shall continue to accept
employment with and work for MSI, in a full-time capacity commencing on the date
of this Agreement and continuing until Employee's employment with MSI is
terminated as provided herein (this period is sometimes referred to herein as
the "Term"). Such employment shall be in the capacity of Senior Vice President,
Finance and Administration and Chief Financial Officer of MSI. MSI shall assign
to Employee, and Employee shall accept and diligently perform to the reasonable
satisfaction of MSI, those duties assigned to such employee by MSI.
1.2 During the Term, Employee shall not, directly or indirectly, alone
or as a member of a partnership, or as an officer, director, employee, agent or
shareholder of any other person, firm or business organization, engage in any
other business activity or pursuit for compensation requiring Employee's
personal services during the period of Employee's employment hereunder without
the prior written consent of MSI acting through its Board of Directors; provided
however nothing in this Agreement shall preclude Employee from: (i) engaging in
religious, charitable, nonprofit or community activities; or (ii) serving on the
board of directors of any company, provided that such board membership is
approved by MSI's Board of Directors, such approval not to be unreasonably
withheld; or (iii) managing Employee's personal investments so long as
Employee's activities in any case do not interfere with the performance of
Employee's duties or responsibilities under this Agreement.
ARTICLE II. Compensation
2.1 Employee shall be compensated at an annual base salary of $150,000
during the Term of this Agreement. The MSI Board of Directors shall review and
may, at its sole discretion, increase this annual base salary from time to time
during the Term of this Agreement or any extension thereof to reflect salary
increases granted generally to other MSI Employees.
2.2 The Employee's base salary shall be paid periodically in the same
manner as it is paid to other executive employees of MSI, but in no event less
frequently than monthly. Base salary and other compensation shall be subject to
such withholdings as required by law or otherwise agreed to by Employee.
2.3 During the Term, in addition to all other amounts payable under
Section 2, the Employee shall be eligible to receive a target bonus of (i)
$50,000 for the period ending December 31, 1996 and (ii) $50,000 per annum for
each successive twelve month period thereafter ending December 31 ("Year End"),
provided the Employee continues to be employed by MSI on such Year End. The MSI
Board of Directors shall review and may, at its sole discretion, increase this
annual target bonus from time to time during the Term of this Agreement or any
extension thereof. Such bonus for 1996 shall be based on the achievement of the
revenue and income goals for MSI set forth on Exhibit A hereto, and such bonus
will be adjusted upwardly or downwardly based on performance against such goals
in the manner described in Exhibit A. For 1997 and beyond, such bonus shall be
based on the achievement of
<PAGE> 2
the revenue, income and/or other goals for MSI established promptly and
reasonably by the Compensation Committee of the Board of Directors of MSI. The
amount of bonus payments payable to the Employee under this Section 2.3 and the
satisfaction of the goals and objectives set forth in Exhibit A or any amendment
thereto shall be determined promptly and reasonably by MSI's Board of Directors
or Compensation Committee and, if earned, such bonus payments shall be paid
within 120 days after each Year End. Such bonus payments shall be subject to all
applicable federal, state and local withholding, payroll and other taxes, as
required by law.
2.4 Employee shall be entitled to receive an incentive stock option to
purchase an additional one hundred seventy-five thousand five hundred fifty-five
(175,555) shares of MSI's common stock (the "Additional Option") on the terms
and conditions described below. The shares subject to the Additional Option will
vest over a four year period (25% on August 15,1996 and an additional 25% on
each anniversary thereafter with all such shares vested as of August 15, 1999)
so long as Employee is an employee or consultant of MSI. In addition to the
standard term for exercise of options under MSI's stock option plan, if
Employee's employment with MSI is terminated without Cause (as defined in
Section 7.1 below), Employee will have three (3) years to exercise the portion
of the Additional Option which had vested at the time of such termination of
employment. Other terms and conditions of the Additional Option will be as
provided by MSI's Board of Directors pursuant to MSI's stock option plan.
ARTICLE III. Executive Benefits
3.1 During the Term of this Agreement, Employee shall be entitled to
participate in MSI's group life insurance plans as they may be amended and in
force from time to time during the Term, and shall, with his or her dependents,
be entitled to health insurance coverage under MSI health insurance plans upon
the same basis as provided to other executive employees of MSI.
3.2 MSI shall provide to Employee vacation, insurances (other than as
provided for in Paragraph 3.1) and fringe benefits no less favorable to Employee
than MSI may from time to time make available to its employees generally on a
pro rata basis or on a basis proportional with Employee's annual salary
hereunder as it may be appropriate with respect to the particular plan.
3.3 Employee may incur reasonable business expenses in the course of
employment hereunder for which Employee shall be eligible for reimbursement or
advances for such expenses in accordance with MSI's policy for business travel
expenses for its executive employees generally.
3.4 Following Employee's relocation to MSI's new headquarters in San
Diego, California, Employee shall not be required without Employee's consent to
accept any: (a) further transfer to a place of business that is more than 35
miles from the headquarters location of MSI, except in connection with a
movement of MSI's principal place of business or headquarters to a location
within the City of San Diego or the County of San Diego, California, or (b) any
temporary assignment which would require Employee to be absent from Employee's
home for more than thirty (30) consecutive days, provided that no such temporary
assignment shall require Employee to be absent from Employee's home for more
than sixty (60) days in any one-year period, excluding normal business travel.
3.5 MSI shall reimburse the Employee for the reasonable relocation
expenses incurred directly by the Employee in connection with his or her
employment by MSI as follows: reasonable out-of-pocket expenses associated with
the Employee's relocation of his residence to a location within the San Diego,
California area, including costs of moving household furnishings, personal
effects, storage costs and insurance; closing costs and commissions to real
estate brokers associated with the sale of the Employee's residence (provided
such sale occurs during the Term but not later than July 1, 1998); travel
expenses associated with a reasonable number of "house hunting" trips; up to
$12,000 toward the costs of renting temporary housing in San Diego (prior to the
sale or rental of Employee's residence in Lexington, Massachusetts, MSI will
reimburse Employee in full for temporary housing rental and after the sale or
rental of such residence will reimburse Employee the excess of his monthly
rental payment in the San Diego area over his former monthly mortgage payment
for his Massachusetts residence, subject in all cases to the $12,000 maximum
reimbursement); and closing costs associated with the purchase of a
2
<PAGE> 3
residence in the San Diego area (provided such purchase occurs during the Term
but not later than July 1, 1998) including title insurance, plot surveys, bank
origination and application fees, legal fees, home inspection fees, appraisal
fees, and up to one and one-half points toward a mortgage. In addition, MSI will
reimburse Employee for any incremental income tax actually owed by the Employee
as a result of any reimbursement payments under this Section 3.5, and such other
expenses as MSI's Board of Directors approves in advance. Employee agrees to
claim all applicable tax deductions associated with such expenses so as to
minimize the incremental income tax to be reimbursed by MSI.
The Employee hereby agrees that all such expenses to be reimbursed to
the Employee under this Section 3.5 by MSI shall be reasonable and that the
Employee shall use his best efforts to minimize the costs by obtaining, in each
instance, terms which are as favorable as those which the Employee would
negotiate if he were to pay for such expenses directly himself. Further, the
Employee agrees to provide suitable and accurate documentation evidencing such
costs incurred, and MSI shall provide reimbursement within a reasonable time
after the receipt of such documentation.
3.6 In addition to the amounts payable under Section 3.5 above, MSI
agrees to pay Employee a one time relocation bonus of $50,000 promptly after
execution of this Agreement. MSI will also reimburse Employee for any
incremental taxes on income actually owed by the Employee as a result of such
relocation bonus. If Employee voluntarily ceases his employment with MSI during
the one year period following his relocation to the San Diego area, Employee
agrees to repay such relocation bonus amount and the relocation expense
reimbursements described in Section 3.5 to MSI within ten (10) days after his
termination of employment. Employee agrees that MSI may deduct and offset all or
part of such amount from any amounts otherwise owed by MSI to Employee at the
time of termination of employment, including salary, severance pay, commissions,
bonuses and expense reimbursements.
3.7 In the event Employee's employment with MSI is terminated without
Cause (as defined in Section 7.1 below) prior to July 1,1997, MSI agrees to
reimburse Employee for reasonable moving and transportation expenses associated
with Employee's relocation to Massachusetts, including costs of moving household
furnishings and personal effects, storage costs and insurance.
ARTICLE IV. Invention Disclosure, Patent Assignment and Copyright
4.1 Employee shall promptly disclose to MSI all inventions conceived or
developed by Employee solely or jointly with another during the Term of this
Agreement and for six months thereafter, which are related to the MSI Business,
as described below, on such forms as MSI may require from time to time. Such
disclosure shall be kept confidential by MSI during MSI's review and thereafter
if MSI determines that the invention is not the property of MSI. Employee hereby
assigns to MSI all right, title and interest in and to any such inventions
relating to the MSI Business (including any actually or demonstratively
anticipated research and development of MSI) which are conceived or made by
Employee solely or jointly with any other person, during the course of
employment with MSI. For purposes of this Agreement, the MSI Business includes
the development, distribution, licensing or sale of algorithms, computer-based
techniques or software for modeling (including graphical display), analysis or
storage of chemical or biological structures, properties, processes or related
information, and any other business in which MSI engages or plans to engage (as
evidenced in business plans or other written materials) during the Term.
4.2 All rights in development (including without limitation software,
source codes, object codes, subroutines, file formats, user interfaces,
algorithms, molecular structures and compositions, business methods and trade
secrets), reports, records and other documents prepared by Employee during the
Term and which relate to the MSI Business or are within the scope of employment
hereunder shall vest exclusively with MSI, and Employee upon MSI's request will
execute any assignments necessary to protect MSI's (or its assignees) interests
in such intellectual property rights and documents and shall assist MSI (or its
assignees) in securing patent protection, if available, or Federal copyright
registration for any inventions included in such property rights or documents.
Employee has not
3
<PAGE> 4
developed or conceived of any invention related to the MSI Business as of the
date of this Agreement that is not owned by MSI.
4.3 Employee hereby acknowledges that this provision constitutes
written notification that this Agreement does not require any assignment of any
inventions or rights or interests therein which fully qualify as an invention
under Section 2870(b) of the California Labor Code. Sections 2870, 2871 and 2872
of the California Labor Code are attached as Exhibit B.
ARTICLE V. Non-Solicitation
5.1 Employee shall not, during the Term and for a period of one year
thereafter, engage in any activity which is intended directly or indirectly to
solicit, encourage, induce or attract to the employ of Employee or any other
business any person who is then an employee of or consultant (other than
consultants providing general services, such as accountants, which are not
directly related to the development, production or marketing of MSI products or
technologies) to MSI or offer any employment, consulting or ownership interest
to any person who is an employee of or consultant to MSI
ARTICLE VI. Confidentiality
6.1 Employee will during the course of employment be privy to
information belonging to MSI which information is valuable to MSI and which
information MSI holds in confidence. Employee undertakes with respect to
information Employee understands, or reasonably should believe to be
confidential to MSI, or as to which Employee has been specifically advised by
MSI that it regards to be confidential, not to disclose to third parties or use
such information during the Term and after the expiration or termination of this
Agreement for any reason, except in connection with the performance of duties as
an Employee of MSI pursuant to this Agreement. At the expiration of this
Agreement or termination of employment hereunder, Employee will, at MSI's
request, return to MSI all written confidential information (including that
contained on any computer media) received from MSI and destroy any
transcriptions or copies Employee may have of such information, unless an
alternative method of disposition is approved by MSI in writing. Employee's
obligations under this Article VI shall be in addition to any other
confidentiality or nondisclosure obligations of Employee to MSI at law or under
any other agreement. Employee's obligations under this Article VI shall not
extend to information which (i) was or is publicly available, (ii) became
available to Employee from a third party which was not, to Employee's knowledge,
bound by any obligation of confidentiality to MSI or (iii) was independently
developed by Employee without violating Employee's obligations hereunder.
ARTICLE VII. Termination and Termination of Responsibilities
7.1 Employee shall be subject to termination of Employee's employment
by MSI only for Cause as defined below, or disability which prevents Employee
from working for longer than three (3) months or as expressly provided in
Section 7.3 below. Notwithstanding any dispute over whether a termination was
properly for Cause, MSI may bar Employee from access to MSI's offices,
facilities and business records after giving Employee notice of termination for
Cause provided that in the event of a dispute concerning MSI's finding of Cause
which is the subject matter of a proceeding under Section 8.7, Employee and
Employee's legal representative shall have access to business records relevant
to such findings of Cause to the extent provided in Section 8.7. "Cause" shall
mean: (i) Employee's Material Breach of this Agreement (as defined below) which
continues uncured for more than thirty (30) days after notice by MSI, (ii)
unexcused absence for more than two consecutive weeks (other than for reasons
relating to Employee's illness or vacation), (iii) Employee's dishonesty or
willful misconduct with respect to MSI, (iv) Employee's drug or alcohol abuse
for which treatment is refused (unless, within 30 days of MSI's notice to obtain
treatment, Employee produces a doctor's letter that Employee is not abusing
drugs or alcohol), or (v) conviction of Employee for a felony. For purposes of
clause (i) above, a "Material Breach of this Agreement" shall mean Employee's
breach of Articles 1.2, IV, V or VI above, or Employee's failure to follow the
lawful directions of MSI's Board of Directors or Chief Executive Officer.
4
<PAGE> 5
7.2 Except as may be otherwise provided in applicable MSI benefit
plans, MSI shall not be liable to Employee for any salary or benefits
continuation beyond the date of Employee's death (except as expressly provided
herein), termination for disability (except as expressly provided herein),
voluntary termination of employment with MSI or upon MSI's rightful termination
of Employee for Cause, except as may be required by law.
7.3 Employee's employment may be terminated by MSI without Cause or
Employee's consent for any reason or no reason by furnishing Employee with
written notice ("Notice") of the fact setting forth the effective date that
Employee's employment is to be terminated and provided that in such event:
(a) Employee will be entitled to receive his 1996 base salary
during the one year period following the effective date of his
termination of employment (the "Severance Period").
(b) Employee shall be allowed to continue participation in MSI
health and life insurance plans until the earlier of the end
of the first eighteen months of the Severance Period or until
Employee is covered by a successor employer's comparable
benefit plans. If MSI's insurers do not permit such continued
participation, then MSI shall reimburse Employee for the costs
of procuring comparable health and life insurance (if Employee
is eligible for such coverage) during the Severance Period, up
to two times the annual amount that MSI paid for such
insurance on Employee during the year prior to termination of
employment.
(c) The Company shall continue to pay all costs related to the
Employee's continued family medical coverage under the
Consolidated Budget Reconciliation Act of 1985 (COBRA) until
the earlier of the end of the first eighteen months of the
Severance Period or until such costs are covered by a
successor employer. The "Qualifying Event" for purposes of
COBRA shall be Employee's effective date of termination of
employment.
If Employee's employment is terminated under this Section 7.3, MSI will use its
best efforts to provide Employee with the opportunity to resign immediately
before the effective date of the Notice described in the first paragraph of this
Section 7.3, but Employee's resignation under those circumstances will have the
same effect under this Agreement as if Employee's employment were terminated
under this Section 7.3; provided any such resignation must be in writing and
acknowledge (which acknowledgment may be in a separate writing) that this
Section 7.3 is applicable in accordance with its terms. If Employee's employment
is terminated under this Section 7.3, MSI may bar Employee from access to MSI's
offices, facilities and business records.
7.4 If the Employee's employment with MSI is terminated because of a
consolidation, merger, reorganization, or sale of all, or substantially all, of
the assets or capital stock of MSI or other business combination in which MSI
is not the surviving entity (a "Change of Control") at any time within a period
commencing two months before and ending twelve months after a Change of Control,
and the Employee is not offered employment by the acquiring corporation in a
comparable position relating to a comparably sized business unit, at a
comparable target compensation (defined for this purpose as then current annual
salary plus then current target annual bonus available to be earned by Employee)
with comparable severance benefits as described in Section 7.3 above, in the
Employee's location at that time or other location acceptable to Employee, or if
Employee's employment is terminated without Cause (as defined in Section 7.3
hereof) at any time within a period commencing two months before and ending
twelve months after a Change of Control, then MSI or the acquiring corporation.
as the case may be, shall be obligated to: (a) pay the severance amount and
provide the Employee with medical and health insurance benefits as set forth in
Section 7.3, and (b) accelerate the vesting of Employee's Additional Options
such that 50% of the then unvested shares of all options for the purchase of MSI
common stock held by Employee become vested. If the Employee is offered
employment by the acquiring corporation in a comparable position relating to a
comparably sized business unit, and at a comparable target compensation with
comparable severance benefits as described
5
<PAGE> 6
in Section 7.3 above, in the Employee's location at that time or other location
acceptable to Employee, neither MSI nor the acquiring corporation shall be
obligated to provide the severance payments or medical and health insurance
benefits as described in Section 7.3 of this Agreement or to accelerate the
vesting of Employee's unvested options (except as may otherwise be provided
under MSI's stock option plans). Anything contained in this Section 7.4 to the
contrary notwithstanding, the Employee shall not be entitled to any severance or
other termination benefit if the Employee has either (i) terminated such
employment voluntarily, or (ii) has been terminated by MSI or any acquiring
corporation "for Cause" pursuant to Section 7.1.
7.5 If the Employee's target compensation (defined for this purpose as
annual salary plus target annual bonus available to be earned by Employee) for
any year during the Term is less than ninety percent (90%) of the Employee's
target compensation for 1996, except in connection with a reduction in
compensation applicable to MSI employees generally, then the Employee shall have
the right to declare such reduction in target compensation as a constructive
termination of his employment without Cause under Section 7.3. In such event
Employee shall be entitled, within thirty (30) days after the effective date of
such reduction in target compensation, to provide MSI with written notice of
such constructive termination of employment, in which case Employee's employment
with MSI shall cease and MSI shall be obligated to pay the severance amount and
provide the insurance benefits set forth in Section 73.
ARTICLE VIII. Miscellaneous
8.1 This agreement shall be governed by and subject to the internal
laws of the State of California.
8.2 The failure of MSI or Employee to insist in any one or more
instances upon performance of any terms, covenants and conditions of this
Agreement, shall not be construed as a waiver or relinquishing of any rights
granted hereunder or of the future performance of any such terms, covenants or
conditions.
8.3 All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
mailed, registered or certified mail, postage prepaid;
If to MSI: Molecular Simulations Inc.
9685 Scranton Road
San Diego, CA 92121-3752
If to Employee: David B. Hiatt
12 Linmoor Terrace
Lexington, MA 02173
or at such other address or addresses as any such party may have furnished to
the other party in writing.
8.4 This Agreement is for personal services and is therefore not
assignable by Employee but is assignable by MSI only to a successor of
substantially the entire business of MSI.
8.5 This Agreement, including the Exhibits attached hereto and the
documents referred to herein, shall constitute the entire agreement between the
parties hereto with respect to the subject matter hereof (except as otherwise
expressly provided herein) and expressly supersedes all oral or written promises
relating to the subject matter hereof. This Agreement may not be changed,
modified or any right under it waived in any manner except by written instrument
signed by both parties expressing the plan and intention to modify this
Agreement. No principle of construction or interpretation shall be applied to
construe this Agreement or any part of it against the party which drafted the
Agreement.
6
<PAGE> 7
8.6 Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective in a jurisdiction where such enforcement is
sought but only to the extent of such prohibition on unenforceability without
invalidity of the remaining provisions hereof and without affecting the validity
or enforceability of such provision in any other jurisdiction.
8.7 Any dispute with respect to any aspect hereof which cannot be
settled by the parties shall be settled by arbitration in the City of San Diego
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof. Except as specifically provided herein, the arbitration
shall proceed in accordance with the laws of the State of California. The party
requesting arbitration shall give a written demand for arbitration to the other
party by registered or certified mail. The demand shall set forth a statement of
the nature of the dispute, the amount involved and the remedies sought. No later
than twenty (20) calendar days after the demand for arbitration is served, the
parties shall jointly select and appoint a retired judge of the San Diego
Superior Court to act as the arbitrator. In the event the parties do not agree
on the selection of an arbitrator, the party seeking arbitration shall apply to
the San Diego County Superior Court for the appointment of a retired judge of
that court to serve as arbitrator. As rules for the arbitration the arbitrator
shall apply the provisions of Sections 1282 through 1284.2 of the California
Code of Civil Procedure, and the parties may pursue discovery in accordance with
California Code of Civil Procedure Section 1283.05 which shall however be
limited to no more than two depositions taken by each party and the production
of only those documents directly relevant to the dispute. No later than (10)
calendar days after the arbitrator is appointed, the arbitrator shall schedule
the arbitration for a hearing to commence on a mutually convenient date. The
hearing shall commence no later than one hundred twenty (120) calendar days
after the arbitrator is appointed and shall continue from day to day until
completed. All discovery shall be completed no later than the commencement of
the arbitration hearing or one hundred twenty (120) calendar days after the date
that a proper demand for arbitration is served, whichever occurs earlier unless
upon a showing of good cause the arbitrator extends or shortens that period. The
arbitrator shall issue his or her award in writing no later than twenty (20)
calendar days after the conclusion of the hearing. The arbitration award shall
be final and binding regardless of whether one of the parties fails or refuses
to participate in the arbitration. The arbitrator is empowered to hear all
disputes between the parties concerning the subject matter hereof, and the
arbitrator may award monetary damages, specific performance, injunctive relief,
rescission and restitution. The arbitrator shall have no authority to award
exemplary or punitive damages under any circumstance. Either party may request
that the arbitrator submit written findings of fact and conclusions of law. The
prevailing party in any arbitration under this Section 8.7 shall be entitled to
be paid by the other party all of the prevailing party's costs and expenses,
including reasonable attorneys' fees, incurred in connection with the
arbitration.
8.8 This Agreement shall become effective upon its execution by both
parties.
IN WITNESS WHEREOF, MSI has executed this Agreement by its duly
authorized officer and has caused its corporate seal to be affixed, and Employee
has individually executed this Agreement intending to be legally bound, as of
the date hereof.
MOLECULAR SIMULATIONS INC. "Employee": DAVID B. HIATT
Signature: /s/ [Signature Illegible] Signature: /s/ David B. Hiatt
--------------------- ---------------------
Printed Name: [Printed Name Illegible]
-------------------
Title: [Title Illegible]
-------------------
7
<PAGE> 8
Exhibit A
MSI'S 1996 REVENUE AND INCOME GOALS
AND
METHODOLOGY FOR CALCULATING BONUS PAYMENTS
For purposes of 1996 bonus calculations, the financial goals of MSI are set
forth below in terms of Margin and Operating Profit. Margin is Revenue less Cost
of Sales and Operating Profit is Gross Profit of MSI after deducting operating
expenses but before the calculating the effect of interest (both income and
expense), taxes, etc. The goals for 1996 are Margin of $41,261,000 and Operating
Profit of $5,050,000.
The bonus is calculated based on the following formula, examples of which are
included on the attached page. No bonus is payable if Margin is less than 75% of
Target Margin, or $30,946,000. If Margin for 1996 exceeds the 75% threshold
($30,946,000), the incremental Margin above the 75% threshold (up to the 100%
threshold - $41,261,000) is multiplied by the Margin factor set forth opposite
the 75% threshold. If Margin does not reach the 100% threshold ($41,261,000),
this product is the bonus amount payable based on performance against the Margin
goal. This bonus amount is subject to downward adjustment for failure to achieve
the Operating Profit goal as described below.
In addition, if Margin for 1996 exceeds the 100% threshold ($41,261,000), the
incremental Margin above the 100% threshold is multiplied by the Margin factor
set forth opposite the 100% threshold, and this product is added to the product
calculated for Margin between 75% and 100% of the Margin goal. In that event,
the sum of these two products is the bonus amount payable based on performance
against the Margin goal. However, this bonus amount is also subject to downward
adjustment for failure to achieve the Operating Profit goal as described below.
If Operating Profit equals or exceeds the Target Operating Profit, there is no
adjustment to the bonus amount calculated based on the Margin achieved and
factors applied. However, if Operating Profit is below the Target Operating
Profit, then the bonus amount calculated based on Margin is reduced by the
product of: (a) the Operating Profit shortfall multiplied by (b) the factor set
forth opposite the Operating Profit goal; provided, however, that, the bonus
amount may not be less than zero.
<PAGE> 9
MOLECULAR SIMULATIONS INC.
1996 SR MGT INCENTIVE PLAN -- DAVID HIATT
BASED ON THE FOLLOWING ANNUAL TARGETS:
MARGIN = $41,261
OP PROFIT = $5,050
<TABLE>
<CAPTION>
TARGET INCENTIVE LEVEL
----------------------
$50K
<S> <C> <C>
MARGIN FACTOR
Applies above: 20,631
30,946 0.004847
41,261 0.010753
OP PROFIT FACTOR
Factor applies below: 5,050 0.012500
- ------------------------------
INCENTIVE SCENARIOS:
- ------------------------------
SCENARIO 1: AT PLAN
Margin Incentive at: 41,261 50
Op Profit Incentive at: 5,050 0
---
50
SCENARIO 2: 90% MARGIN, $1M BELOW OP PROFIT
Margin Incentive at: 37,135 30
Op Profit Incentive at: 4,050 (13)
---
17
SCENARIO 3: AT PLAN MARGIN, $2M BELOW OP PROFIT
Margin Incentive at: 41,261 50
Op Profit Incentive at: 3,050 (25)
---
25
SCENARIO 4: $2M ABOVE MARGIN, $1M ABOVE OP PROFIT
Margin Incentive at: 43,261 72
Op Profit Incentive at: 6,050
---
72
SCENARIO 5: $4M ABOVE MARGIN, $2M ABOVE OP PROFIT
Margin Incentive at: 45,261 93
Op Profit Incentive at: 7,050
---
93
SCENARIO 6: $5M ABOVE MARGIN, $2.5M ABOVE OP PROFIT
Margin Incentive at: 46,261 104
Op Profit Incentive at: 7,550
---
104
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
1996 INCENTIVE COMP. PLAN SUMMARY (HIATT): Target Incentive: $50,000
PROFIT (NBIT) INCENTIVE
- ------------------------------------------------------------------------------------------------------
NBIT % of Target Relative Com- Commission Rate
Variance Incentive Earned mission Rate Formula
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
($2,000,000) -50.0% 1.00 (0.5* Target Incntv/$2,000,000)
$0 0.0% 1.00 (0.5* Target Incntv/$2,000,000)
- ------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Commission Cumulative
NBIT ACTUAL Rate Earnings Earnings
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$3,050,000 -0.012500 ($25,000) ($25,000)
$5,050,000 -0.012500 0 0
- ------------------------------------------------------------------------------------------------------
$2M INCENTIVE $25,000
TARGET Op Income $5,050,000
MARGIN INCENTIVE
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Actual Margin as % of Target Relative Com- Commission
% of Annual Target Incentive Earned mission Rate Rate Formula
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0 - 50% 0% 0.00
50 - 75% 0% 0.00
75 - 100% 100% 4.00 (1)/(0.25)*(Target Incntv/Target Margin)
100% + 8.87 2.2 times previous rate
- ------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Commission Cumulative
ACTUAL MARGIN Rate Earnings Earnings
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$0 - $20,630,500 $0 $0
>20,630,500 - 30,946,750 0.000000 $0 $0
>30,945,750 - 41,261,000 0.004847 $50,000 $50,000
>41,261,000 0.010753
- ------------------------------------------------------------------------------------------------------
TARGET INCENTIVE $50,000
TARGET MARGIN $41,261,000
</TABLE>
<PAGE> 11
Exhibit B
CALIFORNIA LABOR CODE PROVISIONS
Section 2870. Employment Agreements; Assignment of Rights.
(a) Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's equipment,
supplies, facilities, or trade secret information except for those inventions
that either:
(1) relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or
demonstrably anticipated research or development of the
employer; or
(2) result from any work performed by the employee for the
employer.
(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against public policy of this
state and is unenforceable.
Section 2871. Conditions of Employment or Continued Employment; Disclosure of
Inventions.
No employer shall require a provision made void and unenforceable by Section
2870 as a condition of employment or continued employment. Nothing in this
article shall be construed to forbid or restrict the right of an employer to
provide in contracts of employment for disclosure, provided that any such
disclosures be received in confidence, of all of the employee's inventions made
solely or jointly with others during the term of his or her employment, a review
process by the employer to determine such issues as may arise, and for full
title to certain patents and inventions to be in the United States, as required
by contracts between the employer and the United States or any of its agencies.
Section 2872. Notice to Employee; Burden of Proof.
If an employment agreement entered into after January 1, 1980 contains a
provision requiring the employee to assign or offer to assign any of his or her
rights in any invention to his or her employer, the employer must also, at the
time the agreement is made, provide a written notification to the employee that
the agreement does not apply to an invention which qualifies fully under the
provisions of Section 2870. In any suit or action arising thereunder, the burden
of proof shall be on the employee claiming the benefits of its provisions.
<PAGE> 1
EXHIBIT 10.18
EMPLOYMENT AGREEMENT
THIS IS AN AGREEMENT, made as of this 29th day of September, 1992, by
and between Biosym Technologies, Inc., a California corporation (hereafter
"Biosym") and John Newsam, presently residing at 4303 Corte Al Fresco, San
Diego, California 92130 (hereafter "Employee") .
WITNESSETH:
WHEREAS, Employee has been employed by Biosym in a key executive
capacity and Biosym and Employee now wish to enter into an agreement of
employment that will constitute the sole and exclusive agreement relating to the
employment of Employee by Biosym.
NOW, THEREFORE, in consideration of the foregoing premises, and the
mutual covenants, terms and conditions set forth herein, it is hereby agreed
between Biosym and Employee as follows:
ARTICLE I. Employment
1.1 Biosym shall continue to employ Employee, and Employee shall
continue to accept employment with and work for Biosym, in a full-time capacity
and for the period of time commencing with
<PAGE> 2
-2-
the date of the Merger contemplated by an Agreement and Plan of Merger dated as
of June 3, 1992 between Biosym, Corning Incorporated ("Corning") , and
Biosym/Acquisition Inc., a California corporation (the "Merger"), and ending on
June 30, 1997 (this period is sometimes referred to herein as the "Term"). Such
employment shall be in the capacity of Director- Catalysis or such other senior
executive capacity with Biosym as Biosym, acting through its Board of Directors
may designate, and as is reasonable under the circumstances, and Biosym shall
assign to Employee, and Employee shall accept and diligently perform to the
reasonable satisfaction of Biosym, those executive duties assigned to him by
Biosym.
1.2 During the Term, Employee shall not, directly or indirectly, alone
or as a member of a partnership, or as an officer, director, employee, agent or
shareholder of any other person, firm or business organization, engage in any
other business activity or pursuit for compensation requiring Employee's
personal services during the period of Employee's employment without the prior
written consent of Biosym acting through its Board of Directors; provided
however nothing in this Agreement shall preclude Employee from: (i) engaging in
charitable and community activities or from managing Employee's personal
investments, or (ii) serving as a member of the board of directors of an
unaffiliated company not in competition with Biosym or supplying goods or
services to Biosym or buying goods and services from Biosym, subject however in
each such case of
<PAGE> 3
-3-
board membership, to approval of the Board of Directors of Biosym not to be
unreasonably withheld, so long as in all cases in (i) and (ii) Employee's
activities do not interfere with the performance of Employee's duties or
responsibilities under this Agreement.
ARTICLE II. Compensation
2.1 Employee shall be compensated at an annual base salary of
$95,000.00 during the Term. The Biosym Board of Directors shall review and may,
if appropriate, at its discretion, increase this annual base salary from time to
time during the Term of this Agreement to reflect ordinary salary actions
granted generally to other Biosym employees at the discretion of the Board of
Directors and the management of Biosym.
2.2 Base salary shall be paid periodically in the same manner as it is
paid to other senior executive employees of Biosym. Base salary and other
compensation shall be subject to such withholdings as required by law or
otherwise agreed to by Employee.
2.3 As contemplated by the Agreement and Plan of Merger dated June 3,
1992 (the "Merger Agreement"), Employee and Biosym have entered into an
Assumption Agreement on the date of the Merger concerning unexercised stock
options for Biosym common stock held by Employee under (a) Stock Option
Agreement(s) dated
<PAGE> 4
-4-
11/28/90 granting Employee the right to purchase an aggregate of 24,000 shares
of Biosym common stock and providing for certain rights of acceleration in the
event of an acquisition of Biosym. The Assumption Agreement provides with
respect to certain stock options subject to the acceleration rights ("Biosym
Stock Options") that: (a) any right to exercise a Biosym Stock Option as a
result of the Merger will be waived by Employee and be inoperative, and (b) the
Biosym Stock Options will be converted into certain rights to acquire Corning
common stock evidenced by the Assumption Agreement.
2.4 During the Term of this Agreement, Employee shall be eligible to
receive annual bonuses to be calculated, earned and payable as provided below:
(a) The first portion of Employee's annual bonus will be calculated by
comparing the actual operating margins achieved in each twelve
month period ending June 30 (1993 through 1997), as shown on
unaudited income statements of Biosym for each such period prepared
by Biosym's internal accountants in accordance with United States
generally accepted accounting principles applied in conformity with
Corning's accounting policies (the "Comparative Income Statement"),
with the projections set forth in the Biosym Projected Income
Statement on Exhibit A (the "Biosym Projection") for such period,
and Employee, subject to the provisions of this
<PAGE> 5
-5-
Agreement, shall be entitled to the bonus based on such comparison
of that operating margin to the extent expressly set forth on, or
calculable from and in accordance with, Exhibit A hereto; provided
however that the calculation of such actual operating margins shall
not include excessive charges to Biosym for corporate overheads or
other services provided or assigned to Biosym by Corning or its
affiliates which do not reflect fair value. The second portion of
Employee's annual bonus shall be set by determining the extent to
which Employee has achieved the management objectives for such
annual period set for such Employee by agreement of the Employee
and the Biosym President (and if they fail to agree by the
President). Such determination shall be conclusive in all respects
when made by the President and confirmed by the Board of Directors
of Biosym. The amount of this portion of the bonus shall be
calculated using the percentage by which Employee has achieved such
management objectives as determined by the President and confirmed
by the Board of Directors and such calculation is described and set
forth in Exhibit A hereto.
(b) The Board of Directors of Biosym shall have the authority, at its
sole discretion, to reasonably restate the Biosym Projection to
account for or take into consideration: (i) unusual one-time events
which
<PAGE> 6
-6-
constitute material changes in the financial condition or
performance of Biosym or a change in the character or nature of
Biosym business outside the ordinary course of business, including
without limitation material acquisitions but excluding any
acquisition of Hare Inc. made within one year hereof and (ii) any
change in the fiscal year of Biosym including without limitation a
change from the current fiscal year to a calendar year; provided
that the Board of Directors will discuss such restatements with the
President and Chief Executive Officer of Biosym in advance of
effecting any such restatement; and further provided that any such
changes made in restating the Biosym Projection shall also be
reflected in the Comparative Income Statement to the extent
reasonably approved by the Board of Directors of Biosym.
(c) Any amounts payable to Employee pursuant to this Section 2.4 as
provided in subsection (d) will be paid 50% in cash and up to 50%
in Value of restricted common stock of Corning Incorporated subject
to the Divisional Stock Incentive Plan of Corning Incorporated (its
amendments or substitute plans) and subject to approval by the
Board of Directors of Corning ("Restricted Corning Stock") for each
of the twelve month periods in which it is earned. The Biosym Board
of Directors may however substitute a payment of cash for any
Restricted
<PAGE> 7
-7-
Corning Stock that may otherwise be payable hereunder. Value when
used with respect to Restricted Common Stock earned under this
Section 2.4 means the average of the high and low price for a share
of Corning Common Stock listed under the "New York Stock Exchange
Composite Transaction" as reported in The Wall Street Journal
(Eastern Edition) for the last business day of the applicable
twelve month period July 1 to June 30 in which it is earned.
(d) The 50% cash portion of the amounts earned by Employee under this
Section 2.4 shall be payable to Employee promptly after it is
calculable under this Agreement and declared earned by the Board of
Directors and the portion payable in Restricted Common Stock, or
any cash in lieu of such stock, shall be payable to Employee two
years after it is calculable under this Agreement and declared
earned by the Board of Directors subject to the provisions herein,
including Section 7.3, below and unless Employee voluntarily
terminates Employee's employment with Biosym or is otherwise in
violation of this Agreement or has been discharged pursuant to
Section 7.1 hereof. For example, the amount earned by an Employee
for the twelve month period ending June 30, 1993 which is payable
in Restricted Stock (or any cash in lieu thereof) will be payable
within a reasonable period of time after June 30, 1995.
<PAGE> 8
-8-
(e) Employee acknowledges that subject to subsection (h) below, the
shares of Restricted Common Stock (and all shares subsequently
issued or distributed by means of dividends, splits, combinations,
reclassifications, or other capital changes with respect to such
shares) may not be sold, assigned, transferred, pledged or
otherwise encumbered by or on behalf of or for the benefit of
Employee until Employee is entitled to receive physical possession
of the shares pursuant to the terms of this Agreement.
(f) Employee acknowledges that each certificate issued with respect to
the shares shall be registered in the name of the undersigned but
shall be held by Corning Incorporated for safekeeping until
Employee is entitled to receive physical possession of the shares
pursuant to the terms of this Agreement.
(g) Employee acknowledges that any right to receive the shares of
Restricted Common Stock will be terminated in whole or in part and
shall, unless otherwise determined by the Board of Directors and
the Corning Board of Directors in their sole discretion, be
terminated, if Employee shall be discharged for Cause as defined in
Section 7.1 or shall retire or otherwise leave voluntarily the
employ of Biosym (other than for a transfer or assignment to an
entity or corporation of
<PAGE> 9
-9-
which at least 50% of the ownership interest or outstanding capital
stock having ordinary voting power to elect one half or a majority
of the managing committee or Board of Directors of such entity or
corporation is at the time of transfer or assignment directly or
indirectly owned by Corning).
(h) Upon the occurrence of any event set forth in clauses (1) and (2)
below, Biosym shall deliver to Employee or Employee's personal
representative, free of any legend, the possibility of forfeiture
and any restrictions on transfer or alienation, certificates
representing the shares of Restricted Common Stock in such number
as to which Employee may be entitled at the time of such event
pursuant to the provisions of the Agreement.
(1) death;
(2) retirement from Biosym's employ for reasons of total and
permanent disability or for medical or health reasons which
may not be deemed to constitute total and permanent disability
but which render Employee unable to perform the duties and
responsibilities assigned to Employee by, and owed by Employee
to, Biosym.
<PAGE> 10
- 10 -
ARTICLE III. Executive Benefits
3.1 During the Term of this Agreement, Employee shall be entitled to
participate in Biosym's group life insurance plans as they may be amended and in
force from time to time during the Term, and shall be entitled to health
insurance coverage for self and dependents upon the same basis as provided to
other senior executive employees of Biosym.
3.2 Biosym shall provide to Employee vacation, insurances (other than
as provided for in Paragraph 3.1) and fringe benefits no less favorable to
Employee than it may from time to time make available to its employees generally
on a pro rata basis or on a basis proportional with Employee's annual salary
hereunder as may be appropriate with respect to the particular plan.
3.3 Employee may incur reasonable business expenses in the course of
employment hereunder for which Employee shall be eligible for reimbursement or
advances for such expenses in accordance with Biosym's policy for business and
business travel expenses therefor for its senior executive employees generally.
3.4 Employee shall not be required without Employee's consent to accept
any: (a) transfer to a place of business that is more than 35 miles from the
present location of Biosym, except in connection with a movement of Biosym's
principal place of business or headquarters to a location within the City of San
<PAGE> 11
- 11 -
Diego or the County of San Diego, California, or (b) any temporary assignment
which would require Employee to be absent from Employee's home for more than
thirty (30) consecutive days.
ARTICLE IV. Invention Disclosure, Patent Assignment
and Copyright
4.1 Employee shall promptly disclose to Biosym all inventions conceived
or developed by Employee solely or jointly with another during the Term of this
Agreement and for six months thereafter, which are related to the modeling
(including graphical display) of chemical structures, properties, and processes,
the analysis of experimental data relating to such structures, properties, and
processes, and the creation and implementation of computer programs for
accomplishing same (the "Biosym Business") on such form as Biosym may require
from time to time. Such disclosure shall be kept confidential by Biosym during
Biosym's review and if Biosym determines that the invention is not the property
of Biosym. Employee hereby assigns to Biosym all right, title and interest in
and to any such inventions relating to the Biosym Business (including any
actually or demonstratively anticipated research and development of Biosym)
which are conceived or made by Employee solely or jointly with any other person,
during the course of employment with Biosym.
<PAGE> 12
- 12 -
4.2 All rights in developments (including without limitation software,
source codes, object codes, subroutines, file formats, user interfaces,
algorithms, molecular structures and compositions, business methods and trade
secrets), reports, records and other documents prepared by Employee during the
Term and which relate to the Biosym Business or are within the scope of
employment hereunder shall vest exclusively with Biosym, and Employee upon
Biosym's request will execute any assignments necessary to protect Biosym's (or
its assignees) interests in such intellectual property rights and documents and
shall assist Biosym (or its assignees) in securing patent protection, if
available, or Federal copyright registration for any inventions included in such
property rights or documents. Except as disclosed on Exhibit B hereto, Employee
has not developed or conceived of any invention related to the Biosym Business
as of the date of this Agreement that is not owned by Biosym.
4.3 Employee hereby acknowledges that this provision constitutes
written notification that this Agreement does not require any assignment of any
inventions or rights or interests therein which fully qualify as an invention
under Section 2870(b) of the California Labor Code. A copy of Sections 2870,
2871 and 2872 of the California Labor Code is attached as Exhibit C.
<PAGE> 13
- 13 -
ARTICLE V. Non-Solicitation
5.1 During the Term of this Agreement, or if the employment provided by
Agreement is terminated by Employee or by Biosym for any reason prior to the
expiration of the Term of this Agreement, Employee shall not, for a period of
two years after the later of: (a) the Term of this Agreement, or (b) such
termination, engage in any activity which is intended directly or indirectly to
solicit, encourage, induce or attract to the employ of Employee or any other
business any person who is then an employee of or consultant (other than
consultants providing general services, such as accountants, which are not
directly related to the development, production or marketing of Biosym products
or technologies) to Biosym or offer any employment, consulting or ownership
interest to any person who is an employee or consultant to Biosym.
ARTICLE VI. Confidentiality
Employee will during the course of employment be privy to information
belonging to Biosym which information is valuable to Biosym and which
information Biosym holds in confidence. Employee undertakes with respect to
information Employee understands, or reasonably should believe to be
confidential to Biosym, or as to which Employee has been specifically advised by
Biosym that it regards to be confidential, not to disclose to third parties or
use such information except in connection with
<PAGE> 14
- 14 -
the performance of duties as an Employee of Biosym pursuant to this Agreement
during the Term or after the expiration or termination of this Agreement for any
reason. At the expiration of this Agreement or termination of employment
hereunder, Employee will, at Biosym's request, return to Biosym all written
confidential information received from Biosym and destroy any transcriptions or
copies Employee may have of such information, unless an alternative method of
disposition is approved by Biosym in writing. Employee's obligations under this
Article VI shall be in addition to any other confidentiality or nondisclosure
obligations of Employee to Biosym at law or under any other agreements.
ARTICLE VII. Termination and Termination
of Responsibilities
7.1 Employee shall be subject to termination of Employee's
employment during the Term by Biosym only for Cause as defined below, or
disability which prevents Employee from working for longer than six (6) months
or relieved of responsibilities as provided in Section 7.3 below.
Notwithstanding any dispute over whether a termination was properly for Cause,
Biosym may bar Employee from access to Biosym's offices, facilities and business
records after giving Employee notice of termination for Cause provided that in
the event of a dispute concerning Biosym's finding of Cause which is the subject
matter of a proceeding under Section 8.7, Employee and Employee's legal
representative
<PAGE> 15
- 15 -
shall have access to business records relevant to such a finding of Cause to the
extent provided in Section 8.7. "Cause" shall mean: (i) Employee's material
breach of this Agreement (other than for reasons related only to the business
performance of Biosym or business results achieved by Employee) which continues
uncured for more than five (5) days after oral or written notice by Biosym, (ii)
persistent refusal by Employee to perform assigned executive employment duties
consistent with Employee's executive position, (iii) unexcused absence for more
than two consecutive weeks (other than for reasons relating to Employee's
illness or vacation), (iv) Employee's gross negligence or willful misconduct,
(v) Employee's substance abuse for which treatment is refused, (vi) conviction
of Employee of a felony or misdemeanor (other than traffic offenses). For
purposes of subsection (iv), no act or failure to act on Employee's part shall
be considered to be reason for termination for Cause if done, or omitted to be
done, by Employee in good faith and with the reasonable belief that the action
or omission was in the best interest of Biosym and not unlawful.
7.2 Except as may be otherwise provided in applicable Biosym benefit
plans, Biosym shall not be liable to Employee for any salary or benefits
continuation beyond the date of Employee's death (except as expressly provided
herein), termination for disability (except as expressly provided herein),
voluntary termination of employment with Biosym or upon Biosym's rightful
<PAGE> 16
- 16 -
termination of Employee for Cause, except as may be required by law.
7.3 Employee may be relieved of responsibilities by Biosym without
Cause or Employee's consent if Biosym's Board of Directors, upon assessment of
the general business performance of Biosym and the specific performance of
Employee determines that the business needs of Biosym require the replacement of
Employee, by furnishing Employee with written notice ("Notice") of that fact
setting forth the effective date that Employee is to be so relieved of
responsibilities and provided that in such event:
(a) If the effective date of the Notice is a date prior to June 30,
1993, Employee will be entitled to Employee's base salary at the
then effective rate until June 30, 1995, together with any bonus
amounts Employee would otherwise have earned, under Section 2.4
pursuant to the Incentive Plan prior to June 30, 1995, even if
payable after June 30, 1995; provided that in any event Employee's
employment with Biosym shall be terminated effective July 1, 1995.
(b) If Employee is relieved of responsibility effective on a date prior
to June 30, 1995, but any time after June 30, 1993, Employee will
be entitled to Employee's base salary at the then
<PAGE> 17
- 17 -
effective rate until the second anniversary of the effective date
of such relief or June 30, 1997, whichever is earlier, together
with any bonus amounts Employee would otherwise have earned, under
Section 2.4 pursuant to the Incentive Plan prior to June 30, 1995,
even if payable later than such date; provided that Employee's
employment with Biosym shall terminate on the earlier of the day
after such second anniversary or July 1, 1997.
(c) If Employee is relieved of responsibility on or after June 30,
1995, Employee will be entitled to Employee's base salary at the
then effective rate until the end of the Term, together with any
bonus amounts Employee would otherwise have earned under Section
2.4 pursuant to the Incentive Plan prior to the effective date of
such relief.
(d) Employee shall be allowed to continue participation in Biosym
health and life insurance plans through the period in which
Employee is receiving Employee's base salary under clause (a) or
(b) above or until Employee is covered by a successor employee's
comparable benefit plans.
In the event Employee is relieved of responsibilities under this Section 7.3,
Employee shall no longer be eligible to earn any
<PAGE> 18
- 18 -
amounts under Section 2.4 based on Biosym financial performance subsequent to
the effective date of such change, except as expressly provided in Sections (a),
(b) and (c) above, and shall not receive any other Employee benefits described
in Article III except as expressly set forth in clause (d) above. If Employee is
to be relieved of responsibilities under this Section 7.3, Biosym will use its
best efforts to provide Employee with the opportunity to resign immediately
before the effective date of the Notice described in the first paragraph of this
Section 7.3, but Employee's resignation under those circumstances will have the
same effect under this Agreement as if Employee were relieved of
responsibilities under this Section 7.3; provided any such resignation must be
in writing and acknowledge that this Section 7.3 is applicable in accordance
with its terms. If Employee's employment responsibilities are changed or limited
under this Section 7.3, Biosym may bar Employee from access to Biosym's offices,
facilities and business records.
ARTICLE VIII. Miscellaneous
8.1 This Agreement shall be governed by and subject to the
internal laws of the State of California.
8.2 The failure of Biosym or Employee to insist in any one or more
instances upon performance of any of terms, covenants and conditions of this
Agreement, shall not be construed as a waiver
<PAGE> 19
- 19 -
or relinquishing of any rights granted hereunder or of the future performance of
any such terms, covenants or conditions.
8.3 All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
mailed, registered or certified mail, postage prepaid;
If to Biosym: Biosym Technologies, Inc.
9685 Scranton Road
San Diego, California 92121
Attn: President
------------------
with a copy to: Corning Incorporated
Houghton Park C-3-6
Corning, New York 14831
Attn: Secretary
If to Employee: John Newsam
4303 Corte Al Fresco
San Diego, California 92130
with a copy to:
------------------------------
------------------------------
------------------------------
Attn:
------------------------
or at such other address or addresses as any such party may have furnished to
the other party in writing.
8.4 This Agreement is for personal services and is therefore not
assignable by Employee and is assignable by Biosym only to a successor of
substantially the entire business of Biosym.
<PAGE> 20
- 20 -
8.5 This Agreement, including the Exhibits attached hereto and the
documents referred to herein, shall constitute the entire agreement between the
parties hereto with respect to the subject matter hereof (except as otherwise
expressly provided herein). This Agreement may not be changed, modified or any
right under it waived in any manner except by written instrument signed by both
parties expressing the plan and intention to modify this Agreement. No principle
of construction or interpretation shall be applied to construe this Agreement or
any part of it against the party which drafted the Agreement.
8.6 Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective in a jurisdiction where such enforcement is
sought but only to the extent of such prohibition on unenforceability without
invalidity of the remaining provisions hereof and without affecting the validity
or enforceability of such provision in any other jurisdiction.
8.7 Any dispute with respect to any aspect hereof which cannot be
settled by the parties shall be settled by arbitration in the City of San Diego,
California and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. Except as specifically provided herein, the
arbitration shall proceed in accordance with the laws of the State of
California. The party requesting arbitration shall give a written demand for
arbitration to the other party by registered or certified mail. The demand shall
set forth a statement of the nature of the
<PAGE> 21
- 21 -
dispute, the amount involved and the remedies sought. No later than twenty (20)
calendar days after the demand for arbitration is served, the parties shall
jointly select and appoint a retired judge of the San Diego County Superior
Court to act as the arbitrator. In the event the parties do not agree on the
selection of an arbitrator, the party seeking arbitration shall apply to the San
Diego County Superior Court for the appointment of a retired judge of that court
to serve as arbitrator. As rules for the arbitration the arbitrator shall apply
the provisions of Sections 1282 through 1284.2 of the California Code of Civil
Procedure, and the parties may pursue discovery in accordance with California
Code of Civil Procedure Section 1283.05 which shall however be limited to no
more than two depositions taken by each party and the production of only those
documents directly relevant to the dispute. No later than ten (10) calendar days
after the arbitrator is appointed, the arbitrator shall schedule the arbitration
for a hearing to commence on a mutually convenient date. The hearing shall
commence no later than one hundred twenty (120) calendar days after the
arbitrator is appointed and shall continue from day to day until completed. All
discovery shall be completed no later than the commencement of the arbitration
hearing or one hundred twenty (120) calendar days after the date that a proper
demand for arbitration is served, whichever occurs earlier unless upon a showing
of good cause the arbitrator extends or shortens that period. The arbitrator
shall issue his or her award in writing no later than twenty (20) calendar days
after the conclusion of
<PAGE> 22
- 22 -
the hearing. The arbitration award shall be final and binding regardless of
whether one of the parties fails or refuses to participate in the arbitration.
The arbitrator is empowered to hear all disputes between the parties concerning
the subject matter hereof, and the arbitrator may award monetary damages,
specific performance, injunctive relief, rescission, restitution, costs and
attorneys fees. The arbitrator shall have no authority to award exemplary or
punitive damages under any circumstance. Either party may request that the
arbitrator submit written findings of fact and conclusions of law.
ARTICLE IX. Condition Subsequent
This Agreement shall be null and void and of no effect if the Merger is
not consummated.
IN WITNESS WHEREOF, Biosym has executed this Agreement by its duly
authorized officer and has caused its corporate seal to
<PAGE> 23
- 23 -
be affixed, and Employee has individually executed this Agreement intending to
be legally bound, as of the date hereof.
"Biosym":
Biosym Technologies, Inc.,
a California corporation
By /s/ Kevin J. Roberts
--------------------------
Kevin J. Roberts, CEO
--------------------------
[Printed Name and Title]
"Employee":
/s/ John M Newsam 9/22/92
--------------------------
John M. Newsam
--------------------------
[Printed Name]
<PAGE> 24
COVENANT
THIS AGREEMENT is made as of this 29th day of September, 1992, by and among
Corning Incorporated, a New York corporation (hereafter "Corning"), Biosym
Technologies, Inc., a California corporation (hereafter "Biosym") and John
Newsam (hereafter "Selling Holder").
RECITALS
A. In connection with entering into this Agreement, Corning is
acquiring all of the outstanding capital stock and all of the options and rights
to acquire capital stock of Biosym from Selling Holder and from the other
stockholders and option holders of Biosym and thereby is acquiring all of the
goodwill and going-concern value of Biosym.
B. Corning intends to continue to operate Biosym, as a wholly owned
subsidiary.
C. Subsequent to the sale of Biosym, Selling Holder will be employed by
Biosym or its successors or assigns.
D. As a key employee, Selling Holder has experience and knowledge
concerning the business of Biosym, including the trade secrets of Biosym, which,
if used in any way other than
<PAGE> 25
-2-
in the proper conduct of his employment duties to Biosym or its successors or
assigns could result in substantial determinant to Biosym and to Corning; and
E. Corning would not purchase Selling Holder's Biosym stock and options
if Biosym and Corning were exposed to such detriment.
NOW, THEREFORE, in consideration of the foregoing premises, and the
mutual covenants, terms and conditions set forth herein, the parties agree as
follows:
1. Competition. In consideration of the acquisition of all of Selling
Holder's common stock and options and rights to acquire common stock of Biosym,
Selling Holder hereby covenants to Corning and to Biosym that:
1..1 During the period of Selling Holder's employment with Biosym
(including during any leave of absence) and for two (2) years from and after the
date of cessation of employment for any reason (the "Cessation Date"), Selling
Holder shall not (i) engage in the Territory in any business competitive with
the business being carried on by Biosym; or (ii) engage in the Territory in any
business competitive with any business with respect to which Biosym has made
significant plans or expenditures.
<PAGE> 26
-3-
1..2 For purposes of this Agreement, "engage" includes without
limitation, (a) indirect and direct activities, assistance or interest, either
individually, or as a principal, partner, agent, representative, employee,
employer, consultant, independent contractor, distributor, jobber,
representative, stockholder, joint venturer, or investor, or as a director or
officer of any corporation or association, or in any other manner or capacity
whatsoever, and/or (b) record or beneficial holding, direct or indirect, of more
than 1% of the outstanding equity interests in any proprietorship, partnership,
corporation, joint venture, association or other entity.
1..3 For purposes of this Agreement, "Territory" means any one or
more of the following: (i) any city, county, or other political subdivision of
the State of California, or (ii) any city, county or other political subdivision
of any other state in the United States or (iii) any city, county or political
subdivision of any country or territory in the world, where Biosym either (x) is
selling or delivering any of its products or services or is otherwise carrying
on its business or selling activities, (y) or within the 12 months immediately
preceding the Cessation Date, has sold or delivered the Biosym products or
services or otherwise carried on its business or selling activities.
<PAGE> 27
-4-
2. Representations and Warranties. Selling Holder represents and
warrants to Corning and to Biosym as follows:
2..1 Selling Holder is familiar with the business and affairs of
Biosym, the scope and nature of business activities of Biosym and the factors
that have contributed to, and that are significant to the continuation of, the
goodwill and going-concern value of Biosym.
2..2 Selling Holder has reviewed, understands and accepts the
covenants set forth in this Agreement, including the geographic scope, the scope
of competitive activities and the term of each of the covenants set forth in
Section 1 of this Agreement.
2..3 Selling Holder acknowledges that the geographic scope
(including the definition of "Territory"), the scope of competitive activities
(including the definition of "engage") and the term of each of the covenants set
forth in Section 1 of this Agreement:
(i) were determined on the basis of evaluation of, among
other things, the markets in which Biosym currently conducts its business
activities and the time required to develop and market Biosym's products and
services.
<PAGE> 28
-5-
(ii) are reasonably directed to the protection of the
goodwill and going-concern value of Biosym acquired by Corning, and
(iii) are reasonable in light of Corning's acquisition
of all of the capital stock of Biosym and Biosym's goodwill and going-concern
value.
2..4 Selling Holder acknowledges that each of the covenants
set forth in Section 1 of this Agreement are reasonably necessary and proper to
preserve and protect Biosym's trade secrets and that Biosym's trade secrets are
a material to the going-concern value of Biosym.
3. No Solicitation. From the date hereof until two years after the
Cessation Date, Selling Holder shall not, directly or indirectly, whether as a
principal, partner, agent, employee, employer, consultant, independent
contractor, distributor, jobber, representative, stockholder, joint venturer, or
investor, or as a director or officer of any corporation or association, or in
any other manner or capacity whatsoever, (i) divert or attempt to divert from
Biosym any business with any customer or account (a) with which Selling Holder
had any contact or association, (b) which was under the supervision of Selling
Holder, or (c) the identity of which was learned by Selling Holder as a result
of employment or any other affiliate with Biosym, or (ii) induce any salesman,
<PAGE> 29
-6-
distributor, manufacturer, representative, agent, jobber, customer, or other
person transacting or who has transacted business with Biosym to terminate the
relationship or association with Biosym or represent, distribute, market,
promote or sell products or services in competition with the products and/or
services of Biosym. Selling Holder acknowledges that Biosym has trade secret
rights in its list of customers and maintains such list in confidence. For
purposes of this Agreement, "customer" includes, without limitation, any for
profit or non-profit corporation, partnership, association, joint venture,
university, government or governmental agency or other person or entity to which
Biosym has sold or furnished any of its products or services, or that has
purchased or licensed products or services in a transaction in which Biosym
acted as a sales agent, representative, distributor, jobber, value added
reseller or sublicensor, or with which Biosym had a substantial promotional
contact with a view to selling or furnishing any of its products or services, or
any other products or services with respect to which Biosym regularly acts as a
sales representative, distributor, jobber, value added reseller or sublicensor.
4. Severability. Any provision of this Agreement which is unenforceable
in any jurisdiction, shall as to such jurisdiction, be ineffective to the extent
of such unenforceability and shall to that extent be separable from all other
provisions of this Agreement, without invalidating the
<PAGE> 30
-7-
remaining provisions thereof or affecting the validity or enforceability of such
provision in any other jurisdiction. If a court of competent jurisdiction holds
that any provision of this Agreement is overly broad (e.g., in time or
geographic area), the breadth of such provision, as to such jurisdiction, shall
be deemed reduced to the extent necessary to make it enforceable. Furthermore,
Biosym and Selling Holder intend that each of the covenants contained in Section
1 of this Agreement shall be construed as a series of separate covenants, (1)
one for each city, county or other political subdivision of each state, country
or territory included in the definition of Territory and for each competitive
activity prohibited by Section 1, and (2) each separate covenant being for a
series of one-year periods within the time described in Section 1, so that if
the geographic, temporal or other scope of any covenant shall be determined by a
court of competent jurisdiction to be excessive, invalid or unenforceable, then
the unenforceable covenant shall be severed and the remaining covenants not also
so severed shall be deemed enforceable and remain in full force and effect. The
parties intend, and to the extent permitted by law, instruct any court of
competent jurisdiction interpreting this Agreement, that the covenants set forth
in Section 1 of this Agreement be broadly construed so as to effect the purpose
of securing to Corning and Biosym the entire goodwill and going-concern value of
Biosym.
<PAGE> 31
-8-
5. Equitable Remedies. The parties acknowledge and agree that, if
Selling Holder breaches any of the covenants contained in this Agreement, the
extent of damages to Biosym or Corning, or any successor of either of them,
would be impossible to ascertain and there is not and will not be available to
Biosym, Corning or any such successor adequate remedy at law to compensate it if
any such breach occurs. Consequently, Selling Holder agrees that if a breach of
any of such covenants occurs, in addition to any other relief to which it may be
entitled to enforce any or all of such covenants by injunctive or other
equitable relief ordered by any court of competent jurisdiction, without the
necessity of posting a bond or proving any damages.
6. Territory List. Upon the written request of Selling Holder, Biosym
shall compile and shall provide, within ninety (90) days after the Cessation
Date, to Selling Holder a list of each city, county or political subdivision
included in the definition of "Territory" as of the Cessation Date.
7. Waiver of Breach. The waiver by any party of a breach of any
provision hereof by another party shall not operate as, or be construed as, a
waiver of any subsequent similar or dissimilar breach by any party.
8. Entire Agreement. This Agreement constitutes the entire agreement
between the parties relating to the
<PAGE> 32
-9-
subject matter of this Agreement. All other contracts and agreements between the
parties which relate thereto are hereby terminated.
9. Modification. This Agreement may be amended or modified only by a
writing signed by all parties hereto.
10. Binding Effect. This Agreement shall all be binding upon the
personal representatives of the Selling Holder and shall be binding upon and
inure to the benefit of the successors and the assigns of Corning and Biosym.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without regard to
conflicts or choice of law.
12. No Assignment. Selling Holder may not assign his rights or
obligations under this Agreement.
13. Construction. This Agreement and the provisions contained herein
shall not be construed or interpreted for or against any party hereto because
that party drafted or caused that party's legal representative to draft any of
its provisions.
<PAGE> 33
- 10 -
14. Headings. Paragraph and section headings herein are for reference
only and shall not constitute a part of, or affect the construction or
interpretation of, this Agreement.
IN WITNESS WHEREOF, the parties hereto executed this Agreement as of
the date first above written.
"Corning":
Corning Incorporated,
a New York corporation
By /s/ C. Derek Stathan
----------------------------
Its Director Corporate Development
----------------------------
[Printed Name and Title]
"Biosym":
Biosym Technologies, Inc.,
a California corporation
By /s/ Kevin J. Roberts
----------------------------
Its CEO
-----------------------------
[Printed Name and Title]
"Selling Holder":
John Newsam
------------------------------
------------------------------
[Printed Name]
<PAGE> 34
MEMORANDUM
DATE: June 27, 1995
TO: C. Derek Statham
FROM: John M. Newsam
SUBJECT: Proposed Bonus Plan
================================================================================
I very much appreciated receiving on June 14, 1995 your memo dated June 1, 1995
relating to my employment contract.
Although I am personally unskilled in contractual legalese, I have read my full
employment contract several times and find it unambiguous as to the bonuses to
which I am eligible based on attainment of my MBO's:-
- The Notes to Exhibit A clearly state "The Total Incentive Bonus
segments outlined in (A) and (B) above are calculated independently"
(my italics)
- The Notes to Exhibit A clearly state "for example, it is possible
that for a year no amount is awardable under (a) the portion based
upon Biosym's actual OM performance, but an amount is awardable under
(B), the portion for achieving MBO objectives"
- Contract law apparently stipulates essentially that every provision
is to be interpreted such as to give it effect; the description of
the two portions of the annual bonus specified in paragraph 2.4 would
in this sense be redundant if the second, MBO-related portion were
tied to the company financial objectives as per the first portion of
the bonus awardable.
The terms detailed in my employment contract with Biosym/Corning were the sole
basis upon which I chose to execute my employment agreement with
Biosym/Corning. There was no other verbal non-documented discussions with me in
connection with the terms of this agreement. My understanding then and now was
that the annual bonus awardable based on MBO achievement was as detailed in
Exhibit A. There is nothing in my contract to indicate that the MBO-related
portions of my bonus as detailed in Exhibit A are simply "an example".
<PAGE> 35
From the moment I signed this employment contract, 09/22/92, until July 1994,
nearly 2 years later, I was given no indication whatsoever that there was any
issue at all with it. To the contrary, the bonus paid to me promptly after the
end of June 1993, $15k, was exactly that stipulated in Exhibit A of my
employment contract based on 0% attainment of the operating plan objectives and
100% attainment of my MBO's; this bonus amount was $5k greater than that to
which I would previously have been eligible based on my earlier employment
agreement with Biosym.
I became aware that there might conceivably be a dispute over the terms of my
employment contract only in, I believe, late 1994 when I gently expressed
concern that my contract provisions were not being met in that my bonus payment
for the period ending in June 1994 had clearly not been made "promptly after it
is calculable" (section 2.4).
I have consistently, since joining Biosym, placed the priorities of the company
before my own personal priorities and those of my family. I did not negotiate
the terms of my employment with Biosym/Corning, either at the time of execution
of my employment contract or at any point since.
As I have stated previously, albeit in a different context, I had been
uncomfortable discussing compensation issues with you, as I felt that any such
discussion would inevitably prejudice the interactions that I have with you as
my direct supervisor and employer; these I value highly and, indeed, I consider
that enjoying a close and dynamic working relationship with you is a key
element of success in our collective business endeavor.
The change to my contract terms that you have proposed entails a significant
reduction in my total compensation package, >$30k through the period ending
June 30, 1997, even despite the fact that my employment agreement was
structured around a director-level position, two levels junior to my current
capacity in the organization, at the time the contract was executed. The figure
you have proposed for the period July 1 to December 31, 1994 is computed based
on a total bonus target for the fiscal year ending June 30, 1995 of $50k, $20k
less than that shown for 1995 in the Exhibit A schedule.
<PAGE> 36
Nevertheless, I will agree to the terms you have proposed in your memo appended
here, although I would like to request one modification. My employment contract
stipulates that bonuses will be accrued according to our original fiscal year
schedule, with, accordingly, my being eligible for a bonus payment immediately
following the end of June 1995. I would like to propose then that one half of
the total bonus to which I am eligible for the calendar year 1995, namely 15%
of my salary, be computed based on half-attainment of my MBO's and, if
so-determined, paid immediately following the end of June 1995. I would then be
eligible for the remainder, namely 15% of my salary, immediately after the end
of December 1995 based on the degree to which I have then achieved 100% of my
calendar year 1995 MBO's.
Signed:
Name:
Date:
<PAGE> 1
EXHIBIT 10.19
Molecular Simulations, Inc. 9685 Scranton Road, San Diego, CA 92121-3752, (619)
458-9990, Fax: (619) 458-0136
Date: June 10, 1996
To: David Hiatt From: Mick Savage
Dept: Finance & Administration Dept: Executive
Subject: 1996 Compensation Plan for Lissa Goldenstein
INTEROFFICE MEMO
Please implement the following 1996 Compensation Plan for Lissa Goldenstein. All
components are effective as of 1 January 1996 unless otherwise noted.
1. Lissa's annual base salary will be $130,000 effective 1 April 1996.
This salary increase will be retroactive and subject to normal
withholdings.
2. She will be paid commissions quarterly based on the percentage
commission schedule in the attached table. She will earn $66,500 at
100% of her 1996 New Business Margin and consortia-renewal goal of
$28,642,025.
3. She will be paid quarterly bonuses of $4K, $6K, $2K, and $4K for
meeting the quarterly NBM targets of $5,812K; $5,360K; $5,995K; and
$8,533K. In addition, if Lissa has achieved the combined goal for Q1
and Q2 ($11,172K) as of 30 June 1996, she will earn any otherwise
unearned Q1 or Q2 quarterly bonuses. In a similar fashion, if Lissa has
achieved the combined goal for Q3 and Q4 as of 31 December 1996, she
will earn any otherwise unearned Q3 and Q4 quarterly bonuses. These
targets are shown by territory in the attached table.
4. She will be eligible for a bonus equal to $2,000 for each full
percentage point that actual NBM exceeds 100% of her 1996 annual NBM
target of $25,700K; note that this excludes consortia renewals.
5. She will be eligible to earn up to $27,500 in additional bonuses based
on her performance against a set of MBOs that I will forward to you at
a later date.
6. Her car allowance will continue at the current amount of $6,000 per
year.
7. She will be guaranteed 6 months severance in the event her employment
is terminated for any reason other than lack of performance.
8. All provisions of the sales compensation plan provided to other US
sales representatives will apply to her commission and bonus payments.
/s/ Michael J. Savage /s/ Lissa A. Goldenstein
_______________________________ _______________________________
1.
<PAGE> 2
Molecular Simulations, Inc.
1996 Sales Comp Plan
Lissa Goldenstein
96 COMP PLAN
Base Salary $130.0K
Commissions $66.5K
Quota $28,642K
Rates:
<TABLE>
<S> <C> <C> <C> <C>
0-50% $14,321K 0.139% $19.95
50-75% $7,161K 0.232% $16.63
75-100% $7,161K 0.418% $29.93 $66.50
100-125% $7,161K 0.418% $29.93
>125% 0.418%
</TABLE>
<TABLE>
<S> <C>
Quarterly Bonuses: $16.0K
MBO Bonus: $27.5K
>100% Bonus $2K/1% over NBM Target ($25,700K)
</TABLE>
<TABLE>
<CAPTION>
Achvmt Qrtrly MBO
------ ------ ---
<S> <C> <C> <C>
Bonuses @ 75% $10.00 $ 0.00
Bonuses @ 90% $14.00 $15.00
Bonuses @ 100% $16.00 $27.50
Bonus @ 125% of Q $50K $16.00 $27.50
</TABLE>
<TABLE>
<CAPTION>
Cmmens Total
+ Bonus Comp
Compensation @:
<S> <C> <C> <C>
$21,482 75% $ 36.58 $166.58
$25,778 90% $ 83.53 $213.53
$28,642 100% $110.00 $240.00
$35,803 125% $189.93 $319.93
$38,667 135% $221.90 $351.90
</TABLE>
Quota equals NBM target plus consortia renewals.
2.
<PAGE> 3
New Business Margin Targets: License, Yr1 Mtnc, & Contract:
<TABLE>
<CAPTION>
NBM (Q targets, not budget) Q1 Q2 Q3 Q4 Total
<S> <C> <C> <C> <C> <C>
U.S. (20,22,23,35) 2,200 2,420 2,530 3,850 11,000
Europe (20,22,23,35) 1,880 2,068 2,162 3,290 9,400
Japan (35,15,25,24) 1,612 630 1,050 1,008 4,200
Asia Pacific (20,22,23,35) 220 242 263 385 1,100
Consortia
Contracts
Maintenance
Total New Sales Margin 5,812 5,360 5,995 8,533 25,700
22.6% 20.9% 23.3% 33.2% 100.0%
</TABLE>
3.
<PAGE> 4
1996 Quotas
Worldwide
<TABLE>
<CAPTION>
Q1 Q2 Q3 Q4 NBM Renewals Total
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. 2,200,000 2,420,000 2,530,000 3,850,000 11,000,000 1,311,375 12,311,375
Europe 1,880,000 2,068,000 2,162,000 3,290,000 9,400,000 1,227,650 10,627,650
Japan 1,512,000 630,000 1,050,000 1,008,000 4,200,000 278,000 4,478,000
Asia Pacific 220,000 242,000 253,000 385,000 1,100,000 125,000 1,225,000
Total 5,812,000 5,360,000 5,995,000 8,533,000 25,700,000 2,942,025 28,642,025
</TABLE>
4.
<PAGE> 1
EXHIBIT 10.20
SHAREHOLDERS AGREEMENT
BETWEEN CORNING INCORPORATED,
MOLECULAR SIMULATIONS, INC.
AND CERTAIN SHAREHOLDERS OF
MOLECULAR SIMULATIONS, INC.
AUGUST 15 ,1995
<PAGE> 2
SHAREHOLDERS AGREEMENT
THIS AGREEMENT, made this 15th day of August, 1995, by and between
Corning Incorporated, a corporation organized and existing under the laws of the
State of New York, U.S.A., having its principal office at One Riverfront Plaza,
Corning, New York 14831 ("Corning"), Molecular Simulations Inc., a Delaware
corporation having its principal place of business at 16 New England Executive
Park, Burlington, Massachusetts 01803 ("MSI"), and certain shareholders of MSI
identified on Exhibit A hereto (the "MSI Shareholders").
WITNESSETH:
WHEREAS, MSI, MSI Acquisition Inc., MSI's wholly owned subsidiary ("MSI
Acquisition"), Corning and Corning's wholly owned subsidiary, Biosym
Technologies, Inc. ("Biosym"), a California Corporation, have entered into a
Merger Agreement dated August 15, 1995 (the "Merger Agreement") pursuant to
which Biosym has merged with and into MSI Acquisition and Corning has received
certain shares in MSI; and
WHEREAS, the parties wish to enter into this Agreement concerning the
voting of the MSI shares held by Corning and other obligations and benefits of
MSI Shareholders and Corning.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and intending to be legally bound, and for other good and valuable
consideration, receipt of which is acknowledged by all parties, the parties
hereby agree as follows:
ARTICLE 1.
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings; and such meanings shall be equally applicable to singular
and plural forms of such defined terms as applicable:
1.1 AFFILIATE shall have the meaning set forth in Article V,
below.
1.2 BIOSYM shall have the meaning set forth in the introduction to
this Agreement.
1.3 BOARD shall have the meaning set forth in Section 3.1.
1.4 COMMON STOCK means the voting common stock of MSI with a par
value of $.001 per share.
-1-
<PAGE> 3
1.5 CONVERTIBLE NON-VOTING COMMON STOCK means the non-voting Class
B common stock of MSI having a par value of $.001 per share convertible by its
terms into voting Common Stock and issued to Corning pursuant to the terms of
the Merger Agreement.
1.6 CORNING shall have the meaning set forth in the introduction
to this Agreement.
1.7 EXCLUDED ISSUANCE means any shares of Common Stock issued by
MSI: (i) upon the exercise of stock options or warrants existing on the date
hereof and listed and identified on Exhibit B hereto; (ii) upon a conversion of
any shares of the MSI Preferred Stock or Non-Voting Convertible Common Stock
issued and outstanding; (iii) as a stock dividend or upon any subdivision of
shares of Common Stock proportionately equal to all holders of Common Stock; and
(iv) to employees, directors or consultants of MSI or its subsidiaries pursuant
to a stock option plan within the description set forth in Exhibit B hereof.
1.8 FULLY DILUTED SHARES OF COMMON STOCK means all issued and
outstanding shares of Common Stock and all shares of Common Stock issuable upon
conversion or exercise of issued and outstanding Preferred Stock, and
Convertible Non-Voting Common Stock or the options and warrants or other
securities or rights, convertible or exercisable for Common Stock. Exhibit B
sets forth all such options, warrants or securities existing as of the date
hereof.
1.9 MERGER AGREEMENT shall have the meaning set forth in the
introduction to this Agreement.
1.10 MSI shall have the meaning set forth in the introduction to
this Agreement.
1.11 MSI ACQUISITION shall have the meaning set forth in the
introduction to this Agreement.
1.12 MSI SHAREHOLDERS shall have the meaning set forth in the
introduction to this Agreement.
1.13 OPERATING PLAN shall have the meaning set forth in Section
4.1.
1.14 PREFERRED STOCK means the preferred stock of MSI with a par
value of $.01 per share.
1.15 SHARES means any and all shares of Common Stock, Convertible
Non-Voting Common Stock, Preferred Stock or shares of capital stock of MSI by
whatever name called, whether voting or non-voting, including without
limitation, any such shares
-2-
<PAGE> 4
now owned or hereafter acquired by Corning or the MSI Shareholders however
acquired, including by way of example but not limitation, those acquired by
stock splits, stock dividends, exercise of warrants options or conversion of
convertible securities.
1.16 SUBSIDIARY(IES) shall mean any corporation, partnership or other
entity wherever and however organized in which a party owns directly or
indirectly more than fifty percent (50%) of the voting stock, equity or
beneficial interest, is a partner of, or otherwise controls the management of,
by having the right or ability to designate a majority of the directors or
members of the governing body thereof, whether by agreement or otherwise.
ARTICLE 2.
MSI CAPITAL
2.1 INITIAL CAPITAL. As of the date of this Agreement, after giving
effect to the Merger, as that term is defined in the Merger Agreement, the
authorized capital of MSI consists of: (a) 25,000,000 shares of Common Stock;
(b) 1,500,000 shares of Convertible Non-Voting Common Stock; and (c) 2,222,223
shares of Preferred Stock.
2.2 HOLDINGS. Exhibit C hereto sets forth, as of the date hereof and
after giving effect to the Merger as that term is defined in the Merger
Agreement, the total outstanding Shares and any options or other rights to
acquire Shares in either of such stock, held by each of the MSI Shareholders and
Corning.
2.3 CERTIFICATE OF INCORPORATION AND BY-LAWS. A true and correct copy
of the Certificate of Incorporation and By-Laws of MSI as of the date hereof are
attached hereto as Exhibit D.
2.4 CONVERSION OF CONVERTIBLE NON-VOTING COMMON STOCK. Each share of
Convertible Non-Voting Common Stock held by Corning shall be convertible into
one (1) share of Common Stock. The outstanding shares of Convertible Non-Voting
Common Stock held by Corning may be convened by Corning into the .MSI Common
Stock at any time after the occurrence of any of the events described in
subsections 3.5(a) and (e), and shall be converted after the occurrence of the
event described in subsection 3.5(b), but not prior to the occurrence of any
such event.
2.5 ADDITIONAL CAPITAL. Additional capital of MSI issued from time to
time upon such terms and conditions as the Board of Directors of MSI determines
shall be subject to the rights of the parties in this Agreement.
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ARTICLE 3.
MANAGEMENT
3.1 BOARD OF DIRECTORS.
(a) The business of MSI shall be managed by a Board of
Directors consisting of seven (7) members (the "Board"). All actions of the
Board shall require the affirmative vote of a majority of Directors present at a
meeting at which a quorum is present, except for such actions as may be taken by
written consent in lieu of such meeting or as to which the higher than majority
vote is required pursuant to MSI's Certificate of Incorporation, its By-Laws or
applicable law;
(b) In any and all elections of directors of MSI, whether by
vote or written consent, Corning and the MSI Shareholders shall each cast their
votes as shareholders to elect three (3) nominees of Corning to the Board, and
four (4) nominees of the MSI Shareholders to the Board and one of the nominees
of the MSI Shareholders shall be the Chief Executive Officer for MSI as provided
in Section 3.3 below. The MSI Shareholders and Corning shall use their best
efforts to cause any vacancies on the Board caused by resignation or removal of
a Director nominated respectively by Corning or the MSI Shareholders to be
filled by the Board with a nominee of the party which nominated the director who
has resigned or been removed;
(c) at least 30 days prior to its distribution of notice and
proxy materials for any meeting at which directors are elected, MSI will notify
Corning and the MSI Shareholders of such meeting. Corning and the MSI
Shareholders shall each deliver to MSI within fifteen (15) days of receipt of
the notice provided in the first sentence of this subsection (c) the names of
their respective nominees for the Board. The MSI Shareholder nominees shall be
initially as set forth in Section 3.1 (d) below. Thereafter the MSI Shareholders
agree that the MSI nominees will be determined by the shareholders of MSI
(including the MSI Shareholders) holding a majority of the total Shares
outstanding and held by shareholders of MSI immediately prior to the execution
of this Agreement, provided this method of determining MSI Shareholder nominees
may be changed from time to time by the MSI Shareholders as described in the
second sentence of Section 12.2 below. MSI will include the nominees of Corning
and the MSI Shareholders in the notice and proxy material for the election of
such directors. If no nominee is given by Corning or the MSI Shareholders, their
respective nominees shall be the directors on the Board at that time
representing such party;
(d) The initial nominees of Corning to the MSI Board are C.
Derek Statham, Peter W. Booth and Frank E. Taylor and the initial nominees
(including the Chief Executive Officer) of the MSI Shareholders to the Board are
Michael J. Savage, and Bruns Grayson, Peter Engel, and Tom Cable.
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3.2 MEETINGS. The Board of MSI shall have meetings at least four (4)
times every fiscal year for the purpose of reviewing the performance of the
management of MSI and for the purpose of taking such other actions as the Board
may deem appropriate.
3.3 CHIEF EXECUTIVE OFFICERS. The Board will appoint from among its
members: (a) a Chairman who shall not be an employee of MSI, from among the
nominees of Corning; (b) a Vice Chairman who shall not be an employee of MSI,
from among the nominees of the MSI Shareholders; (c) a Chief Executive Officer
for MSI, who in accordance with MSI's By-Laws, may not vote on his or her
removal or replacement. During the period that the restrictions in Section 3.5
continue to be applicable to the Shares held by Corning, the MSI Shareholders
will be entitled to nominate the Chief Executive Officer of MSI. During the Term
of this Agreement, Corning will support the election of the nominee of the MSI
Shareholders for Chief Executive Officer and in the event of any tie vote of the
Board on the removal or replacement of the Chief Executive Officer, Corning will
support and defer to the decision of the directors nominated by the MSI
Shareholders on such removal or replacement unless doing any of the foregoing
would violate fiduciary obligations of any of the members of the Board. The
initial nominee for MSI Chief Executive Officer by the MSI Shareholders is
Michael J. Savage. The Chairman and Vice Chairman of the Board are expected to
spend the appropriate time on issues relating to the integration and operation
of the combined business of Biosym and MSI during the first year of this
Agreement.
3.4 COMMITTEES OF THE BOARD. The Board will appoint an audit committee
consisting of two (2) Board members, one from among the members nominated by
Corning and the other from among the members nominated by the MSI Shareholders.
The audit committee shall by unanimous vote appoint or remove the Chief
Financial Officer of MSI. The initial Chief Financial Officer of MSI will be
David B. Hiatt. Corning's nominees to the Board will have the right to
participate as a member in any other committee of the Board, e.g. executive or
compensation committees.
3.5 VOTING OF SHARES HELD BY CORNING. Unless a longer period is
otherwise agreed upon by Corning, during the term of this Agreement, Corning
will vote all of its Shares in accordance with the direction of a majority of
the Board on any matter submitted for or requiring a shareholder vote, until any
such time as: (a) MSI issues additional Common Stock or stock convertible into
Common Stock to parties other than Corning, such that after such issuance the
Shares held by Corning and its transferees (direct and indirect) collectively
are equal to or less than forty percent (40%) of the total outstanding Common
Stock, Preferred Stock and any stock convertible into Common Stock; or (b) MSI
issues securities to the public requiring registration pursuant to the
Securities Act of 1933 as amended or any successor act (the "1933 Act") in which
the gross proceeds to MSI from the sale of such securities equals or exceeds $10
million; or
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(c) August 15, 2000; or (d) any substantial, material, change in the policies
and business strategy identified in the Mission Statement incorporated in the
Operating Plan described in Section 4.1 below for MSI, which Mission Statement
is attached hereto as Exhibit E, unless formally approved by one or more of
Corning's nominees to the Board; or (e) upon consummation of any acquisition of
MSI or substantially all of its assets by a third party or a merger with a third
party pursuant to which (i) MSI is not the surviving corporation and (ii) MSI
Shares are exchanged or converted into less than a majority of the surviving
corporation shares of capital stock. During the term of this Agreement, the
restrictions provided under this Section 3.5 shall apply to direct and indirect
transferees of Corning's Shares.
3.6 ACTIONS REQUITING UNANIMOUS APPROVAL OF DIRECTORS. The unanimous
vote of all members of the Board of Directors of MSI present at a duly
constituted meeting or by the unanimous written consent of all the members of
the Board of Directors shall be required to make any amendment of the
Certificate of Incorporation or By-Laws of MSI, which would materially conflict
with or be contrary to the provisions of this Shareholders Agreement.
3.7 RIGHTS FOR ADDITIONAL INVESTMENT. During the term of this Agreement
MSI shall, prior to any issuance by MSI of any of its securities (other than
debt securities with no equity feature), offer by written notice to each MSI
Shareholder and Corning (an "Investor"), the right, for a period of thirty (30)
days, to purchase for cash at any amount equal to the price or other
consideration for which such securities are to be issued, the number of such
securities as is equal to the full number of securities to be offered by MSI
multiplied by a fraction, the numerator of which shall be the total number of
shares of Common Stock held by such Investor as of the date of MSI's notice of
offer (treating all outstanding securities that are convertible, exercisable or
exchangeable into or for (whether directly or indirectly) shares of Common Stock
as having been so converted, exercised or exchanged) and the denominator of
which shall be the aggregate number of Fully Diluted Shares of Common Stock
(calculated as of the proposed date of issuance); provided, however, that the
preemptive rights of each Investor pursuant to this Section 3.7 shall not apply
with respect to (i) an Excluded Issuance; (ii) securities issued solely in
consideration for the acquisition (whether by merger or otherwise) by MSI or any
of its .Subsidiaries of the stock or assets of another business entity; or (iii)
except as otherwise provided m Section 3.8, below, securities issued pursuant to
a firm commitment underwritten public offering. MSI's written notice to each
Investor shall describe the securities proposed to be issued by MSI and specify
the number, price and payment terms. Each Investor may accept MSI's offer as to
the full number of securities offered to it or any lesser number, by written
notice thereof given by it to MSI prior to the expiration of the aforesaid
thirty (30) day period, in which event MSI shall promptly sell and such Investor
shall buy, upon the terms specified, the number of securities agreed to be
purchased by such Investor. Subsequent to such thirty (30) day period but prior
to ninety
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(90) days after the date of its notice of offer to the Investors, MSI shall be
free to offer and sell to any third party or parties the number of such
securities not agreed by the Investors to be purchased by them, at a price and
on payment terms identical to those specified in such notice of offer to the
Investors. However, if such third party sale or sales are not consummated within
such ninety (90) day period, MSI shall not sell such securities as shall not
have been purchased within such period without again complying with this Section
3.7.
3.8 INITIAL PUBLIC OFFERING. In the event of any firm commitment
underwritten initial public offering by MSI, MSI agrees to negotiate in good
faith with its underwriter(s) to require as a condition to the public offering
that Corning be offered the opportunity to purchase from such underwriter(s), at
the public offering price, an allotment of the securities to be issued by MSI in
the public offering such that Corning may maintain its pro rata percentage
ownership of MSI, calculated as described in Section 3.7, above. If requested by
MSI and its underwriter(s), Corning shall not sell or otherwise transfer or
dispose of any Common Stock or other securities of MSI held by Corning (other
than those included in the registration) during the seven-day period prior to
and the 180-day period following the effective date of the registration
statement filed under the 1933 Act in connection with MSI's initial public
offering; provided that all other holders of MSI Shares (except any holder
holding less than 1% of the Fully Diluted Shares of Common Stock calculated at
the time of issuance) enter into similar agreements.
3.9 CORNING INVESTMENT. At all times; Corning's investment in MSI will
be treated fairly and with due regard for the fiduciary obligations of the Board
to shareholders generally and to Corning specifically and Corning's investment
in MSI will be entitled to equal treatment with other holders of Common Stock of
MSI on a non-discriminatory basis concerning any voting rights (except as
otherwise expressly provided in this Agreement or the Certificate of
Incorporation of MSI as of the date hereof), dividends (except for the
Convertible Non-Voting Common Stock which does not have the right to receive
cash dividends), whether in cash or securities, rights or options granted by MSI
to purchase additional shares or any other benefits or distributions provided by
MSI to holders of Common Stock by virtue of their status as holders of Common
Stock but not including any Excluded Issuance.
ARTICLE 4.
OPERATIONAL PROVISIONS
4.1 OPERATING PLAN. Corning and the MSI senior management have agreed
upon the operating plan for MSI (the "Operating Plan") of even date herewith,
including without limitation the initial senior officers identified on Exhibit
F, and the MSI senior management will recommend to the Board that MSI adopt and
operate within the general scope of the Operating Plan, provided that the
Operating Plan may be modified, amended
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or updated by MSI senior management with the approval of the Board, as
appropriate, as a result of changing market conditions, new opportunities or
other valid business reasons.
4.2 INDEPENDENT ENTERPRISE. MSI shall at all times be conducted as an
independent enterprise for the profit of all shareholders and with the objective
of becoming a successful public company, except as otherwise may be approved by
its Board or shareholders as the case may be in connection with the sale of all
or substantially all of assets or stock of MSI (whether by merger or otherwise).
4.3 ACCOUNTING AND CONTROLS. The parties and Board shall cause the
management of MSI to maintain its accounts in accordance with generally accepted
accounting principles and specifically to: (a) make and keep books, records and
accounts which in reasonable detail accurately reflect the transactions and
dispositions of the assets of MSI; and (b) devise and maintain a system of
internal accounting controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with general or specific
authorizations; (ii) transactions are recorded as necessary to permit the
preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements and to
maintain the accountability of assets; and (iii) the recorded accountability for
the assets can be compared with the existing assets at reasonable intervals and
the appropriate action with respect to any differences is taken.
4.4 FINANCIAL INFORMATION. The management of MSI shall: (a) present to
the Board annual capital and operating budgets for approval by the Board; (b)
make available to all members of the Board on a regular basis all such
information as may be required to permit the Directors to make informed
judgments with respect to such budgets and all other items of business coming
before them; (c) provide to each Director quarterly financial statements showing
profit and loss, cash flow, assets and liabilities and including appropriate
analyses and forecasts; (d) prepare annual financial statements in accordance
with generally accepted accounting principles and have them audited by
independent auditors of recognized standing; (e) allow Corning and the MSI
Shareholders, and their duly authorized accountants including outside certified
public accountants upon reasonable advance notice at the expense of the party
giving notice, to inspect at reasonable times and places the financial books and
records of MSI; and (f) provide to Corning's Corporate Accounting Department
quarterly financial information reasonably needed by Corning in order for it to
report Corning's investment in MSI in accordance with generally accepted
accounting principles.
4.5 INFORMATION FOR THE MEETINGS. The management of MSI shall furnish
to Corning and the MSI Shareholders (or to the directors designated by the MSI
Shareholders in the case of Board meetings) an agenda and information relating
thereto for meetings of shareholders of MSI and regular or special meetings of
the Board of MSI
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in advance of such meetings for the effective deliberation at such meetings and
if reasonably possible to do so at least seven (7) days in advance of such
meetings.
ARTICLE 5.
TRANSFERS TO SUCCESSORS AND AFFILIATES
5.1 TRANSFERS TO SUCCESSORS AND AFFILIATES. Notwithstanding anything to
the contrary herein and subject to applicable securities laws and regulations,
either Corning or any of the MSI Shareholders may transfer any or all of its
Shares to any Affiliate (as such term is defined in Regulation D under the 1933
Act) or to any third party as follows:
(a) in the case of transfer to Affiliates or to non-affiliate
third parties by MSI Shareholders, such transfers may be made without Corning's
consent, except that the consent of Corning (not to be unreasonably withheld)
will be required if:
(i) the third party is not an MSI Shareholder or
an Affiliate of an MSI Shareholder; and
(ii) more than twenty-five percent (25%) of the
issued and outstanding Shares (calculated as of the date of transfer) would be
held by such third party as a result of transfers (including the contemplated
transfer) by MSI Shareholders or their transferees;
(b) in the case of transfer to Affiliates or to non-affiliate
third parties by Corning, such transfers may be made without the consent of any
MSI Shareholder, except that the consent of MSI Shareholders holding 80% of the
total Shares held by MSI Shareholders (not to be unreasonably withheld) will be
required if:
(i) the third party is not an Affiliate of
Corning; and
(ii) more than ten percent (10%) of the issued
and outstanding Shares (calculated as of the date of transfer) would be held by
third parties which are not Affiliates of Corning, MSI Shareholders or
Affiliates of MSI Shareholders as a result of transfers (including the
contemplated transfer) by Corning or its transferees;
provided however any such transferee including Affiliates shall agree in
writing, prior to and as a condition of such transfer to be bound by the
provisions of this Agreement to the same extent as the transferring party. Any
such transferee of the MSI Shareholders shall have the rights and obligations of
the MSI Shareholders under this Agreement and any such transferee of Corning
shall have the rights and obligations of Corning under this Agreement provided
such obligations and rights will be shared in the event of a transfer of less
than all the Corning Shares.
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ARTICLE 6.
ADDITIONAL AGREEMENTS
Except for the transactions contemplated or described by this Agreement
or the Merger Agreement, any services, agreements, contractual obligations or
other arrangements material to MSI and not in the ordinary course of business
such as software licensing or computer equipment sales or leases, between the
MSI Shareholders and Corning or any of their respective Affiliates on the one
hand, and MSI on the other, shall be in the form of a written agreement on terms
no less favorable to MSI than MSI would obtain in a transaction with an
unrelated party unless otherwise approved by a majority of the disinterested
members of the Board.
ARTICLE 7.
FORCE MAJEURE
7.1 EFFECT OF FORCE MAJEURE. If performance of this Agreement or of any
obligation hereunder, except the payment of money, is prevented, restricted or
interfered with by reason of force majeure, any party so affected, upon giving
prompt written notice to the other parties, shall be excused from such
performance to the extent of such prevention, restriction or interference;
provided, that the party so affected shall use its best efforts to avoid or
remove such causes of non-performance and shall continue performance hereunder
with the utmost dispatch whenever such causes are removed.
7.2 DEFINITION. Force majeure shall be understood to mean and include
damage or delay caused by acts of God, acts or regulations or decrees of any
government (de facto or de jure), natural phenomena such as earthquakes and
floods, fires, riots, war, shipwrecks, strikes, freight embargoes, lockouts, or
other causes, whether similar or dissimilar to those enumerated above, beyond
the reasonable control of the Parties, which prevent the total or partial
carrying out of any obligation, except the payment of money, under this
Agreement.
7.3 NOTIFICATION. In the event a case of force majeure shall prevent
the total or partial execution of a party's obligations under this Agreement,
the party claiming force majeure shall inform the other Parties in writing
within fifteen (15) days after the occurrence of such case, stating the
beginning and, if possible, the ending times of such case of force majeure and
describing the circumstances thereof.
ARTICLE 8.
ARBITRATION; APPLICABLE LAW
8.1 ARBITRATION. The parties expect to resolve amicably all issues,
breaches or disputes under this Agreement. However, in the event that the same
are not resolved amicably they shah be finally settled by arbitration held in
the United States of America
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and conducted in accordance with the Rules of the American Arbitration
Association. The arbitration panel shall consist of three (3) arbitrators
appointed in accordance with such Rules. The arbitration will be conducted in
the English language and in Chicago, Illinois. The award made in such
arbitration shall be final and conclusive upon the parties. Application may be
made to any court having jurisdiction for an order of enforcement of such award.
8.2 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware and the laws of the United
States of America without regard to conflicts of law principles that would
require a different result.
ARTICLE 9.
NOTICES
9.1 NOTICES. Any notice required or permitted to be given pursuant to
this Agreement shall be given in writing in the English language and forwarded,
charges prepaid, by registered airmail, or by telex confirmed by registered
airmail or facsimile (fax) confirmed by registered airmail, and addressed as
follows (or as hereafter specified by notice from the party being addressed):
If to Corning: Corning Incorporated
One Riverfront Plaza
Corning, NY 1483 1
Attn: Secretary
cc: General Counsel
If to MSI: Molecular Simulations, Inc.
16 New England Executive Park
Burlington, MA
Attn: President
cc: General Counsel
If to MSI To the respective addresses set forth
Shareholders: on Exhibit A hereto.
All notices given hereunder shall be deemed given, in the case of notice by
registered mail only, as of the fourth (4th) day following posting, and, in the
case of notice by telex or facsimile confirmed by registered mail, as of the day
following the day the telex or facsimile is dispatched.
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ARTICLE 10.
TERM
10.1 TERM. Except as provided in Section 10.2, this Agreement shall be
effective as of the date hereof and remain in full force and effect until the
earliest occurrence of any event under 3.5 (a-e). Any provision of this
Agreement which constitutes an agreement governed by Section 218(c) of the
Delaware General Corporation Law (or any statutory provision which is a
successor thereto) shall be effective for the period described above; provided
that the parties may extend the duration of such period, as they may then agree
in writing.
10.2 DEFAULT. In the event that Corning on the one hand, or MSI
Shareholders on the other shall default in its or their obligations hereunder
and fail to remedy such default within sixty (60) days after such default shall
have been called to its attention by notice from the other party (it being
understood that no default by any one MSI Shareholder shall be construed as a
default by the MSI Shareholders hereunder unless such default, together with the
default of other MSI Shareholders, if any, results in a material adverse effect
on Corning's rights under this Agreement, nor shall a default by Corning be
construed as a default hereunder unless such default results in a material
adverse effect on the MSI Shareholders' rights under this Agreement); (a) the
parties shall have such rights and remedies as are effective under applicable
law; and (b) the non-defaulting party may (but is not required to) immediately
terminate this Agreement. Termination pursuant to, or for reasons set forth at
this Section 10.2 by the non-defaulting party shall serve to extinguish all
provisions of this Agreement.
10.3 REMEDY FOR DEFAULT. Upon a breach or threatened breach of the
terms or conditions of this Agreement, the other Parties hereto shall, in
addition to all other remedies, each be entitled to seek injunctive relief,
and/or a decree for specific performance in accordance with the provisions of
this Agreement.
ARTICLE 11.
ASSIGNMENT
11.1 ASSIGNMENT ON WRITTEN CONSENT. This Agreement shall be binding
upon and inure to the benefits of the parties and their respective successors
and assigns. This Agreement may not be assigned in whole or in part by any party
except as provided herein.
11.2 ASSIGNMENT TO SUBSIDIARY. Subject to the provisions of Section 5.1
above, Corning and the MSI Shareholders reserve the right to assign in whole or
in part their respective rights and obligations hereunder to any Subsidiary. The
exercise by such an assignor of such right to assign shall not alter such
assignee's obligations hereunder. In
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the event Corning or any of the MSI Shareholders assigns its rights and
obligations hereunder to a Subsidiary, then such assignor shall guarantee the
performance by said Subsidiary of the rights and obligations assigned hereunder.
ARTICLE 12.
MISCELLANEOUS
12.1 ENTIRE AGREEMENT. This Agreement and its Exhibits, the Merger
Agreement and the agreements described therein, constitute the entire agreement,
between Corning, MSI and the MSI Shareholders with respect to the subject matter
hereof, and supersede all previous negotiations, commitments and writings.
12.2 AMENDMENT OR MODIFICATION. 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 instances and either retroactively or
prospectively), only with the written consent of Corning, MSI and the holders of
eighty percent (80%) of the Shares then held by the MSI Shareholders. Any
amendment or waiver effected in accordance with this Section 12.2 will be
binding upon each MSI Shareholder and Corning, each transferee of an MSI
Shareholder or Corning and MSI.
12.3 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
12.4 NO WAIVER. No failure or delay on the part of any party hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
12.5 HEADINGS. Article and section headings in this Agreement are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
12.6 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts taken together shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives in the manner legally binding
upon them as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
By:____________________________________
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives in the manner legally binding
upon them as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
By:____________________________________
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives in the manner legally binding
upon them as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
ABS Ventures II Limited Partnership
By:____________________________________
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives in the manner legally binding upon them
as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
Brown Technology Associates Limited
Partnership
By:____________________________________
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives in the manner legally binding upon them
as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
American Consulting Corporation
By:____________________________________
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives in the manner legally binding upon them
as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
CH Partners IV
By:____________________________________
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives in the manner legally binding upon them
as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
CH Investment Partners
By:____________________________________
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives in the manner legally binding upon them
as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
D.E. SHAW INVESTMENT GROUP, L.P.
By: D.E. Shaw & Co., L.P.
Its General Partner
By: D.E. Shaw & Co., L.P.
Its General Partner
By:____________________________________
David E. Shaw, President
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives in the manner legally binding upon them
as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
Mayfield VI
By:____________________________________
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<PAGE> 24
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives in the manner legally binding upon them
as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
Mayfield Associates
By:____________________________________
-23-
<PAGE> 25
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives in the manner legally binding upon them
as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
Morgan Stanley Venture Capital Fund, L.P.
By:____________________________________
-24-
<PAGE> 26
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives in the manner legally binding upon them
as of the date first above written.
CORNING INCORPORATED
By:____________________________________
MOLECULAR SIMULATIONS INC.
By:____________________________________
MOLECULAR SIMULATIONS INC. SHAREHOLDERS
SIF Limited Partnership
By:____________________________________
-25-
<PAGE> 27
EXHIBIT A TO SHAREHOLDERS AGREEMENT
MSI SHAREHOLDERS
ABS Ventures II Limited Partnership
Brown Technology Associates Limited Partnership
10 No. Calvert Street
Suite 735
Baltimore, MD 21202
Attn: Bruns Grayson
American Consulting Corporation
c/o Affinity Publishing
144 No. Robertson Boulevard
Suite 201
Los Angeles, CA 90048
Attn: Peter Engel
CH Partners IV
CH Investment Partners
c/o Cable & Howse Ventures
777 108th
Avenue N.E.
Suite 2300
Bellevue, WA 98004
Attn: Tom Cable
D.E. Shaw Investment Group, L.P.
120 W. 45th Street
39th Floor, Tower 45
New York, NY 10036
Attn: Ben Appen
Mayfield VI
Mayfield Associates
c/o Mayfield Fund
2800 Sand Hill Road
Menlo Park, CA 94025
Attn: Wendell G. Van Auken
-26-
<PAGE> 28
Morgan Stanley Venture Capital Fund, L.P.
SIF Limited Partnership
c/o Morgan Stanley Venture Partners
1221 Avenue of the Americas
33rd Floor
New York, NY 10020
Attn: Guy de Chazal
-27-
<PAGE> 29
EXHIBIT B
OPTION PLAN:
The option plan for directors, employees or consultants of MSI will
consist of (a) MSI's existing option plan pursuant to which 1,349,846 shares are
issuable under outstanding options and 77,325 shares are available for option
grants and (b) options for an additional 2,000,000 shares of Common Stock of
MSI, which options shall be awarded to participants selected by the Board to
purchase Common Stock at such price as the Board may in the future determine.
This stock option plan shall be the only stock option plan under which MSI
grants such options to directors, employees or consultants for a period of three
(3) years from the date of this Shareholders Agreement. The number of shares of
Common Stock issuable under this stock option plan shall be adjusted
appropriately for any stock splits, dividends or combinations with respect to
MSI's Common Stock.
FULLY DILUTED SHARES OF COMMON STOCK AS OF THE DATE HEREOF:
<TABLE>
<S> <C>
Shares of Common Stock Outstanding 9,330,893
Shares of Common Stock Issuable Upon Conversion of Preferred Stock 2,222,223
Shares of Common Stock Issuable Upon Conversion of Convertible
Non-Voting Common Stock 1,467,825
Shares of Common Stock Subject to Outstanding Options 1,349,846
Shares of Common Stock Subject to Outstanding Warrants 40,654
----------
Total 14,411,441
----------
</TABLE>
-28-
<PAGE> 30
EXHIBIT C TO
SHAREHOLDERS AGREEMENT
<TABLE>
<CAPTION>
NON-VOTING WARRANTS & STOCK, WARRANTS &
SHAREHOLDER COMMON STOCK PREFERRED STOCK COMMON STOCK ISSUES OPTIONS ISSUED OPTIONS
- ----------- ------------ --------------- ------------ -------------- -----------------
<S> <C> <C> <C> <C> <C>
Morgan Stanley(1) 172,632 172,632
ABS Ventures(2) 368,178 368,178
Cable & Howse(3) 412,599 412,599
American Consulting Corp. 105,478 105,478
Mayfield(4) 450,097 450,097
D.E. Shaw lnvst Group, L.P. 186,278 2,222,223 2,408,501
Corning 5,776,558 1,467,825 7,244,383
------------ ------------ ---------- -------------- ----------
TOTALS 7,471,820 2,222,223 11,161,868
</TABLE>
(1) Shareholders of record are Morgan Stanley Venture Capital Fund, L.P.
and SIF Limited Partnership
(2) Shareholders of record are ABS Ventures II Limited Partnership and
Brown Technology Associates Limited Partnership
(3) Shareholders of record are CH Partners IV and CH Investment Partners
(4) Shareholders of record are Mayfield VI and Mayfield Associates
-29-
<PAGE> 31
EXHIBIT D
CERTIFICATE OF INCORPORATION AND BY-LAWS OF MSI
<PAGE> 1
EXHIBIT 10.21
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of October 18, 1991
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
RECITALS .................................................................................. 1
SECTION 1
COVENANTS OF THE COMPANY ...................................... 4
1.1 Basic Financial Information ............................................. 4
1.2 Additional Information .................................................. 5
1.3 Prompt Payment of Taxes, etc. ........................................... 7
1.4 Maintenance of Properties and Leases .................................... 7
1.5 Insurance ............................................................... 7
1.6 Accounts and Records .................................................... 8
1.7 Independent Accountants ................................................. 8
1.8 Compliance with Requirements of Governmental
Authorities ............................................................. 8
1.9 Maintenance of Corporate Existence, etc. ................................ 8
1.10 Proprietary Information and Inventions Agreements ....................... 8
1.11 Indebtedness ............................................................ 9
1.12 Extension of Credit ..................................................... 9
1.13 Compensation of Officers ................................................ 9
1.14 Transactions with Affiliates ............................................ 9
1.15 Attendance at Board Meetings ............................................ 9
1.16 Board of Directors ...................................................... 10
1.17 Termination of Covenants ................................................ 10
SECTION 2
RESTRICTIONS ON TRANSFERABILITY OF
SECURITIES; COMPLIANCE WITH SECURITIES ACT ............................. 10
2.1 Restrictions on Transferability ......................................... 10
2.2 Certain Definitions ..................................................... 10
2.3 Restrictive Legend ...................................................... 11
2.4 Notice of Proposed Transfers ............................................ 12
2.5 Requested Registration .................................................. 13
(a) Request for Registration ....................................... 13
(b) Underwriting ................................................... 15
2.6 Company Registration .................................................... 16
2.7 Expenses of Registration ................................................ 17
2.8 Registration on Form S-2 or Form S-3 .................................... 18
2.9 Registration Procedures ................................................. 19
2.10 Indemnification ......................................................... 21
2.11 Information by Holder ................................................... 23
2.12 Limitations on Registration of Issues of
</TABLE>
i.
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Securities ............................................................. 23
2.13 Rule 144 Reporting ..................................................... 24
2.14 Transfer or Assignment of Registration Rights .......................... 24
2.15 "Market Stand-Off" Agreement ........................................... 25
SECTION 3
MISCELLANEOUS ........................................... 25
3.1 Governing Law .......................................................... 25
3.2 Successors and Assigns ................................................. 25
3.3 Entire Agreement; Amendment; Waiver .................................... 25
3.4 Notices, etc. .......................................................... 26
3.5 Delays or Omissions .................................................... 26
3.6 Rights; Separability ................................................... 26
3.7 Information Confidential ............................................... 26
3.8 Title and Subtitles .................................................... 27
3.9 Counterparts ........................................................... 27
3.10 TFSI and SVB Warrants .................................................. 27
3.11 Termination of Prior Agreements ........................................ 27
EXHIBITS
EXHIBIT A: Polygen Investors
EXHIBIT B: MSI Investors
</TABLE>
ii.
<PAGE> 4
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Amended and Restated Investor Rights Agreement (the "Agreement") dated
as of October 18, 1991, by and among POLYGEN CORPORATION, a Delaware corporation
("Polygen" or the "Company"), and the investors listed on Exhibits A and B
attached hereto (the "Investors").
RECITALS
WHEREAS, in order to induce Polygen and Molecular Simulations
Incorporated ("MSI") to enter into that certain Agreement and Plan of
Reorganization dated August 27, 1991 (the "Merger Agreement"), the Company's
obligations under which are conditioned upon the execution and delivery by the
Company and the Investors of this Agreement, Polygen and the Investors hereby
agree that this Agreement shall exclusively govern the rights of certain of the
Investors to cause the Company to register shares of its Common Stock (the
"Common Stock") issued or issuable to the Investors and certain other persons,
and the other matters set forth herein;
WHEREAS, effective upon the merger of MSI with and into Polygen (the
"Merger"), the Company and the Investors desire to set forth in a single
agreement any and all registration, first refusal, first offer, co-sale,
financial information, inspection, observer and board representation rights and
voting arrangements (collectively, "Investor Rights"), such agreement
superseding all previous agreements of Polygen and MSI as to such rights and
arrangements;
WHEREAS, effective upon the consummation of the Merger, the Company's
Certificate of Incorporation shall be amended to provide that all shares of the
Company's preferred stock shall be automatically converted into shares of the
Company's Common Stock and all rights of the Company's preferred stockholders as
preferred stockholders shall thereafter be eliminated in their entirety and any
rights to purchase the Company's preferred stock shall cease to exist,
WHEREAS, certain of the Investors are parties to that certain Investor
Rights Agreement dated February 24, 1989, as amended on October 16, 1990 (the
"Polygen Investors Agreement") pursuant to which Polygen granted to certain of
such Investors certain registration, first refusal, financial information,
inspection, observer, co-sale and board representation rights;
<PAGE> 5
WHEREAS, one of the Investors is a party to that certain Series D
Preferred Stock Purchase Agreement, dated February 27, 1989 (the "Polygen Series
D Agreement") pursuant to which Polygen granted to such Investor certain first
offer rights;
WHEREAS, one of the Investors is a party to that Registration Rights
Agreement and holder of that certain Common Stock Purchase Warrant each dated
October 16, 1990 (collectively, the "Polygen Registration Rights Agreement and
Warrant"), pursuant to which Polygen granted to such investor certain
registration and other rights as set forth in the Polygen Investors Agreement
and in such Warrant;
WHEREAS, certain of the Investors are parties to that certain Letter
Agreement dated February 27, 1989 (the "Polygen Letter Agreement"), pursuant to
which certain of such Investors granted to one of such Investors certain co-sale
rights;
WHEREAS, certain of the Investors are parties to that certain Voting
Agreement dated November 18, 1985 (the "Polygen Voting Agreement"), pursuant to
which such Investors agreed to provide for the future voting of certain of their
shares of
Polygen;
WHEREAS, certain of the Investors are parties to that certain
Stockholders Agreement dated November 18, 1985, as amended on December 2, 1986
and April 15, 1988 (the "Polygen Stockholders Agreement"), pursuant to which
such Investors agreed to provide for the future voting of certain of their
shares of Polygen and certain of such Investors granted to certain other of such
Investors first refusal rights;
WHEREAS, immediately prior to the consummation of the Merger, MSI's
Certificate of Incorporation shall be amended to provide that all shares of MSI
preferred stock shall be automatically converted into shares of MSI common stock
and all rights of MSI preferred stockholders as preferred stockholders shall
thereafter be eliminated in their entirety;
WHEREAS, effective upon the consummation of the Merger, (i) all MSI
Common Stock will be exchanged for Polygen Common Stock, (ii) all MSI stock
options and MSI warrants will be assumed by Polygen, and (iii) and all MSI
Common Stock as well as any rights to purchase MSI Common Stock shall cease to
exist;
WHEREAS, certain of the Investors are parties to that certain Purchase
Agreement dated January 25, 1988, as amended March 31, 1988 (the "First MSI
Series A Agreement"), pursuant to
2.
<PAGE> 6
which MSI granted to certain of such Investors certain financial information,
inspection and first refusal rights;
WHEREAS, certain of the Investors are parties to that certain
Registration Agreement dated January 22, 1988, as amended March 31, 1988, March
18, 1991 and August 1, 1991 (the "MSI Registration Agreement"), pursuant to
which MSI granted to certain of such Investors certain registration rights;
WHEREAS, certain of the Investors are parties to that certain
Shareholders Agreement, dated January 22, 1988, as amended March 31, 1988 (the
"MSI Shareholders Agreement"), pursuant to which certain of such Investors have
agreed to have certain first refusal, co-sale and board representation rights;
WHEREAS, one of the Investors is a party to that certain Addendum to
Purchase Agreement dated March 31, 1988 (the "Second MSI Series A Agreement"),
pursuant to which MSI granted to such Investor certain financial information,
inspection, registration and first refusal rights as set forth in the First MSI
Series A Agreement, the MSI Registration Agreement and the MSI Shareholders
Agreement;
WHEREAS, one of the Investors is a party to that certain Series A
Preferred Stock Purchase Agreement dated March 18, 1991 (the "Third MSI Series A
Agreement"), pursuant to which MSI granted to such Investor certain financial
information, inspection and first refusal rights as set forth in the First MSI
Series A Agreement;
WHEREAS, Silicon Valley Bank ("SVB") is a party to the Silicon Valley
Bank Warrant Agreement ("SVB Warrant Agreement") pursuant to which MSI granted
to such Investor certain information rights and antidilution protection;
WHEREAS, certain Investors are parties to holdback agreements
("Holdback Agreements") dated January 22, 1988 providing them with certain
rights;
WHEREAS, certain of the Investors are parties to that certain Amendment
and Waiver Agreement dated March 18, 1991 (the "MSI Amendment Agreement"),
pursuant to which MSI granted to such Investors certain registration rights as
set forth in the MSI Registration Agreement;
WHEREAS, certain of the Investors are parties to those certain Letter
Agreements dated March 18, 1991 (the "MSI Letter Agreements"), pursuant to which
MSI granted to such Investors certain first refusal rights;
3.
<PAGE> 7
WHEREAS, the Company desires to grant all applicable Investor Rights to
holders of MSI common stock and options and warrants to acquire MSI common stock
outstanding immediately prior to the consummation of the Merger (collectively,
the "MSI Securityholders") and to holders of Polygen capital stock outstanding
immediately prior to the consummation of the Merger as set forth herein;
WHEREAS, certain terms of the Merger may require a consent or waiver
from certain or all of the Investors for the consummation of such transactions;
NOW, THEREFORE, the undersigned agree that all registration, financial
information, inspection, observer, first refusal, first offer, board
representation and co-sale rights and voting arrangements under the
aforementioned agreements shall be extinguished in their entirety effective
immediately prior to the consummation of the Merger and all such Investor Rights
shall be set forth in this Agreement as follows:
SECTION 1
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
1.1 Basic Financial Information. The Company will furnish the following
reports to each Investor and MSI Securityholder (without duplication) so long
as such securityholder owns at least 400,000 shares of Polygen Common Stock
after the consummation of the Merger (as then presently constituted and subject
to subsequent adjustment for stock splits, stock dividends, reverse stock
splits, recapitalizations and the like) (each, a "Significant Rightsholder").
(a) As soon as practicable after the end of each fiscal year of the
Company, and in any event within one hundred and twenty days thereafter, a
consolidated balance sheet of the Company and its subsidiaries, as of the end of
such fiscal year, and consolidated statements of income and sources and
applications of funds of the Company and its subsidiaries, for such year,
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied (except as noted in the notes thereto) and setting forth in
each case in comparative form the figures for the previous fiscal year, all in
reasonable detail and certified by independent public accountants of recognized
national standing selected by the Company, and a Company prepared comparison to
budget.
4.
<PAGE> 8
(b) As soon as practicable after the end of the first, second and third
quarterly accounting periods in each fiscal year of the Company, and in any
event within forty-five days thereafter, a consolidated balance sheet of the
Company and its subsidiaries, as of the end of each such quarterly period, and
consolidated statements of income of the Company and its subsidiaries for such
period and for the current fiscal year to date, prepared in accordance with GAAP
consistently applied (except as noted in the notes thereto) and setting forth in
comparative form the figures for the corresponding periods of the previous
fiscal year and the figures in the current budget, subject to changes resulting
from year-end audit adjustments, all in reasonable detail and certified by the
principal financial or accounting officer of the Company, except that such
balance sheet shall not contain the notes normally required by GAAP.
(c) From the date the Company becomes subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in lieu of the financial information required pursuant to Sections
1.1(a) and (b), copies of its annual reports on Form 10-K and its quarterly
reports on Form 10-Q.
1.2 Additional Information.
(a) The Company will permit any Significant Rightsholder (or a
representative of any such Significant Rightsholder) to visit and inspect any of
the properties of the Company, including its books of accounts and other records
(and make copies thereof and take extracts therefrom), and to discuss its
affairs, finances and accounts with the Company's officers and its independent
public accountants, all at such reasonable times and as often as any such person
may reasonably request.
(b) Until the earlier to occur of (i) the date on which the Company is
subject to the reporting requirements of Sections 13(a) or 15(d) of the Exchange
Act, or (ii) the date on which quotations for the Common Stock of the Company
are reported by the automated quotations systems operated by the National
Association of Securities Dealers, Inc. ("NASD"), or by an equivalent quotations
system, the Company will deliver the reports described below in this Section 1.2
to each Significant Rightsholder:
(i) As soon as practical after the end of each month and in any event
within thirty days thereafter, a consolidated balance sheet of the Company and
its subsidiaries, as of the end of such month and consolidated statements of
income of the Company and its subsidiaries, for each month and for the
5.
<PAGE> 9
current fiscal year of the Company to date, all subject to customary year-end
audit adjustments, prepared in accordance with GAAP consistently applied and
certified by the principal financial or accounting officer of the Company
(except as noted in the notes thereto), together with a comparison of such
statements to the corresponding periods of the prior fiscal year and to the
Company's operating plan then in effect and approved by its Board of Directors.
(ii) Annually (but in any event at least fifteen days prior to the
commencement of each fiscal year of the Company), the business plan of the
Company, in such manner and form as approved by the Board of Directors of the
Company, which business plan shall include a projection of income and a
projected cash flow statement for such fiscal year and a projected balance sheet
as of the end of such fiscal year. Any material changes in such business plan
shall be submitted as promptly as practicable after such changes have been
approved by the Board of Directors of the Company.
(iii) As soon as practicable after the end of each fiscal year and in
any event within one hundred and twenty days thereafter, (A) a report from the
Company reporting on compliance with the terms and conditions of this Agreement
and any other agreement pursuant to which the Company has borrowed money and (B)
a copy of the annual management review letter of the Company's independent
public accountants.
(iv) As soon as practicable after transmission or occurrence and in any
event within ten days thereof, copies of any reports or communications delivered
to any class of the Company's security holders or to the financial community,
including any filings by the Company, or by any of its officers or directors
relating to the Company, with any securities exchange, the Securities and
Exchange Commission (the "Commission") or the National Association of Securities
Dealers, Inc.
(v) With reasonable promptness, such other information and data with
respect to the Company and its subsidiaries as any such person may from time to
time reasonably request.
(c) The provisions of Section 1.1 and this Section 1.2 shall not be in
limitation of any rights which any Significant Rightsholder may have with
respect to the books and records of the Company and its subsidiaries, or to
inspect their properties or discuss their affairs, finances and accounts, under
the laws of the jurisdictions in which they are incorporated.
6.
<PAGE> 10
(d) Notwithstanding the foregoing, no Significant Rightsholder, in his
capacity as a Significant Rightsholder, shall have a right to access to any
trade secrets or classified information; and, provided further, that each
Significant Rightsholder shall agree to hold in confidence and trust any
information provided pursuant to this Section 1.2, except that the obligations
of International Business Machines Corporation ("IBM") with regard to
confidentiality shall be addressed in separate agreements.
1.3 Prompt Payment of Taxes, etc. The Company will promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Company or any subsidiary; provided,
however, that any such tax, assessment, charge or levy need not be paid if the
validity thereof shall currently be contested in good faith by appropriate
proceedings or if the Company shall have set aside on its books adequate
reserves with respect thereto, and provided, further, that the Company will pay
all such taxes, assessments, charges or levies forthwith upon the commencement
of proceedings to foreclose any lien which may have attached as security
therefor. The Company will pay or cause to be paid when due, or in conformity
with customary trade terms or otherwise in accordance with policies related
thereto adopted by the Company's Board of Directors, all other material amounts
of indebtedness incident to the operations of the Company.
1.4 Maintenance of Properties and Leases. The Company will keep its
properties and those of its subsidiaries in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
necessary and proper repairs, renewals, replacements, additions and improvements
thereto; and the Company and its subsidiaries will at all times comply with each
material provision of all leases to which any of them is a party or under which
any of them occupies property if the breach of such provision might have a
material adverse effect on the condition, financial or otherwise, or results of
operations of the Company.
1.5 Insurance. Except as otherwise determined in accordance with
policies adopted by the Company's Board of Directors, the Company will keep its
assets and those assets of its subsidiaries which are of an insurable character
insured by financially sound and reputable insurers against loss or damage by
fire, explosion and other risks customarily insured against by companies in the
Company's line of business, and the Company will maintain, with financially
sound and reputable insurers, insurance against other hazards and risks and
liability to
7.
<PAGE> 11
persons and property to the extent and in the manner customary for companies in
similar businesses similarly situated.
1.6 Accounts and Records. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with GAAP
applied on a consistent basis.
1.7 Independent Accountants. The Company will retain independent public
accountants of recognized national standing who shall certify the Company's
financial statements at the end of each fiscal year. In the event the services
of the independent public accountants so selected or any firm of independent
public accountants hereafter employed by the Company are terminated, the Company
will promptly thereafter notify the Significant Rightsholders and will request
the firm of independent public accountants whose services are terminated to
deliver to the Significant Rightsholders a letter from such firm setting forth
the reasons for the termination of their services. In the event of such
termination, the Company will promptly thereafter engage another firm of
independent public accountants of recognized national standing. In its notice to
the Significant Rightsholder, the Company shall state whether the change of
accountants was recommended or approved by the Board of Directors of the Company
or any committee thereof.
1.8 Compliance with Requirements of Governmental Authorities. The
Company and each of its subsidiaries shall duly observe and conform to all valid
requirements of governmental authorities relating to the conduct of their
businesses or to their properties or assets.
1.9 Maintenance of Corporate Existence, etc. The Company shall maintain
in full force and effect its corporate existence, rights and franchises and all
licenses and other rights in or to use patents, processes, licenses, trademarks,
trade names or copyrights owned or possessed by it or any subsidiary and deemed
by the Company to be necessary to the conduct of their business without, to the
Company's best knowledge, any conflict with any business in or rights of others
to use such patents, processes, licenses, trademarks, trade names or copyrights.
1.10 Proprietary Information and Inventions Agreements. The Company
will use its best efforts to cause each person now or hereafter employed by it
or any subsidiary with access to confidential information to enter into a
proprietary information and inventions agreement in form and substance
acceptable to the
8.
<PAGE> 12
Company's Board of Directors with such changes as the Company's Board of
Directors may from time to time approve.
1.11 Indebtedness. The Company shall not, without the prior approval of
the Board of Directors of the Company, incur any additional indebtedness in
excess of $500,000, other than trade credit incurred in the ordinary course of
business.
1.12 Extension of Credit. The Company shall not, without the prior
approval of the Board of Directors of the Company, extend credit by any method
or in any form or manner in excess of $200,000, other than open account credit
extended to customers in the ordinary course of business.
1.13 Compensation of Officers. The Company shall not, without the prior
approval of the Board of Directors of the Company, compensate any of its
officers in an amount greater than $100,000.
1.14 Transactions with Affiliates. The Company shall not, without the
approval of the disinterested members of the Company's Board of Directors,
engage in any loans, leases, contracts or other transactions with any director,
officer or key employee of the Company, or any member of any such person's
immediate family, including the parents, spouse, children and other relatives of
any such person, on terms less favorable than the Company would obtain in a
transaction with an unrelated party, as determined in good faith by the
Company's Board of Directors.
1.15 Attendance at Board Meetings. Immediately following the
consummation of the Merger and at all times subsequent thereto and to the time
of the effectiveness of the Company's initial public offering of sales of its
equity securities to the public on a registration statement on Form S-1 with
gross proceeds to the Company of at least $7,500,000 (an "IPO"), IBM (or its
representative) shall have the right to attend all meetings of the Company's
Board of Directors in a nonvoting observer capacity, to receive notice of such
meeting and to receive the information provided by the Company to the Company's
Board of Directors; provided, however, that IBM (or its representative) shall
agree to hold in confidence and trust and to act in a fiduciary manner with
respect to all information so provided; and, provided further, that the Company
reserves the right to exclude IBM (or its representative) from any meeting or
portion thereof to which attendance by IBM (or its representative) would
adversely affect the attorney-client privilege between the Company and its
counsel.
9.
<PAGE> 13
1.16 Board of Directors. Each of the undersigned Investors agrees to
vote its shares of capital stock in favor of each of the nine members of the
Board of Directors of the Company (as constituted immediately after the
consummation of the Merger) until December 31, 1992.
1.17 Termination of Covenants. The covenants set forth in this Section
1 (except Section 1.16) shall terminate and be of no further force and effect
after the time of effectiveness of the Company's IPO meeting the conditions set
forth in Section 1.15 herein.
SECTION 2
RESTRICTIONS ON TRANSFERABILITY OF
SECURITIES; COMPLIANCE WITH SECURITIES ACT
2.1 Restrictions on Transferability. The shares of Common Stock of the
Company held by the Holders (as hereinafter defined) shall not be transferable,
except upon the conditions specified in this Section 2 or in the Merger
Agreement or in any certificate or letter referred to therein, which conditions
are intended to ensure compliance with the provisions of the Securities Act or
to account for the Merger as a pooling-of-interests transaction or, in the case
of Section 2.15 hereof, to assist in an orderly distribution, as the case may
be. Each holder will cause any proposed transferee of Restricted Securities (as
hereinafter defined) held by that holder to agree to take and hold those
securities subject to the provisions and upon the conditions specified in this
Section 2 or in the Merger Agreement or in any certificate or letter referred to
therein.
2.2 Certain Definitions. As used in this Section 2, the following terms
shall have the following respective meanings:
"Restricted Securities" shall mean the securities of the Company
required to bear or bearing the legend set forth in Section 2.3 hereof, but
shall in no event include any securities issued in connection with the Merger
Agreement.
"Registrable Securities" shall mean (i) shares of the Company's Common
Stock issued upon the automatic conversion of shares of each of the Series A,
Series B, Series C and Series D Preferred Stock of the Company pursuant to an
amendment to the Company's Certificate of Incorporation concurrently with the
consummation of the Merger; (ii) shares of the Company's Common Stock issued to
MSI common stockholders pursuant to the Merger Agreement; (iii) shares of the
Company's Common Stock issuable upon the exercise of the Company's Common Stock
purchase warrants
10.
<PAGE> 14
issued to Technology Funding Secured Investors II ("TFSI"); (iv) shares of the
Company's Common Stock issuable upon the exercise of common stock options and
common stock purchase warrants issued by MSI to and held by the former MSI
optionholders and MSI warrantholders assumed by the Company in connection with
the Merger; and (v) any shares of the Company's Common Stock issued in respect
of the Registrable Securities pursuant to any stock split, stock dividend,
recapitalization or similar event.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company
in compliance with Sections 2.5, 2.6 and 2.8 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, reasonable
fees and disbursements of one counsel for all of the selling Holders for a "due
diligence" examination of the Company, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company).
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of one counsel for all Holders (other than the fees and
disbursements of counsel included in Registration Expenses).
"Holder" shall mean (i) any holder holding or having the right to
acquire Registrable Securities which have not been sold to the public; or (ii)
any other person holding or having the right to acquire Registrable Securities
to whom these registration rights have been transferred pursuant to Section 2.14
of this Agreement.
"Initiating Holders" shall mean any holders or their assignees under
Section 2.14 hereof who in the aggregate are holders of 50% or more of the
shares of Common Stock held by all Holders.
2.3 Restrictive Legend. Other than shares of Common Stock issued or
issuable in connection with the Merger which shares shall be legended in
accordance with the provisions of the Merger Agreement, each appropriate
certificate representing (i) the shares of Common Stock or (ii) any other
securities issued in
11.
<PAGE> 15
respect of the shares of Common Stock upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event shall (unless otherwise
permitted or unless the securities evidenced by such certificate shall have been
registered under the Securities Act) be stamped or otherwise imprinted with a
legend in substantially the following form (in addition to any legend required
under applicable state securities laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THE SECURITIES UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES
LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
Upon request of a holder of such a certificate, the Company shall
remove the foregoing legend from the certificate or issue to such holder a new
certificate therefor free of any transfer legend if, (A) with such request the
Company shall have received either the opinion referred to in Section 2.4(i) or
the "no-action" letter referred to in Section 2.4(ii) to the effect that any
transfer by such holder of the securities evidenced by such certificate will not
violate the Securities Act and applicable state securities laws or (B) in
accordance with Rule 144(k), such holder is not, and has not during the last
three months been, an affiliate of the Company and such holder has held the
securities represented by such certificate for a period of at least three years
and such holder is eligible to use Rule 144(k). In the event a holder falls
within clause (A) or (B) above, the Company will use its best efforts to assist
such holder in obtaining removal of the legend set forth above.
2.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities agrees by acceptance thereof to comply in all
respects with the provisions of this Section 2.4. Prior to any proposed transfer
of any Restricted Securities (other than under circumstances described in
Sections 2.5, 2.6 and 2.8 hereof), the holder thereof shall give written notice
to the Company of such holder's intention to effect such transfer. Each such
notice shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied (except in transactions in
compliance with Rule 144) by either (i) a written opinion of legal counsel who
shall be reasonably satisfactory to the Company, addressed to the Company and
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that the proposed transfer of the Restricted Securities may be effected
without registration
12.
<PAGE> 16
under the Securities Act, or (ii) a "no action" letter from the Commission to
the effect that the distribution of such securities without registration will
not result in a recommendation by the staff of the Commission that action be
taken with respect thereto, whereupon the holder of such Restricted Securities
shall be entitled to transfer such Restricted Securities in accordance with the
terms of the notice delivered by the holder to the Company. Each certificate
evidencing the Restricted Securities transferred as provided above shall bear
the appropriate restrictive legend set forth in Section 2.3 above, except that
such certificate shall not bear such restrictive legend if the opinion of
counsel or "no-action" letter referred to above is to the further effect that
such legend is not required in order to establish compliance with any provisions
of the Securities Act.
2.5 Requested Registration.
(a) Request for Registration. If the Company shall receive
from Initiating Holders at any time a written request that the Company effect
any registration with respect to all or a part of the Registrable Securities the
aggregate proceeds of which are expected to exceed $7,500,000 in the aggregate,
the Company will:
(i) promptly give written notice of the proposed registration
to all other Holders; and
(ii) as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, the execution
of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws
and appropriate compliance with applicable regulations issued under the
Securities Act) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request
given within thirty days after such written notice from the Company is
effective; provided that the Company shall not be obligated to effect,
or to take any action to effect, any such registration pursuant to this
Section 2.5:
(A) In any particular jurisdiction in which the
Company would be required to execute a general consent to
service of process in effecting such registration,
qualification or compliance, unless the Company is already
subject to service in such jurisdiction;
13.
<PAGE> 17
(B) After the Company has effected two such registrations
pursuant to this Section 2.5(a) and such registrations have been
declared or ordered effective and the sales of such Registrable
Securities shall have closed; or
(C) Within 120 days of a registration pursuant to Section 2.6
hereof.
Subject to the foregoing clauses (A), (B) and (C), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable, after receipt of the request or
requests of the Initiating Holders; provided, however, that if (i) in the
reasonable judgment of both counsel to the Company and the Board of Directors of
the Company, such registration or qualification would be inappropriate at such
time because of certain material information which would be required to be
disclosed in such a registration statement by reason of the Federal securities
laws, and (ii) the Company shall furnish to such Holders a certificate signed by
the President of the Company stating that in the good faith judgment of both
counsel to the Company and the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed in the near future containing the disclosure of material
information required to be included therein by reason of Federal securities laws
and that it is therefore essential to defer the filing of such registration
statement, then the Company shall have the right to defer such filing for the
period during which such disclosure would be seriously detrimental, provided
that the Company may not defer the filing for a period of more than 120 days
after receipt of the request of the Initiating Holders, and, provided further,
that the Company shall not defer its obligation in this manner more than once in
any twelve-month period.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Section 2.5(b) below,
include other securities of the Company which are held by the then current
officers or directors of the Company or which are held by persons who, by virtue
of agreements with the Company, are entitled to include their securities in any
such registration to the extent such persons do not hold Registrable Securities
(the "Other Investors"), and may include securities of the Company being sold
for the account of the Company.
(b) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by
14.
<PAGE> 18
means of an underwriting, they shall so advise the Company as a part of their
request made pursuant to Section 2.5 and the Company shall include such
information in the written notice referred to in Section 2.5(a) (i) above. The
right of any Holder to registration pursuant to Section 2.5 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 with
respect to such participation and inclusion) to the extent provided herein. A
Holder may elect to include in such underwriting all or a part of the
Registrable Securities he holds.
If the Company shall request inclusion in any registration pursuant to
Section 2.5 of securities being sold for its own account, or if officers or
directors of the Company holding other securities of the Company or Other
Investors shall request inclusion in any registration pursuant to Section 2.5,
the Initiating Holders shall, on behalf of all Holders, offer to include the
securities of the Company and such officers, directors and Other Investors in
the underwriting and may condition such offer on their acceptance of the further
applicable provisions of this Section 2. The Company shall (together with all
Holders, officers, directors and Other Investors proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders, which underwriter(s) are reasonably acceptable to the Company.
Notwithstanding any other provision of this Section 2.5, if the representative
of the underwriters advises the Initiating Holders in writing that marketing
factors require a limitation on the number of shares to be underwritten which
may include the underwriters' position that none of such securityholders' shares
may be sold in such underwritten offering, the securities of the Company being
sold for its own account and the securities of the Company (other than
Registrable Securities) held by officers or directors of the Company shall be
excluded from such registration to the extent so required by such limitation
(which may be all of such securityholders' shares) and if a limitation of the
number of shares is still required, the number of shares (a) that may be
included in the registration and underwriting shall be allocated among all
Holders and Other Investors in proportion, as nearly practicable, to the
respective amounts of Registrable Securities and other securities which they
held at the time of filing the registration statement or (b) in the
underwriters' discretion, may be eliminated in their entirety. In the event that
that number of shares of Registrable Securities of any Initiating Holder
included in any registration is reduced below 90% of the
15.
<PAGE> 19
shares requested to be included in such registration as a result of the
allocations pursuant to this Section 2.5(b) or is reduced to zero, then such
registration shall not be deemed a registration for purposes of Section
2.5(a)(ii)(B). If the Company or any Holder of Registrable Securities, officer,
director or Other Investor who has requested inclusion in such registration as
provided above disapproves of the terms of any such underwriting, such person
shall withdraw therefrom by written notice to the Company, the underwriter and
the Initiating Holders. The securities so withdrawn shall also be withdrawn from
registration. Any Registrable Securities or other securities excluded shall also
be withdrawn from such registration.
2.6 Company Registration.
(a) If the Company shall determine to register any of its
securities either for its own account or the account of a securityholder or
holders exercising their respective demand registration rights, other than a
registration relating solely to employee benefit plans, or a registration
relating solely to a Commission Rule 145 transaction, or a registration on any
registration form which does not permit secondary sales, the Company will:
(i) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends
to attempt to qualify such securities under the applicable blue sky or
other state securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), except as set
forth in Section 2.6(b) below, and in any underwriting involved
therein, all the Registrable Securities specified in a written request
or requests made by any Holder within thirty days after the written
notice from the Company described in clause (i) above is effective.
Such written request may specify all or a part of a Holder's
Registrable Securities.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 2.6(a)(i). In such event the right of any Holder to
registration pursuant to Section 2.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their
16.
<PAGE> 20
securities through such underwriting shall (together with the Company and the
Other Investors distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company, which underwriter(s) are
reasonably acceptable to a majority in interest of the participating Holders of
Registrable Securities. Notwithstanding any other provision of this Section 2.6,
if the representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten which may include the position of the underwriters that none of
such securityholders' shares may be sold in such underwritten offering, the
representative may (subject to the allocation priority set forth below) limit or
eliminate in its entirety, in the underwriters' sole discretion, as the case may
be, the number of Registrable Securities to be included in the registration and
underwriting. The Company shall so advise all holders of securities requesting
registration, and the number of shares of securities that are entitled to be
included in the registration and underwriting, if any, shall be allocated first
to the Company for securities being sold for its own account and thereafter in
the following manner: the securities of the Company held by officers and
directors of the Company (other than Registrable Securities) shall be excluded
from such registration and underwriting to the extent required by such
limitation, and, if a limitation on the number of shares is still required, then
the number of shares that may be included in the registration and underwriting
shall be allocated among all such Holders and Other Investors in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities and
other securities which they held at the time of filing the registration
statement. If any Holder of Registrable Securities or any officer, director or
Other Investor disapproves of the terms of any such underwriting, he shall
withdraw therefrom by written notice to the Company and the underwriter. Any
Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
2.7 Expenses of Registration. Except as provided in Section 2.8, all
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Section 2 shall be borne by the
Company, and all Selling Expenses shall be borne by the holders of the
securities so registered pro rata on the basis of the number of their shares so
registered; provided, however, that the Company shall not be required to pay any
Registration Expenses if, as a result of the withdrawal of a request for
registration by Initiating Holders (unless such withdrawal is due to the
misconduct of the Company or due to an unforeseen material adverse change in the
assets,
17.
<PAGE> 21
business, condition or prospects of the Company occurring prior to the
effectiveness of the registration statement, in which case the Company will
continue to bear such expenses), the registration statement does not become
effective, in which case the Holders and Other Investors requesting registration
shall bear such Registration Expenses pro rata on the basis of the number of
their shares so included in the registration, provided that such registration
shall not be counted as a registration pursuant to Section 2.5(a) (ii) (B).
2.8 Registration on Form S-2 or Form S-3. The Company shall use its
best efforts to qualify for registration on Form S- 2 and Form S-3 or any
comparable or successor form or forms; and to that end the Company shall
register (whether or not required by law to do so) the Common Stock under the
Exchange Act in accordance with the provisions of the Exchange Act following the
effective date of the first registration of any securities of the Company on
Form S-1 or Form S-18 or any comparable or successor form or forms. After the
Company has qualified for the use of either Form S-2 or Form S-3 or both, in
addition to the rights contained in the foregoing provisions of this Section 2,
the Holders of Registrable Securities shall have the right to request unlimited
registrations on Form S-2 or Form S-3 (such requests shall be in writing and
shall state the number of shares of Registrable Securities to be disposed of and
the intended methods of disposition of such shares by such Holder or Holders);
provided, however, that (i) in the event that the Company is qualified for the
use of Form S-2 but is not qualified for the use of Form S-3, the Company shall
not be obligated to effect, or to take any action to effect, any such
registration on Form S-2 after the Company has effected four such registrations
pursuant to this Section 2.8 and such registrations have been declared or
ordered effective and the sales of such Registrable Securities shall have
closed, (ii) if the Company is qualified to use Form S-3 it shall not be
obligated to effect any registration on Form S-2, (iii) all Registration
Expenses and Selling Expenses in connection with such four registrations on Form
S-2 shall be borne pro rata by the Holder or Holders participating in the
registration and the Company on the basis of the number of their securities so
registered, (iv) in the case of any registration on Form S-3, all Registration
Expenses incurred thereby shall be borne by the Company and all Selling Expenses
incurred thereby shall be borne pro rata by the holders of the securities so
registered. Notwithstanding the above, the Company shall not be obligated to
effect any registration under this Section 2.8(i) 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) on Form S-3 at an aggregate price to the public of less than
18.
<PAGE> 22
$500,000, (ii) in the event that the Company shall furnish the certification
described in paragraph 2.5(a) (ii) (but subject to the limitations set forth
therein), or (iii) in a given six-month period after the Company has effected
one such registration in any such period.
2.9 Registration Procedures. In the case of each registration
effected by the Company pursuant to Section 2, the Company will keep each Holder
advised in writing as to the initiation of each registration and as to the
completion thereof. At its expense, the Company will:
(a) keep such registration effective for a period of 120 days
or until the Holder or Holders have completed the distribution described in the
registration statement relating thereto, whichever first occurs; provided,
however, that (i) such 120-day period shall be extended for a period of time
equal to the period the Holder refrains from selling any securities included in
such registration at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the Securities Act, permits an offering on a continuous or delayed basis,
and provided further that applicable rules under the Securities Act governing
the obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (I) includes any prospectus required by Section
10(a) (3) of the Securities Act or (II) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (I) and (II) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act in the registration statement;
(b) prepare and file with the Commission 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 Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
a Holder from time to time may reasonably request;
19.
<PAGE> 23
(d) notify each seller of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities 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
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(e) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;
(f) provide a transfer agent and registrar for all Registrable
Securities and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration;
(g) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney or accountant retained by any such
seller or underwriter, all financial records and other pertinent corporate
documents and properties of the Company, and cause the Company's officers and
directors to supply all information reasonably requested by any such seller,
underwriter, attorney or accountant in connection with such registration
statement; provided, however, that such seller, underwriter, attorney or
accountant shall agree to hold in confidence and trust all information so
provided;
(h) furnish to each selling Holder, to the extent feasible, a
signed counterpart, addressed to the selling Holder, of
(i) an opinion of counsel for the Company, dated the effective
date of the registration statement, and
(ii) comfort letters signed by the Company's independent
public accountants who have examined and reported on the Company's
financial statements included in
20.
<PAGE> 24
the registration statement, to the extent permitted by the standards of
the American Institute of Certified Public Accountants or other
relevant authorities,
in each case covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and (in the case of
the accountants' comfort letters) with respect to events subsequent to the date
of the financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities;
(i) furnish to each selling Holder a copy of all documents
filed with and all correspondence from or to the Commission in connection with
any such offering other than non-substantive cover letters and the like;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act; and
(k) in connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 2.5 hereof, the Company will
enter into any underwriting agreement reasonably necessary to effect the offer
and sale of Common Stock, provided such underwriting agreement contains
customary underwriting provisions and provided further that if the underwriter
so requests the underwriting agreement will contain customary contribution
provisions.
2.10 Indemnification.
(a) The Company will indemnify each Holder, each of its
officers, directors and partners, and each person controlling such Holder, with
respect to which registration, qualification or compliance has been effected
pursuant to this Section 2, and each underwriter, if any, and each person who
controls any underwriter, against all claims, losses, damages and liabilities
(or actions, proceedings or settlements in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission
21.
<PAGE> 25
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and will reimburse each such Holder, each of its officers, directors
and partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
such Holder or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by him
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act and the rules and
regulations thereunder, each other such Holder and Other Investor and each of
their officers, directors and partners, and each person controlling such Holder
or Other Investor, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any 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
the Company and such Holders, Other Investors, directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information about such Holder as a Stockholder furnished
to the Company by such Holder or Other Investor for the purpose of inclusion in
such document; provided, however, that the obligations of such Holder hereunder
shall not apply to amounts
22.
<PAGE> 26
paid in settlement of any such claims, losses, damages or liabilities (or
actions in respect thereof) if such settlement is effected without the consent
of such Holder or Other Investor (which consent shall not be unreasonably
withheld); provided further, that the obligations of such Holders and Other
Investors hereunder shall be limited to an amount equal to the proceeds to each
such Holder or Other Investor of securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section
2.10 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
2.10, to the extent such failure is not prejudicial. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
2.11 Information by Holder. Each Holder of Registrable
Securities shall furnish to the Company such information regarding such holder
and the distribution proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Section 2.
2.12 Limitations on Registration of Issues of Securities. From
and after the date of this Agreement, the Company shall not, without the prior
written consent of the holders representing a majority in interest of the
Registrable Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company giving such holder
23.
<PAGE> 27
or prospective holder any registration rights the terms of which are materially
more favorable than the registration rights granted to Holders of Registrable
Securities hereunder.
2.13 Rule 144 Reporting. Subject to the requirements of Rule
145, with a view to making available the benefits of certain rules and
regulations of the commission which may permit the sale of the Restricted
Securities to the public without registration, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
from and after ninety days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject to
such reporting requirements;
(c) so long as any holder owns any Restricted Securities,
furnish to the holder forthwith upon written request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any
time from and after ninety days following the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public) and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed as a holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing a holder to sell any such
securities without registration.
2.14 Transfer or Assignment of Registration Rights. Subject to
the terms of the Merger Agreement, the rights to cause the Company to register
securities granted to a Holder by the Company under Sections 2.5, 2.6 and 2.8
may be transferred or assigned by a Holder to a transferee or assignee of not
fewer than 50,000 shares of Restricted Securities (as presently constituted and
subject to subsequent adjustments for stock splits, stock dividends, reverse
stock splits and the like), provided that the Company is given written notice at
the time of or within a reasonable time after such transfer or assignment,
stating the name and address of such transferee or assignee and identifying the
securities with respect to which such registration rights are being transferred
or assigned, and provided
24.
<PAGE> 28
further that the transferee or assignee of such rights assumes the obligations
of such holder under this Section 2.
2.15 "Market Stand-Off" Agreement. If requested by the Company
and an underwriter of Common Stock (or other securities) of the Company, a
Holder shall not sell or otherwise transfer or dispose of any Common Stock (or
other securities of the Company held by such holder (other than those included
in the registration) during the seven-day period prior to and the 180-day period
following the effective date of a registration statement of the Company filed
under the Securities Act, provided that:
(a) such agreement only applies to the first such registration
statement of the Company, including securities to be sold on its behalf to the
public in an underwritten offering; and
(b) all Holders, Other Investors and officers and directors of
the Company enter into similar agreements; provided, however, that the failure
of any Other Investor, officer, director or Holder each holding less than 1% of
the existing shares of Common Stock (on a fully diluted basis) to enter into a
similar agreement shall not relieve any Holder from its obligation to enter into
such agreement.
Such agreement shall be in writing in a form satisfactory to
the Company and such underwriter. The Company may impose stop transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of such 180-day period.
SECTION 3
MISCELLANEOUS
3.1 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Delaware, as if entered into by and between
Delaware residents exclusively for performance entirely within Delaware.
3.2 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto; provided, however, the Company may not assign its rights
hereunder.
3.3 Entire Agreement; Amendment; Waiver. This Agreement
(including the exhibits hereto) constitutes the full and entire understanding
and agreement between the parties with
25.
<PAGE> 29
regard to the subjects hereof and thereof. Neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated except by a written
instrument signed by the Company and the holders of at least 60% in the
aggregate of the Registrable Securities then held by Holders.
3.4 Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
first-class mail, postage prepaid, or delivered either by hand or by messenger,
addressed (a) if to any Investors, as indicated on the list of Investors
attached hereto as Exhibits A and B, or at such other address as such Investor
or permitted assignee shall have furnished to the Company in writing, or (b) if
to the Company, to Chief Executive Officer and President, Polygen Corporation,
200 Fifth Avenue, Waltham, MA 02154, or at such other address as the Company
shall have furnished to each holder in writing. All such notices and other
written communications shall be effective (i) if mailed, five days after mailing
and (ii) if delivered, upon delivery.
3.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any holder upon any breach or default of the
Company under this Agreement shall impair any such right, power or remedy of
such holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any holder of any breach or default under this Agreement or any
waiver on the part of any holder of any provision or condition of this Agreement
must be made in writing and shall be effective only to the extent specifically
set forth in such writing. All remedies, either under this Agreement or by law
or otherwise afforded to any holder, shall be cumulative and not alternative.
3.6 Rights; Separability. Unless otherwise expressly provided
herein, a holder's rights hereunder are several rights, not rights jointly held
with any of the other holders. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
3.7 Information Confidential. Each holder acknowledges that
the information received by it pursuant hereto may be confidential and for its
use only, and it will not use such confidential information in violation of the
Exchange Act or
26.
<PAGE> 30
reproduce, disclose or disseminate such information to any other person (other
than its employees or agents having a need to know the contents of such
information, and its attorneys), except in connection with the exercise of
rights under this Agreement, unless the Company has made such information
available to the public generally or such holder is required to disclose such
information by a governmental body.
3.8 Title and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and shall
not affect in any way the meaning or interpretation of this Agreement.
3.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
3.10 TFSI and SVB Warrants. Each of TFSI and SVB understands
and agrees that there will not be price dilution protection in respect to their
respective warrants in the Company's and MSI's respective certificate of
incorporation or in the warrants held by TFSI and SVB. TFSI understands and
agrees that by executing this Agreement, TFSI waives its rights to participate
in and receive any adjustments in the Warrant exercise price or number of shares
of Common Stock issuable upon exercise of the Warrants pursuant to the
securities issued and issuable in connection with the Merger and pursuant to any
future Dilution Sale (as such term is defined in the common stock purchase
Warrant (together with Exhibit A thereto) issued to TFSI on October 16, 1990).
3.11 Termination of Prior Agreements. Effective immediately
prior to the Closing (as that term is defined in the Merger Agreement), the
following agreements are hereby superseded in their entirety by the terms hereof
and shall be of no further force and effect: (i) the Polygen Investors
Agreement; (ii) the Polygen Series D Agreement; (iii) the Polygen Registration
Rights Agreement and Warrant; (iv) the Polygen Letter Agreement; (v) the Polygen
Voting Agreement; (vi) the Polygen Stockholders Agreement; (vii) the First MSI
Series A Agreement; (viii) the MSI Registration Agreement; (ix) the MSI
Shareholders Agreement; (x) the Second MSI Series A Agreement; (xi) the Third
MSI Series A Agreement; (xii) the MSI Amendment Agreement; (xiii) the MSI Letter
Agreements; (xiv) the SVB Warrant Agreement; and (xv) the Holdback Agreements.
27.
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above written.
POLYGEN CORPORATION
By /s/ Jeffrey Arnold
------------------------------------
Name: Jeffrey Arnold
Title: President
INVESTOR
ABS Ventures II Limited Partnership
----------------------------------------
(Print or Type Name)
By /s/ Bruns Grayson
------------------------------------
Name: Bruns Grayson
Title: Managing Partner
INVESTOR
ALIAS
----------------------------------------
(Print or Type Name)
By /s/ [signature illegible]
------------------------------------
Name:
Title:
INVESTOR
MARIE L. ARY
----------------------------------------
(Print or Type Name)
By /s/ Marie L. Ary
------------------------------------
Name: MARIE L. ARY
Title: TECHNICAL SUPPORT, MSI
INVESTOR
NICK AUSTIN
----------------------------------------
(Print or Type Name)
By /s/ Nick Austin
------------------------------------
Name:
Title:
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above written.
POLYGEN CORPORATION
By ------------------------------------
Name: Jeffrey Arnold
Title: President
INVESTOR
Banc Boston Ventures Inc.
----------------------------------------
(Print or Type Name)
By /s/ Marcia T. Bates
------------------------------------
Name: Marcia T. Bates
Title: Vice President
INVESTOR
PATRICK M. BENNETT
----------------------------------------
(Print or Type Name)
By /s/ P. M. Bennett
------------------------------------
Name:
Title:
INVESTOR
NADINE BROWN
----------------------------------------
(Print or Type Name)
By /s/ Nadine Brown 10/28/91
------------------------------------
Name: Nadine Brown
Title: Marketing Administrator
INVESTOR
Brown Technology Associates
Limited Partnership
----------------------------------------
(Print or Type Name)
By /s/ Donald B. Hebb, Jr.
------------------------------------
Name: Donald B. Hebb, Jr.
Title: General Partner
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above written.
POLYGEN CORPORATION
By: ___________________________________
Name: Jeffrey Arnold
Title: President
INVESTOR
A. BARR DOLAN
----------------------------------------
(Print or Type Name)
By /s/ A. BARR DOLAN
------------------------------------
Name: A. BARR DOLAN
Title: General Partner
INVESTOR
CH Partners IV
----------------------------------------
(Print or Type Name)
By /s/ Thomas Cable
------------------------------------
Name:
Title:
INVESTOR
Collier Enterprises
----------------------------------------
(Print or Type Name)
By /s/ [signature illegible]
------------------------------------
Name:
Title:
INVESTOR
Kirsten L. Coulter
----------------------------------------
(Print or Type Name)
By /s/ Kirsten L. Coulter
------------------------------------
Name:
Title:
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above written.
POLYGEN CORPORATION
By: ___________________________________
Name: Jeffrey Arnold
Title: President
INVESTOR
P. COULTER
----------------------------------------
(Print or Type Name)
By /s/ P. Coulter
------------------------------------
Name:
Title:
INVESTOR
CRUTTENDEN & CO.
----------------------------------------
(Print or Type Name)
By /s/ Walter Cruttenden
------------------------------------
Name:
Title:
INVESTOR
Draper Associates/ California Partners
----------------------------------------
(Print or Type Name)
By /s/ Timothy C. Draper
------------------------------------
Name: Timothy C. Draper
Title: General Partner
INVESTOR
EGC II LIMITED PARTNERSHIP
CHARLES A. REID
----------------------------------------
(Print or Type Name)
By /s/ Charles A. Reid
------------------------------------
Name: CHARLES A. REID
Title: EGC II LIMITED PARTNERSHIP
BY GENERAL PARTNER BALTIMORE
STREET CAPITAL III BY
GENERAL PARTNER CHARLES A.
REID
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above
written.
POLYGEN CORPORATION
By
------------------------------------
Name: Jeffrey Arnold
Title: President
INVESTOR
Peter H. Engel
----------------------------------------
(Print or Type Name)
By /s/ Peter H. Engel
------------------------------------
Name: Peter H. Engel
Title:
INVESTOR
ANDREW J. FERRARA
----------------------------------------
(Print or Type Name)
By /s/ Andrew J. Ferrara
------------------------------------
Name: Andrew J. Ferrara
Title:
INVESTOR
JOHN H. FRIEDMAN
----------------------------------------
(Print or Type Name)
By /s/ John H. Friedman
------------------------------------
Name:
Title:
INVESTOR
[illegible]
----------------------------------------
(Print or Type Name)
By /s/ [signature illegible]
------------------------------------
Name:
Title:
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above
written.
POLYGEN CORPORATION
By
----------------------------
Name: Jeffrey Arnold
Title: President
INVESTOR
GEOCAPITAL II
--------------------------------
(Print or Type Name)
By /s/ [signature illegible]
----------------------------
Name: [illegible]
Title: General Partner
INVESTOR
GC&H INVESTMENTS
--------------------------------
(Print or Type Name)
By /s/ James C. Kitch
-----------------------------
Name: James C. Kitch
Title: Executive Partner
INVESTOR
GEOCAPITAL VENTURES
--------------------------------
(Print or Type Name)
By /s/ [signature illegible]
-----------------------------
Name:
Title: General Partner
INVESTOR
YVONNE AMELIA GODDARD WILLIAM A GODDARD
-------------------------- ----------------------------
(Print or Type Name) (Print or Type Name)
/s/ Yvonne Amelia Goddard /s/ William A. Goddard
------------------------- ----------------------------
Name: Name: William A. Goddard
Title: Title:
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above
written.
POLYGEN CORPORATION
By
------------------------------------
Name: Jeffrey Arnold
Title: President
INVESTOR
SIMON HANNA
----------------------------------------
(Print or Type Name)
By /s/ S. Hanna
------------------------------------
Name: Simon Hanna
Title: Dr.
INVESTOR
JAMES J. HARRISON
----------------------------------------
(Print or Type Name)
By /s/ James J. Harrison
------------------------------------
Name:
Title:
INVESTOR
INNOVEN III CORP
----------------------------------------
(Print or Type Name)
By /s/ Raun J. Rasmussen
------------------------------------
Name: Raun J. Rasmussen
Title: Vice President
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above
written.
POLYGEN CORPORATION
By
------------------------------------
Name: Jeffrey Arnold
Title: President
INVESTOR
INNOVEN IV CORP
----------------------------------------
(Print or Type Name)
By /s/ Raun J. Rasmussen
------------------------------------
Name: Raun J. Rasmussen
Title: President
INVESTOR
INTERNATIONAL BUSINESS
MACHINES CORPORATION
----------------------------------------
(Print or Type Name)
By /s/ Micheal W. Szeto
------------------------------------
Name: Micheal W. Szeto
Title: Vice President of Business
Development, IBM U.S.
INVESTOR
KME VENTURE CAPITAL L.P.
By: Sajat Ltd., General Partner
----------------------------------------
(Print or Type Name)
By /s/ Osama I. Al-Saleh
------------------------------------
Name: Osama I. Al-Saleh
Title: Attorney-In-Fact
INVESTOR
RALPH KORPMAN
----------------------------------------
(Print or Type Name)
By /s/ Ralph Korpman
------------------------------------
Name:
Title:
<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above
written.
POLYGEN CORPORATION
By
------------------------------------
Name: Jeffrey Arnold
Title: President
INVESTOR
LAR PARTNERS
----------------------------------------
(Print or Type Name)
By /s/ Raun J. Rasmussen
------------------------------------
Name: Raun J. Rasmussen
Title: Managing Partner
INVESTOR
Irwin Lieber
----------------------------------------
(Print or Type Name)
By /s/ Irwin Lieber
------------------------------------
Name:
Title:
INVESTOR
/s/ R. Lovell
----------------------------------------
(Print or Type Name)
By /s/ R. Lovell
------------------------------------
Name: R. Lovell
Title:
INVESTOR
LYNXVALE LTD
----------------------------------------
(Print or Type Name)
By /s/ E.R. Howells
------------------------------------
Name: E.R. Howells
Title: Director
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above written.
POLYGEN CORPORATION
By
------------------------------------
Name: Jeffrey Arnold
Title: President
INVESTOR
The MacNeal-Schwendler Corporation
----------------------------------------
(Print or Type Name)
By /s/ Richard H. MacNeal
------------------------------------
Name: Richard H. MacNeal
Title: Chairman and CEO
INVESTOR
Stephen Mayo
----------------------------------------
(Print or Type Name)
By /s/ Stephen Mayo
------------------------------------
Name:
Title:
INVESTOR
MENLO VENTURES III
By Menlo Management Partners,
Its General Partner
----------------------------------------
(Print or Type Name)
By /s/ Thomas H. Bredt
------------------------------------
Name: Thomas H. Bredt
Title: General Partner
INVESTOR
Morgan Stanley Venture Capital Fund L.P.
By: Morgan Stanley Venture Partners L.P.
its General Partner
----------------------------------------
(Print or Type Name)
By: Morgan Stanley Venture Capital Inc.,
its Managing General Partner
By /s/ Guy de Chazal
------------------------------------
Name: Guy de Chazal
Title: President
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above written.
POLYGEN CORPORATION
By ________________________
Name: Jeffrey Arnold
Title: President
INVESTOR
EUGENE J. MOSCARET
----------------------------------------
(Print or Type Name)
By /s/ Eugene J. Moscaret
------------------------------------
Name:
Title:
INVESTOR
BARRY D. OLAFSON
----------------------------------------
(Print or Type Name)
By /s/ Barry Olafson
------------------------------------
Name:
Title: Vice President
INVESTOR
Porosan Group
----------------------------------------
(Print or Type Name)
By /s/ Peter H. Engel
------------------------------------
Name: Peter H. Engel
Title: President
INVESTOR
Michael Rivers
----------------------------------------
(Print or Type Name)
By /s/ Michael Rivers
------------------------------------
Name:
Title:
<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above written.
POLYGEN CORPORATION
By ________________________
Name: Jeffrey Arnold
Title: President
INVESTOR
Michael J. Savage
----------------------------------------
(Print or Type Name)
By /s/ Michael J. Savage
------------------------------------
Name:
Title: President & CEO
INVESTOR
SIF Limited Partnership
by Morgan Stanley Venture Capital Inc.,
its Advisor
----------------------------------------
(Print or Type Name)
By /s/ Guy de Chazal
------------------------------------
Name: Guy de Chazal
Title: Vice President
INVESTOR
Silicon Valley Bank
----------------------------------------
(Print or Type Name)
By /s/ Robert Kaufman
------------------------------------
Name: Robert Kaufman
Title: Corporate Banking Officer
INVESTOR
TECHNOLOGY FUNDING SECURED INVESTORS II,
a California limited partnership
By: TECHNOLOGY FUNDING INC.
Managing General Partner
By /s/ [signature illegible]
--------------------------------
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investor Rights Agreement effective as of the date first above written.
POLYGEN CORPORATION
By ________________________
Name: Jeffrey Arnold
Title: President
INVESTOR
TRANSITIONS TWO, LIMITED PARTNERSHIP
By: Technology Transitions Partners
A General Partner
By: Technology Transitions, Inc.
Its Managing General Partner
By: /s/ Thomas K. Sweeney
-----------------------------
THOMAS K. SWEENY
Vice President
INVESTOR
[Jeffrey M. W illegible]
----------------------------------------
(Print or Type Name)
By /s/ [Jeffrey M. W illegible]
------------------------------------
Name:
Title:
INVESTOR
ARIEH WARSHEL
----------------------------------------
(Print or Type Name)
By /s/ Arieh Warshel
------------------------------------
Name: Arieh Warshel
Title:
INVESTOR
----------------------------------------
(Print or Type Name)
By /s/ A. H. Windle
------------------------------------
Name: Alan H. Windle
Title: Dr.
<PAGE> 44
EXHIBIT A
LIST OF INVESTORS OF POLYGEN
Jeffrey M. Wales
4 Ridge Road
Marblehead, MA 01945
Andrew J. Ferrara
44 Dover Road
Wellesley, MA 02181
Patrick Alias
209 Caterina Heights
Concord, MA 01742
EGC Limited Partners
c/o Alex Brown & Sons
10 North Calvert Street
Suite 735
Baltimore, MD 21202
Technology Funding Secured Investors II
c/o Technology Funding, Inc.
2000 Alameda de las Pulgas, Suite 250
San Mateo, CA 94403
Attn: Robert Marshall
International Business Machines Corporation
c/o Director of Business Development
Applications Systems Division
472 Wheelers Farm Road
Milford, CN 06460
ABS Ventures II Limited Partnership
c/o Alex: Brown & Sons
10 North Calvert Street, Suite 735
Baltimore, MD 21202
Brown Technology Associates
Limited Partnership
c/o Alex. Brown & Sons
10 North Calvert Street, Suite 735
Baltimore, MD 21202
1.
<PAGE> 45
GeoCapital Ventures
655 Madison Avenue
New York, NY 10021
Attention: Stephen J. Clearman
Collier Enterprises
3003 Tami Ami Trail North
Naples, FL 33940
Attention: Miles Collier
California Partners
c/o Draper Associates
3803 E. Bayshore Road, Suite 125
Palo Alto, CA 94303
Attention: Timothy C. Draper
Menlo Ventures III
3000 Sand Hill Road
Building 4, Suite 100
Menlo Park, CA 94025
Attention: Thomas H. Bredt
GC&H Investments
One Maritime Plaza, 20th Floor
San Francisco, CA 94111
Irwin Lieber
c/o GEO Capital Ventures
655 Madison Avenue
New York, NY 10021
James Harrison
c/o GEO Capital Ventures
655 Madison Avenue
New York, NY 10021
John Friedman
c/o GEO Capital Ventures
655 Madison Avenue
New York, NY 10021
Ralph A. Korpman
c/o GEO Capital Ventures
655 Madison Avenue
New York, NY 10021
Stephen J. Clearman
2.
<PAGE> 46
c/o GEO Capital Ventures
655 Madison Avenue
New York, NY 10021
David M. Rein
D.M. Rein & Co.
100 Highway 70
Lakewood, NJ 08701
SIF Limited Partnership
c/o Morgan Stanley Venture
Capital, Inc.
1251 Avenue of the Americas
26th Floor
New York, NY 10020
Attn: Guy L. deChazal
Morgan Stanley Venture
Capital Fund L.P.
c/o Morgan Stanley Venture
Capital, Inc.
1251 Avenue of the Americas
26th Floor
New York, NY 10020
Attn: Guy L. deChazal
HANK & CO.
c/o Chancellor Capital Management, Inc.
153 East 53rd St., 22nd Floor
New York, NY 10043
Attention: Howard Goldstein
Boston Safe Deposit and Trust Co.
as Trustee for US WEST Master Trust
1 Boston Place
Boston, MA 02108
Attn: Securities Operations Department
Mellon Bank, N.A. Master
Trustee for Bell Atlantic
Master Pension Trust (as
directed: Citibank, N.A.)
c/o Citicorp
153 East 53rd St., 22nd Floor
New York, NY 10043
Attention: Howard Goldstein
3.
<PAGE> 47
Continental Illinois National
Bank & Trust as Custodian,
at the direction of Citibank,
N.A., Investment Manager for the
Policemen's Annuity and Benefit
Fund of Chicago
c/o Citicorp
153 East 53rd St:, 22nd Floor
New York, NY 10043
Attention: Howard Goldstein
Craig J. Foley
c/o Citicorp
153 East 53rd St., 22nd Floor
New York, NY 10043
Parag Saxena
c/o Chancellor Capital Management, Inc.
153 East 53rd St., 22nd Floor
New York, NY 10043
Marc Tesler
c/o Chancellor Capital Management, Inc:
153 East 53rd St., 22nd Floor
New York, NY 10043
BancBoston Ventures Inc:
100 Federal Street
Boston, MA 02110
Attn: Dianna H: Frazier
Charter Ventures
525 University Avenue
Suite 1500
Palo Alto, CA 94301
Attn: A. Barr Dolan
GeoCapital II
655 Madison Avenue
New York, NY 10021
Attn: Stephen J. Clearman
InnoVen III
Park 80 Plaza West-One
Saddle Brook, NJ 07662
Attn: Robert C. Oliver, Jr:
4.
<PAGE> 48
InnoVen IV
Park 80 Plaza West-One
Saddle Brook, NJ 07662
Attn: Robert C. Oliver, Jr.
LAR Partners
Park 80 Plaza West-One
Saddle Brook, NJ 07662
Attn: Robert C. Oliver, Jr.
KME Venture Capital Limited Partnership
367 Split Rock Road
Syosset, NY 11791
Attn: John Evans
Transitions Two, Limited Partnership
426 Colt Highway
Farmington, CT 06032
Attn: Thomas K. Sweeny
Landmark Ventures, Inc.
P.O. Box 188
920 Hopmeadow Street
Sinsury, CT 06070-018
Attn: Thomas K. Sweeney
5.
<PAGE> 49
EXHIBIT B
LIST OF INVESTORS OF MSI
MSI Stockholders
MacNeal Schwendler Corp.
815 Colorado Blvd.
Los Angeles, CA 90041
Attn: Dr. Joseph Gloudeman
Mr. Christopher V. Grell
2 Townsend Street #1-1102
San Francisco, CA 94107
Dr. Simon Hanna
9 Glenacre Close
Cherry Hinton
Cambridge, CB1 4DX ENGLAND
Dr. Patrick D. Coulter
19 Millington Road
Cambridge, CB1 4DX ENGLAND
Mr. Steven Langberg
12720 Burbank Blvd. #302
North Hollywood, CA 91607
CH Partners IV
Ranier Park Plaza
777-108th Ave. NE Suite 2300
Bellevue, WA 98004
Mr. Thomas J. Cable
Dr. Stephen L. Mayo
25394 LaLoma Drive
Los Altos Hills, CA 94022
Dr. Barry D. Olafson
11568 Raintree Spring Court
Cupertino, CA 95014
Dr. William A. Goddard III and Amelia Goddard
955 Avondale Road
San Marino, CA 91108
Dr. Kirsten L. Coulter
19 Millington Road
Cambridge, CB1 4DX ENGLAND
1.
<PAGE> 50
Mr. Patrick M. Bennett
106 Boxworth End
Cambridge, ENGLAND
Mr. Alan W. Windle
15 Storey's Way
Cambridge, ENGLAND
Mr. Paul Saxe
5031 Palermo Avenue
Oceanside, CA 92057
Porosan Group
c/o Mr. Peter H. Engel
10756 Rochester Ave.
Los Angeles, CA 90024
Lynxvale Limited
c/o Mr. Alan H. Windle
The Old Schools
Cambridge, ENGLAND
Mr. Craig F. Dawson
18863 California Street
Castro Valley, CA 94546
Ms. Nancy Green
2190 St. Francis Drive
Palo Alto, CA 94303
MSI Stock Option Holders
Mr. Peter H. Engel
c/o Porosan Group
10756 Rochester Ave.
Los Angeles, CA 90024
Mr. James H. Richardson
7102 Clarendon
San Jose, CA 95129
Mr. Fred C. Laccabue
10359 Heney Creek Place
Cupertino, CA 95014
2.
<PAGE> 51
Mr. Craig F. Dawson
18863 California Street
Castro Valley, CA 94546
Dr. Cun Feng Fan
475 Cumulus Avenue
Sunnyvale, CA 94087
Dr. William M. Alexander
1921 Brewster Avenue
Redwood City, CA 94062
Dr. Marie Ary
5754 Wish Avenue
Encino, CA 91316
Dr. Mark Benzel
1045 Cherry Avenue
San Jose, CA 95125
Dr. Mario Blanco
6398 Devonshire Drive
San Jose, CA 95125
Ms. Nadine Brown
902 West Remington
Sunnyvale, CA 94087
Ms. Edie Burge
11568 Raintree Spring Court
Cupertino, CA 95014
Mr. Kevin Cable
468 Upland Road
Redwood City, CA 94063
Dr. Tahir Cagin
305 San Antonio Street
Arcadia, CA 91006
Mr. Glen Churchfield
284 Windy Bush Drive
New Hope, PA 18938
Dr. James M. Coffin
1137 Westminister Drive
Naperville, IL 60563
3.
<PAGE> 52
Kimberley C. Connell
3665 Benton Street #107
Santa Clara, CA 95051
Dr. Sheryl Doran
455 Monoca Road
Portola Valley, CA 94028
Dr. Richard Emberson
2656 Kipling Street
Palo Alto, CA 94306
Dr. Robert D. Everson
13 Morningside Place
Wanague, NJ 07465
Mr. Steven J. Fulkerson
801 Apache Trail
Lake Villa, IL 60046
Mr. Conrad C. Gordon
70 Westline Drive
Daly City, CA 94015
Dr. Mathew Hahn
5062 Elmgrove Court
San Jose, CA 95130
Dr. Richard M. Hedges
1255 Regent Place
Livermore, CA 94550
Mrs. Teresa Hoppe
2527 Yerba Hills Court
San Jose, CA 95121
Dr. Shaw Ling Hsu
6 Campbell Court
Amherst, ME 01002
Mrs. Emma Hughie
37692 Goldenrod Drive
Newark, CA 94560
Mr. Hans-Rudolph Kottmann
Steffanstrasse 44
CH-4106 Therwil, Switzerland
Ms. Keli T. Lopes
4.
<PAGE> 53
1055 Oregon Avenue
Palo Alto, CA 94030
Mr. Eugene Moscaret
1125 Encanto Drive
Arcadia, CA 91007
Dr. Kim Moore
388 Bristol Drive
Carol Stream, IL 60188
Dr. Gerard Picouleau
480 Warren Drive
San Francisco, CA 94131
Mr. Michael D. Rivers
642 Pinrail Lane
Foster City, CA 94404
Dr. David Rogers
601 Minnesota #111
San Francisco, CA 94107
Mr. Michael J. Savage
492 Arboleda
Los Altos, CA 94024
Dr. Charles D. Shuey
1757 Vistillas Road
Altadena, CA 91001
Mrs. Carolynn Sherby
460 Old Oak Court
Los Altos, CA 94022
Mr. Sandeep Shroff
100 N. Whisman Road #161
Mountain View, CA 94043
Mr. John Vairo
1115 Polo Run Drive
Yardley, PA 19067
Dr. Weige Xue
P.O. Box 2001
Princeton, NJ 08543
Dr. Jeffrey Hare
Maison Shirogane 201
5.
<PAGE> 54
3-3-4 Shirogane, Minato-ku Tokyo 108 Japan
Dr. Paul Bartlett
247 Stanford Avenue
Kensington, CA 94708
Dr. Leroy Hood
1453 E. California Blvd.
Pasadena, CA 91106
Dr. Arieh Warshel
5032 Maytime Lane
Culver City, CA 90230
Nick E. Austin
204 Victoria Road
Cambridge, UNITED KINGDOM
Dr. Richard Lovell
19 Chestertown Towers
Cambridge CB4 IDZ
UNITED KINGDOM
Lynn Robbins
2306 Fox Run Drive
Plainsboro, NJ 08536
Gemma Rocchette
11266 Terra Vista Pkwy #124
Rancho Cucamonga, CA 91730
MSI Warrant Holders
Cruttenden & Company
18301 Von Karman, Suite 100
Irvine, CA 92715
Gregory E. Presson
c/o Cruttenden & Company
18301 Von Karman, Suite 100
Irvine, CA 92715
6.
<PAGE> 55
J.C. McRae
c/o Cruttenden & Company
18301 Von Karman, Suite 100
Irvine, CA 92715
Anthony Haas
c/o Cruttenden & Company
18301 Von Karman, Suite 100
Irvine, CA 92715
Silicon Valley Bank
75 Page Mill Road
Suite A-2200
Palo Alto, CA 94304
7.
<PAGE> 56
AMENDMENT TO AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amendment to Amended and Restated Investor Rights Agreement (the
"Amendment") is made pursuant to Paragraph 3.3 of the Amended and Restated
Investor Rights Agreement dated as of October 18, 1991 (the "Agreement") by and
among POLYGEN CORPORATION, a Delaware corporation (the "Company") and various
investors in the Company as listed on Exhibit A and B to the Agreement. All
terms capitalized herein shall have the meanings ascribed to them in the
Agreement. The undersigned securityholders hereby agree as of February 14, 1992
as follows:
RECITALS
WHEREAS, an October 18, 1991, certain of the securityholders listed
below (the "Securityholders") and the Company entered into the Agreement to
provide for certain registration, information and other rights set forth therein
for such Securityholders;
WHEREAS, Section 1.16 of the Agreement provides for an agreement for
the election of the Company's Board of Directors;
WHEREAS, recently the Board of Directors of the Company approved an
amendment to Section 1.16 of the Agreement to provide for an agreement with
respect to Board of Directors' representation;
WHEREAS, the Company and the undersigned Securityholders desire that
such Section 1.16 be amended as set forth herein;
WHEREAS, the Board of Directors also recently approved the sale of
certain shares of the Company's Common Stock to Teijin Limited pursuant to that
certain Common Stock Purchase Agreement dated on or about February 14, 1992 (the
"Purchase Agreement");
WHEREAS, in connection with the issuance and sale of such shares, the
Company, Teijin Limited and the undersigned Securityholders desire that Teijin
Limited be granted the rights
<PAGE> 57
as well as the obligations of a Securityholder as set forth in the Agreement;
WHEREAS, the Amendment to the Agreement requires the approval of the
Company and the Holders of at least 60% of the Registrable Securities.
NOW, THEREFORE, BE IT RESOLVED, for good and valuable consideration,
receipt of which is hereby acknowledged, the Company, Teijin Limited and the
undersigned Securityholders hereby agree that the Agreement shall be amended by
this Amendment as follows:
1. Section 1.16 of the Agreement shall be deleted in its entirety and
shall read as follows:
"1.16 Board of Directors. Each of the undersigned Investors
agrees until December 31, 1992 to vote its shares of capital stock in
favor of (a) each of the nine members of the Board of Directors of the
Company (as constituted immediately after the consummation of the
Merger, or any successor Director to any of such nine Directors, if
any, if such Director shall have been selected by the Board of
Directors to fill a vacancy on the Board of Directors after a
Director's death or resignation) and (b) the tenth member of the Board
of Directors elected by the Board of Directors to fill the newly
created vacancy as of January 22, 1992 (or any successor to such
Director, if such Director shall have been selected by the Board of
Directors to fill a vacancy on the Board after such Director's
resignation or death.)"
2. Upon the issuance of the shares of Common Stock of the Company to
Teijin Limited pursuant to the Purchase Agreement, Teijin Limited shall be
deemed to be a party to the Agreement as if an original signatory thereto and
shall be entitled to all of the rights and agrees to be bound by all of the
obligations of an "Investor," a "Holder," a "Holder of Registrable Securities"
and a "Holder of Restricted Securities," as each such term is defined in the
Agreement.
3. Notwithstanding the foregoing, Teijin Limited shall not be subject
in any way to the terms of the Merger Agreement and Section 2.1 of the Agreement
shall apply to Teijin Limited as if it read as follows:
2.
<PAGE> 58
2.1 Restrictions on Transferability. The shares of Common
Stock of the Company held by the Holders (as hereinafter defined) shall
not be transferable, except upon the conditions specified in this
Section 2, which conditions are intended to ensure compliance with the
provisions of the Securities Act, or, in the case of Section 2.15
hereof, to assist in an orderly distribution, as the case may be. Each
holder will cause any proposed transferee of Restricted Securities (as
hereinafter defined) held by that holder to agree to take and hold
those securities subject to the provisions and upon the conditions
specified in this Section 2.
4. The paragraph entitled "Registrable Securities" of Section 2.2 of
the Agreement shall be deleted in its entirety and shall read as follows:
""Registrable Securities" shall mean (i) shares of the
Company's Common Stock issued upon the automatic conversion of shares
of each of the Series A, Series B, Series C and Series D Preferred
Stock of the Company pursuant to an amendment to the Company's
Certificate of Incorporation concurrently with the consummation of the
Merger; (ii) shares of the Company's Common Stock issued to MSI common
stockholders pursuant to the Merger Agreement; (iii) shares of the
Company's Common Stock issuable upon the exercise of the Company's
Common Stock purchase warrants issued to Technology Funding Secured
Investors II ("TFSI"); (iv) shares of the Company's Common Stock issued
to Teijin Limited pursuant to the Purchase Agreement; (v) shares of the
Company's Common Stock issuable upon the exercise of common stock
options and common stock purchase warrants issued by MSI to and held by
the former MSI optionholders and MSI warrantholders assumed by the
Company in connection with the Merger; and (vi) any shares of the
Company's Common Stock issued in respect of the Common Stock set forth
in clauses (i) - (v) immediately above pursuant to any stock split,
stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Agreement shall remain in full force and effect.
6. This Amendment may be executed in any number of counterparts, each
of which may be executed by less that all of
3.
<PAGE> 59
the parties hereto and each of which shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
as of the date first above written.
` POLYGEN CORPORATION
By:/s/ Michael J. Savage
______________________________
Name: Michael J. Savage
_________________________
Title: President
________________________
SECURITYHOLDER
By:______________________________
Print Name: __________________
TEIJIN LIMITED
By:/s/ Hisao Kimura
______________________________
Name: Hisao Kimura
_________________________
Title: Managing Director
________________________
4.
<PAGE> 60
AMENDMENT TO AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amendment to Amended and Restated Investor Rights Agreement (the
"Amendment") is made pursuant to Paragraph 3.3 of the Amended and Restated
Investor Rights Agreement dated as of October 18, 1991 (the "Agreement") by and
among POLYGEN CORPORATION, a Delaware corporation (the "Company") and various
investors in the Company as listed on Exhibit A and B to the Agreement. All
terms capitalized herein shall have the meanings ascribed to them in the
Agreement. The undersigned securityholders hereby agree as of February 14, 1992
as follows:
RECITALS
WHEREAS, on October 18, 1991, certain of the securityholders listed
below (the "Securityholders") and the Company entered into the Agreement to
provide for certain registration, information and other rights set forth therein
for such Securityholders ;
WHEREAS, Section 1.16 of the Agreement provides for an agreement for
the election of the Company's Board of Directors;
WHEREAS, recently the Board of Directors of the Company approved an
amendment to Section 1.16 of the Agreement to provide for an agreement with
respect to Board of Directors' representation;
WHEREAS, the Company and the undersigned Securityholders desire that
such Section 1.16 be amended as set forth herein;
WHEREAS, the Board of Directors also recently approved the sale of
certain shares of the Company's Common Stock to Teijin Limited pursuant to that
certain Common Stock Purchase Agreement dated on or about February 14, 1992 (the
"Purchase Agreement");
WHEREAS, in connection with the issuance and sale of such shares, the
Company, Teijin Limited and the undersigned Securityholders desire that Teijin
Limited be granted the rights as well as the obligations of a Securityholder as
set forth in the Agreement;
WHEREAS, the Amendment to the Agreement requires the approval of the
Company and the Holders of at least 60% of the Registrable Securities.
<PAGE> 61
NOW, THEREFORE, BE IT RESOLVED, for good and valuable consideration,
receipt of which is hereby acknowledged, the company, Teijin Limited and the
undersigned Securityholders hereby agree that the Agreement shall be amended by
this Amendment as follows:
1. Section 1.16 of the Agreement shall be deleted in its entirety and
shall read as follows:
"1.16 Board of Directors. Each of the undersigned Investors
agrees until December 31, 1992 to vote its shares of capital stock in
favor of (a) each of the nine members of the Board of Directors of the
Company (as constituted immediately after the consummation of the
Merger, or any successor Director to any of such nine Directors, if
any, if such Director shall have been selected by the Board of
Directors to fill a vacancy on the Board of Directors after a
Director's death or resignation) and (b) the tenth member of the Board
of Directors elected by the Board of Directors to fill the newly
created vacancy as of January 22, 1992 (or any successor to such
Director, if such Director shall have been selected by the Board of
Directors to fill a vacancy on the Board after such Director's
resignation or death.)"
2. Upon the issuance of the shares of Common Stock of the Company to
Teijin Limited pursuant to the Purchase Agreement, Teijin Limited shall be
deemed to be a party to the Agreement as if an original signatory thereto and
shall be entitled to all of the rights and agrees to be bound by all of the
obligations of an "Investor," a "Holder," a "Holder of Registrable Securities"
and a "Holder of Restricted Securities," as each such term is defined in the
Agreement.
3. Notwithstanding the foregoing, Teijin Limited shall not be subject
in any way to the terms of the Merger Agreement and Section 2.1 of the Agreement
shall apply to Teijin Limited as if it read as follows:
2.1 Restrictions on Transferability. The shares of Common
Stock of the Company held by the Holders (as hereinafter defined) shall
not be transferable, except upon the conditions specified in this
Section 2, which conditions are intended to ensure compliance with the
provisions of the Securities Act, or, in the case of Section 2.15
hereof, to assist in an orderly distribution, as the case may be. Each
holder will cause any proposed transferee of Restricted Securities (as
hereinafter defined) held by that holder to agree to take and hold
those securities subject to the provisions and upon the conditions
specified in this Section 2.
2.
<PAGE> 62
4. The paragraph entitled "Registrable Securities" of Section 2.2 of
the Agreement shall be deleted in its entirety and shall read as follows:
""Registrable Securities" shall mean (i) shares of the
Company's Common Stock issued upon the automatic conversion of shares
of each of the Series A, Series B, Series C and Series D Preferred
Stock of the Company pursuant to an amendment to the Company's
Certificate of Incorporation concurrently with the consummation of the
Merger; (ii) shares of the Company's Common Stock issued to MSI common
stockholders pursuant to the Merger Agreement; (iii) shares of the
Company's Common Stock issuable upon the exercise of the Company's
Common Stock purchase warrants issued to Technology Funding Secured
Investors II ("TFSI") ; (iv) shares of the Company's Common Stock
issued to Teijin Limited pursuant to the Purchase Agreement; (v) shares
of the Company's Common Stock issuable upon the exercise of common
stock options and common stock purchase warrants issued by MSI to and
held by the former MSI optionholders and MSI warrantholders assumed by
the Company in connection with the Merger; and (vi) any shares of the
Company's Common Stock issued in respect of the Common Stock set forth
in clauses (i) - (v) immediately above pursuant to any stock split,
stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Agreement shall remain in full force and effect.
6. This Amendment may be executed in any number of counterparts, each
of which may be executed by less that all of the parties hereto and each of
which shall constitute one and the same instrument.
3.
<PAGE> 63
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
as of the date first above written.
POLYGEN CORPORATION
By: /s/ Michael Rivers
________________________________
Name: Michael D. Rivers
___________________________
Title:Director Asia/Pacific
__________________________
SECURITYHOLDER
By:/s/ [ILLEGIBLE]
________________________________
Print Name: [ILLEGIBLE]
_____________________
TEIJIN LIMITED
By:
Name:___________________________
Title:__________________________
SECURITYHOLDER
By:/s/ ANDREW J. FERR
________________________________
Print Name: ANDREW J. FERR
_____________________
TEIJIN LIMITED
By:
Name:___________________________
Title:__________________________
SECURITYHOLDER
By: /s/ RICHARD C. HACKNEY
________________________________
Print Name: EGC II LIMITED
________________________
PARTNERSHIP BY GENERAL PARTNER
BALTIMORE STREET CAPITAL III BY
GENERAL TEIJIN LIMITED PARTNER
RICHARD C. HACKNEY.
TEIJIN LIMITED
By:
Name:___________________________
Title:__________________________
SECURITYHOLDER
Technology Funding Secured
Investors II, LP:
By: Technology Funding Inc.,
Managing General Partner
By:/s/ [ILLEGIBLE]
________________________________
Print Name:
_____________________
TEIJIN LIMITED
By:________________________________
Name:___________________________
Title:__________________________
<PAGE> 64
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
as of the date first above written.
POLYGEN CORPORATION
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
/s/ M.W. Szeto
By: International Business Machines
________________________________________
Print Name: Corporation
M. W. Szeto
_____________________________
IBM Director of Business Development
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
ABS VENTURES II LIMITED PARTNERSHIP
By: /s/ Bruns Grayson
________________________________________
Print Name: Bruns Grayson
_____________________________
TEIJIN LIMITED
By:
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
Brown Technology Associates Limited
Partnership
By: /s/ Richard L. Franvo
________________________________________
Print Name: Richard L. Franvo, General
_____________________________
Partner
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
By:/s/ [ILLEGIBLE]
________________________________________
Print Name: Geocapital Ventures
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
<PAGE> 65
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
as of the date first above written.
POLYGEN CORPORATION
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
By: /s/ Timothy Draper
________________________________________
Print Name: Timothy Draper
_____________________________
For Draper Associates L.P.
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
MENLO VENTURES III
BY: Menlo Management Partners, its
General Partner
By: /s/ Thomas H. Bredt
________________________________________
Print Name: Thomas H. Bredt
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
GC & H INVESTMENTS
By: /s/ John L. Cardoza
________________________________________
Print Name: John L. Cardoza
_____________________________
Executive Partner
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title: _________________________________
SECURITYHOLDER
By: /s/ Irwin Lieber
________________________________________
Print Name: Irwin Lieber
_____________________________
TEIJIN LIMITED
BY:________________________________________
Name:___________________________________
Title:__________________________________
<PAGE> 66
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: ________________________
Name:___________________
Title: _________________
SECURITYHOLDER
By: /s/ James J. Harrison
________________________________________
Print Name: James J. Harrison
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
By: /s/ [ILLEGIBLE]
________________________________________
Print Name: [ILLEGIBLE]
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
By: /s/ [ILLEGIBLE]
________________________________________
Print Name: [ILLEGIBLE]
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
SIF Limited Partnership
c/o Morgan Stanley
Venture Capital, Inc.
By: /s/ Guy de Chazal
________________________________________
Print Name: Guy de Chazal
_____________________________
Vice President
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
<PAGE> 67
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: ________________________
Name:___________________
Title: _________________
SECURITYHOLDER:
Morgan Stanley Venture Capital Fund, Inc.
By: /s/ Guy de Chazal
________________________________________
Print Name: Guy de Chazal
_____________________________
President
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
Boston Safe Deposit and Trust Company
By: /s/ Mary Ann Bresnanan
________________________________________
Print Name: Mary Ann Bresnanan
_____________________________
TEIJIN LIMITED
By:
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
Banc Boston Ventures Inc.
By: /s/ Marcia T. Bates
________________________________________
Print Name:_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
[ILLEGIBLE]
By: /s/ [ILLEGIBLE]
________________________________________
Print Name: [ILLEGIBLE]
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
<PAGE> 68
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: ________________________
Name:___________________
Title: _________________
SECURITYHOLDER
By: /s/ Raun J. Rasmussen
________________________________________
Print Name: INNOVEN III CORP.
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
By: /s/ Raun J. Rasmussen
________________________________________
Print Name: INNOVEN III CORP.
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
LAR PARTNERS
By: /s/ Raun J. Rasmussen
________________________________________
Print Name: LAR PARTNERS
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
Transitions Two, Limited Partnership
By: /s/ THOMAS K. SWEENY
________________________________________
Print Name: THOMAS K. SWEENY
_____________________________
VICE PRESIDENT
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
<PAGE> 69
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: ________________________
Name:___________________
Title: _________________
SECURITYHOLDER
The MacNeal-Schwendler Corporation
By: /s/ Louis A. Greco
________________________________________
Print Name: Louis A. Greco for
_____________________________
Richard H.MacNeal
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
By: /s/ CHRIS GRELL
________________________________________
Print Name: CHRIS GRELL
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
By: /s/ SIMON HANNA
________________________________________
Print Name: SIMON HANNA
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
By: /s/ THOMAS J. CABLE
________________________________________
Print Name: THOMAS J. CABLE
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
<PAGE> 70
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: ________________________
Name:___________________
Title: _________________
SECURITYHOLDER
By: /s/ KEVIN CABLE
________________________________________
Print Name: KEVIN CABLE
_____________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
By: /s/ Barry Olafson
_____________________________________
Print Name: /s/ Barry Olafson
_________________________
TEIJIN LIMITED
By:_______________________________________
Name:__________________________________
Title:_________________________________
SECURITYHOLDER
By: /s/ William Goddard
[s] Yvonne Amelia Goddard
______________________________________
Print Name: William Goddard/
Yvonne Amelia Goddard
______________________________
TEIJIN LIMITED
By:________________________________________
Name:___________________________________
Title:__________________________________
SECURITYHOLDER
By: /s/ Fred C. Laccarve
______________________________________
Print Name: Fred C. Laccarve, Trustee
For the Laccarve Living Trust
U/A Dated 22 February 1991
______________________________________
TEIJIN LIMITED
By:_______________________________________
Name:__________________________________
Title:_________________________________
<PAGE> 71
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: ________________________
Name:___________________
Title: _________________
SECURITYHOLDER
By: /s/ Eugene J. Moscaret
__________________________
Print Name: E.J. Moscaret
__________________
TEIJIN LIMITED
By: __________________
Name: __________________
Title: _________________
SECURITYHOLDER
By: /s/ Craig F. Dawson
__________________________
Print Name: Craig F. Dawson
__________________
TEIJIN LIMITED
By: __________________
Name: __________________
Title: _________________
SECURITYHOLDER
By: /s/ Cun Feng Fan
__________________________
Print Name: Cun Feng Fan
__________________
TEIJIN LIMITED
By: __________________
Name: __________________
Title: _________________
SECURITYHOLDER
By: /s/ William M. Alvador
__________________________
Print Name: /s/ William M. Alvador
__________________
TEIJIN LIMITED
By: __________________
Name: __________________
Title: _________________
<PAGE> 72
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: ________________________
Name:___________________
Title: _________________
SECURITYHOLDER
By: /s/ Marie Ary
__________________________
Print Name: Marie Ary
__________________
TEIJIN LIMITED
By: __________________
Name: __________________
Title: _________________
SECURITYHOLDER
By: /s/ Mario Blanco
__________________________
Print Name: Mario Blanco
__________________
TEIJIN LIMITED
By: __________________
Name: __________________
Title: _________________
SECURITYHOLDER
By: /s/ Nadine Brown
__________________________
Print Name: Nadine Brown
__________________
TEIJIN LIMITED
By: __________________
Name: __________________
Title: _________________
SECURITYHOLDER
By: /s/ Glen Churchfield
__________________________
Print Name: Glen Churchfield
__________________
TEIJIN LIMITED
By: __________________
Name: __________________
Title: _________________
<PAGE> 73
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: ______________________________
Name:_________________________
Title: _______________________
SECURITYHOLDER
By: /s/ Kimberley C. Connell
_______________________________
Print Name: Kimberley C. Connell
_______________________
TEIJIN LIMITED
By: ____________________________
Name: ____________________________
Title: ___________________________
POLYGEN CORPORATION
By: /s/ [Illegible]
_____________________________
Name: /s/ [Illegible]
___________________________
Title: Systems Engineer
__________________________
SECURITYHOLDER
By:
______________________________
Print Name:
______________________
TEIJIN LIMITED
By: __________________
Name: __________________
Title: _________________
<PAGE> 74
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
as of the date first above written.
POLYGEN CORPORATION
By: ____________________________
Name:____________________________
Title:___________________________
SECURITYHOLDER
By: /s/ Shaw Ling Hsu
____________________________
Name: Shaw Ling Hsu
___________________________
TEIJIN LIMITED
By: ___________________________
Name: ___________________________
Title: __________________________
SECURITYHOLDER
By: /s/ H. R. Kottmann
______________________________
Print Name: H. R. Kottmann
______________________
TEIJIN LIMITED
By: ___________________________
Name: ___________________________
Title:___________________________
SECURITYHOLDER
By: /s/ Keli Lores
_____________________________
Print Name: Keli Lores
_____________________
TEIJIN LIMITED
By: _____________________________
Name: ___________________________
Title:___________________________
SECURITYHOLDER
By: /s/ Kim M. Moore
_____________________________
Print Name: Kim M. Moore
______________________
TEIJIN LIMITED
By:_____________________________
Name: __________________________
Title:__________________________
<PAGE> 75
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: /s/ Michael Rivers
_____________________________
Name: Michael D. Rivers
___________________________
Title: Director Asia/Pacific
__________________________
SECURITYHOLDER
By: /s/ Michael Rivers
_____________________________
Print Name: Michael D. Rivers
_____________________
TEIJIN LIMITED
BY: _____________________________
Name: _______________________
Title: ______________________
SECURITYHOLDER
By: /s/ Charles B. Shuey
______________________________
Print Name: Charles B. Shuey
_______________________
TEIJIN LIMITED
By: _____________________________
Name: ___________________________
Title: __________________________
SECURITYHOLDER
By: /s/ Paul A. Bartlett
____________________________
Print Name: Paul A. Bartlett
___________________________
TEIJIN LIMITED
By: ____________________________
Name: ___________________________
Title:___________________________
SECURITYHOLDER
By: [s] Leroy Hood
_____________________________
Print Name: [s] Leroy Hood
_____________________
TEIJIN LIMITED
By:______________________________
Name: ___________________________
Title: __________________________
<PAGE> 76
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: _______________________________________
Name:______________________________________
Title: ____________________________________
SECURITYHOLDER
By: [s] Illegible
_______________________________________
Print Name: [s] Illegible
_______________________________
TEIJIN LIMITED
By:________________________________________
Name: _____________________________________
Title: ____________________________________
SECURITYHOLDER
By: [s] R. Lovell
_______________________________________
Print Name: Dr. R. Lovell
_______________________________
TEIJIN LIMITED
By:________________________________________
Name: _____________________________________
Title: ____________________________________
SECURITYHOLDER
By: [s] Robert Kaufman Silicon Valley Bank
_______________________________________
Print Name: Robert Kaufman
________________________________
TEIJIN LIMITED
By:________________________________________
Name: _____________________________________
Title: ____________________________________
SECURITYHOLDER
By: [s] Illegible
_______________________________________
Print Name: [s] Illegible
_______________________________
TEIJIN LIMITED
By:________________________________________
Name: _____________________________________
Title: ____________________________________
<PAGE> 77
IN WITNESS WHEREOF, the undersigned have duly executed
this Amendment as of the date first above written.
POLYGEN CORPORATION
By: ________________________
Name:___________________
Title: _________________
SECURITYHOLDER
By: [s] Gemma J. Rocchette
_________________________
Print Name: Gemma J. Rochette
__________________
TEIJIN LIMITED
By:__________________________
Name: _______________________
Title: ______________________
SECURITYHOLDER
Porosan Group
By: /s/ Peter H. Engel
_______________________
Print Name: Peter H. Engel
____________
TEIJIN LIMITED
By:________________________
Name: ____________
Title: ___________
SECURITYHOLDER
Porosan Group, Inc.
By: /s/ Peter H. Engel
_______________________
Print Name: Peter H. Engel
____________
TEIJIN LIMITED
By:________________________
Name: ____________
Title: ___________
SECURITYHOLDER
By: [s] Illegible
_______________________
Print Name:
________________
TEIJIN LIMITED
By:_______________________
Name: _____________________
Title: ____________________
<PAGE> 78
SECOND AMENDMENT TO AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Second Amendment to Amended and Restated Investor Rights
Agreement (the "Second Amendment") is made this 14 day of July, 1994, pursuant
to paragraph 3.3. of the Amended and Restated Investor Rights Agreement dated
as of October 18, 1991 (the "Investor Rights Agreement") by and among Molecular
Simulations Incorporated, a Delaware corporation (the "Company") and various
investors in the Company, as amended on February 14, 1992. All terms
capitalized but not otherwise defined herein shall have the meanings ascribed
to them in the Investor Rights Agreement. The undersigned securityholders
hereby agree as follows:
RECITALS
WHEREAS, on October 18, 1991, certain of the securityholders listed
below (the "MSI Securityholders") and the Company entered into the Investor
Rights Agreement to provide for certain registration, information and other
rights set forth therein for such MSI Securityholders;
WHEREAS, on February 14, 1992, the Company, the MSI Securityholders and
Teijin Limited entered into an Amendment to the Investor Rights Agreement for
purposes of adding Teijin Limited as a party to the Investor Rights Agreement;
WHEREAS, on May 27, 1994, the Company, BioCAD Corporation and certain
other parties entered into an Agreement and Plan of Merger (the "BioCAD Merger
Agreement") pursuant to which BioCAD Corporation will become a wholly-owned
subsidiary of the Company and certain former stockholders of BioCAD Corporation
(the "BioCAD Stockholders") will receive an aggregate of approximately 6.7
million shares of the Company's Common Stock;
WHEREAS, in connection with the issuance of such shares pursuant to the
terms of the BioCAD Merger Agreement, the Company, the BioCAD Stockholders and
the undersigned MSI Securityholders desire that the BioCAD Stockholders be
granted the rights as well as the obligations of an MSI Securityholder as set
forth in the Investor Rights Agreement;
WHEREAS, the Second Amendment requires the approval of the Company and
the Holders of at least 60% of the Registrable Securities.
NOW, THEREFORE, BE IT RESOLVED, for good and valuable consideration,
receipt of which is hereby acknowledged, the Company, the BioCAD Stockholders
and the undersigned MSI Securityholders hereby agree that the Investor Rights
Agreement shall be amended by this Second Amendment as follows:
<PAGE> 79
1. Upon the issuance of the shares of Common Stock of the Company (the
"MSI Shares") to the BioCAD Stockholders pursuant to the BioCAD Merger
Agreement, each of the BioCAD Stockholders shall become a party to the Investor
Rights Agreement and shall be entitled to all of the rights (including all
rights under Section 1 of the Investor Rights Agreement to which such BioCAD
Stockholder may be entitled by his or its ownership of stock in the Company)
and agrees to be bound by all of the obligations of an "Investor", a "Holder",
a "Holder of Registrable Securities", and a "Holder of Restricted Securities,"
as each such term is defined in the Investor Rights Agreement.
2. Section 2.1 of the Investor Rights Agreement shall apply to the
BioCAD Stockholders as if it read as follows:
2.1 Restrictions on Transferability. All shares of Common Stock
of the Company held by the Holders (as hereinafter defined), including
the MSI Shares, shall not be transferable, except upon the conditions
specified in this Section 2, which conditions are intended to ensure
compliance with the provisions of the Securities Act, or, in the case of
Section 2.15 hereof, to assist in an orderly distribution, as the case
may be. Each Holder will cause any proposed transferee of Restricted
Securities (as hereinafter defined) held by that Holder to agree to take
and hold those securities subject to the provisions and upon the
conditions specified in this Section 2.
3. The definition of "Restricted Securities" contained in Section 2.2
of Investor Rights Agreement shall be deemed to include the MSI Shares.
4. The paragraph entitled "Registrable Securities" of Section 2.2 of
the Agreement shall be deleted in its entirety and shall read as follows:
"Registrable Securities" shall mean (i) shares of the Company's
Common Stock issued upon the automatic conversion of shares of each of
the Series A, Series B, Series C and Series D Preferred Stock of the
Company pursuant to an amendment to the Company's Certificate of
Incorporation concurrently with the consummation of the Merger; (ii)
shares of the Company's Common Stock issued to MSI common stockholders
pursuant to the Merger Agreement; (iii) shares of the Company's Common
Stock issuable upon the exercise of the Company's Common Stock purchase
warrants issued to Technology Funding Secured Investors II ("TFSI");
(iv) shares of the Company's Common Stock issued to Teijin Limited
pursuant to the Common Stock Purchase Agreement between the Company and
Teijin Limited dated February 14, 1992; (v) shares of the Company's
Common Stock issuable upon the exercise of common stock options and
common stock purchase warrants issued by MSI to and held by the former
MSI optionholders and MSI warrantholders assumed by the Company in
connection with the Merger; (vi) the shares of
<PAGE> 80
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i)-(vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: /s/ Michael J. Savage
- ---------------------------------- ---------------------------------------
Name: Michael J. Savage Printed Name of MSI Securityholder
- ---------------------------------- ---------------------------------------
Title: President By: ___________________________________
- ---------------------------------- Name: _________________________________
Title: ________________________________
BIOCAD STOCKHOLDERS:
---------------------------------------
Printed Name of BioCAD Stockholder
---------------------------------------
By: ___________________________________
Name: _________________________________
Title: ________________________________
<PAGE> 81
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i)-(vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
Banc Boston Ventures, Inc.
By: ---------------------------------------
------------------------------- Printed Name of MSI Securityholder
Name:
----------------------------- By: /s/Marcia T. Bates
Title: -----------------------------------
---------------------------- Name: Marcia T. Bates
---------------------------------
Title: Director
--------------------------------
BIOCAD STOCKHOLDERS:
---------------------------------------
Printed Name of BioCAD Stockholder
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
3
<PAGE> 82
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i)-(vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: Irwin Lieber
------------------------------- ---------------------------------------
Printed Name of MSI Securityholder
Name:
----------------------------- By: /s/Irwin Lieber
---------------------------------
Title:
----------------------------- Name:
---------------------------------
Title:
--------------------------------
BIOCAD STOCKHOLDERS:
---------------------------------------
Printed Name of BioCAD Stockholder
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
3
<PAGE> 83
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant
to any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and
provisions of the Investor Rights Agreement shall remain in full force and
effect.
6. This Second Amendment may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto and each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By:________________________________ /s/ JEFFREY M. WALES
________________________________________
Printed Name of MSI Securityholder
Name:______________________________
By: JEFFREY M. WALES
________________________________________
Title:_____________________________
Name:___________________________________
Title:__________________________________
BIOCAD STOCKHOLDERS:
________________________________________
Printed Name of BioCAD Stockholder
By:_____________________________________
Name:___________________________________
Title:__________________________________
3
<PAGE> 84
the Company's Common Stock issued to the BioCAD Stockholder pursuant to the
Agreement and Plan of Merger dated May 27, 1994 by and among the Company,
MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and (vii) any
shares of the Company's Common Stock issued in respect of the Common Stock
set forth in clauses (i)-(vi) immediately above pursuant to any stock
split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS MSI SECURITYHOLDERS:
INCORPORATED
By: Draper Associates, L.P. (California Partners)
------------------------ ------------------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Timothy Draper
---------------------- ---------------------------------------------
Title: Name: Timothy Draper
--------------------- ------------------------------------------
Title: General Partner
------------------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
3
<PAGE> 85
the Company's Common Stock issued to the BioCAD Stockholders pursuant
to the Agreement and Plan of Merger dated May 27, 1994 by and among
the Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI;
and (vii) any shares of the Company's Common Stock issued in respect of
the Common Stock set forth in clauses (i) - (vi) immediately above
pursuant to any stock split, stock dividend, recapitalization or similar
event."
5. Except as otherwise amended herein, the other terms and
provisions of the Investor Rights Agreement shall remain in full force and
effect.
6. This Second Amendment may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto and each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
/s/ Kevin Cable
By: ______________________________ __________________________________
Printed Name of MSI Securityholder
By: /s/ Kevin Cable
Name: ____________________________ __________________________________
Name: /s/ Kevin Cable
Title: ___________________________ Title: ___________________________
BIOCAD STOCKHOLDERS:
__________________________________
Printed Name of BioCAD Stockholder
__________________________________
By: ______________________________
Name: ____________________________
Title: ___________________________
3
<PAGE> 86
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and
Mayfield VI; and (vii) any shares of the Company's Common Stock issued
in respect of the Common Stock set forth in clauses (i) - (vi)
immediately above pursuant to any stock split, stock dividend,
recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and
provisions of the Investor Rights Agreement shall remain in full force and
effect.
6. This Second Amendment may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto and each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: American Consulting Corporation
-------------------------------- --------------------------------------
c/o Weidenbaum, Ryder & Co. Printed Name of MSI Securityholder
Name:
----------------------------- By: /s/ P. Engel
-----------------------------------
Title: Name: P. Engel
----------------------------- ---------------------------------
Title: President
---------------------------------
BIOCAD STOCKHOLDERS:
--------------------------------------
Printed Name of BioCAD Stockholder
By:
----------------------------------
Name:
---------------------------------
Title:
-------------------------------
<PAGE> 87
pursuant to the Agreement and Plan of merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and
Mayfield VI; and (vii) any shares of the Company's Common Stock issued
in respect of the Common Stock set forth in clauses (i) - (vi)
immediately above pursuant to any stock split, stock dividend,
recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and
provisions of the Investor Rights Agreement shall remain in full force and
effect.
6. This Second Amendment may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto and each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
Printed Name of MSI Securityholder
By: ______________________________
By: Menlo Management Partners,
Name: ____________________________ its General Partner
Title: ___________________________ Name: /s/ Thomas M. Bredt
----------------------------
Title: General Partner
----------------------------
BIOCAD STOCKHOLDERS:
___________________________________
Printed Name of BioCAD Stockholder
By: _______________________________
Name: _____________________________
Title: ____________________________
<PAGE> 88
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and
Mayfield VI; and (vii) any shares of the Company's Common Stock issued
in respect of the Common Stock set forth in clauses (i) - (vi)
immediately above pursuant to any stock split, stock dividend,
recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: By: /s/ William Goddard III
--------------------------------- ---------------------------------
William A. Goddard III.
Name: By: /s/ Amelia Yvonne Correy Godard
------------------------------- ----------------------------------
Title: Amelia Yvonne Correy Goddard
-------------------------------
BIOCAD STOCKHOLDERS:
--------------------------------------
Printed Name of BioCAD Stockholder
By:
-----------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 89
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and Mayfield
VI; and (vii) any shares of the Company's Common Stock issued in respect of
the Common Stock set forth in clauses (i)-(vi) immediately above pursuant
to any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: CH Partners IV
------------------------------ Printed Name of MSI Securityholder
Name:
---------------------------- By: Thomas J. Cable
Title: -----------------------------
---------------------------
Name: Thomas J. Cable
---------------------------
Title: GP
--------------------------
BIOCAD STOCKHOLDERS:
---------------------------------
Printed Name of BioCAD Stockholder
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE> 90
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI;
and (vii) any shares of the Company's Common Stock issued in respect of
the Common Stock set forth in clauses (i) - (vi) immediately above
pursuant to any stock split, stock dividend, recapitalization or similar
event."
5. Except as otherwise amended herein, the other terms and
provisions of the Investor Rights Agreement shall remain in full force and
effect.
6. This Second Amendment may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto and each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: ______________________________ _____________________________________
Printed Name of MSI Securityholder
By: /s/ A. Barr Dolan
Name: ____________________________ _____________________________________
Name: A. Barr Dolan
Title: ___________________________ _____________________________________
Title: General Partner
Charter Ventures
_____________________________________
BIOCAD STOCKHOLDERS:
_____________________________________
Printed Name of BioCAD Stockholder
By: _________________________________
Name: _______________________________
Title: ______________________________
3
<PAGE> 91
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: CRAIG F. DAWSON
------------------------------ --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Craig F. Dawson
---------------------------- ---------------------------------
Title: Name:
--------------------------- -------------------------------
Title:
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
3
<PAGE> 92
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and Mayfield
VI; and (vii) any shares of the Company's Common Stock issued in respect of
the Common Stock set forth in clauses (i) - (vi) immediately above pursuant
to any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: CH Investment Partners
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Thomas J. Cable
---------------------------- ---------------------------------
Title: Name: Thomas J. Cable
--------------------------- -------------------------------
Title: GP
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 93
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and Mayfield
VI; and (vii) any shares of the Company's Common Stock issued in respect to
the Common Stock set forth in clauses (i) - (vi) immediately above pursuant
to any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: Teijin Limited
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Takehisa Tokunaga
---------------------------- ---------------------------------
Title: Name: Takehisa Tokunaga
--------------------------- -------------------------------
Title: Manager Information Systems
Business Division
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
3
<PAGE> 94
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i)-(vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
Andrew J. Ferrara
By: ----------------------------------
------------------------------ Printed Name of MSI Securityholder
Name:
---------------------------- By:
Title: -----------------------------
---------------------------
Name: /s/ Andrew J. Ferrara
---------------------------
Title:
--------------------------
BIOCAD STOCKHOLDERS:
---------------------------------
Printed Name of BioCAD Stockholder
By:
-----------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE> 95
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: BARRY D. OLAFSON
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Barry D. Olafson
---------------------------- ---------------------------------
Title: Name:
--------------------------- -------------------------------
Title:
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
3
<PAGE> 96
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and Mayfield
VI; and (vii) any shares of the Company's Common Stock issued in respect to
the Common Stock set for in clauses (i) - (vi) immediately above pursuant
to any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: MacNeal Schwendler Corporation
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Louis A. Greco
---------------------------- ---------------------------------
Title: Name: Louis A. Greco
--------------------------- -------------------------------
Title: Chief Financial Officer
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 97
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i)-(vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto and each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: Paraq Saxena
------------------------------- ----------------------------------
Name: Printed Name of MSI Securityholder
-----------------------------
Title: By: /s/ PARAQ SAXENA
---------------------------- --------------------------------
Name:
------------------------------
Title:
-----------------------------
BIOCAD STOCKHOLDERS:
-----------------------------------
Printed Name of BioCAD Stockholder
By:
--------------------------------
Name:
------------------------------
Title:
3
<PAGE> 98
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: Marc Tesler
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Marc Tesler
---------------------------- ---------------------------------
Title: Name:
--------------------------- -------------------------------
Title:
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
3
<PAGE> 99
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: EUGENE J. MOSCARET
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ E. J. Moscaret
---------------------------- ---------------------------------
Title: Name: EUGENE J. MOSCARET
--------------------------- -------------------------------
Title:
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
3
<PAGE> 100
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and Mayfield
VI; and (vii) any shares of the Company's Common Stock issued in respect of
the Common Stock set forth in clauses (i) - (vi) immediately above pursuant
to any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: ABS Ventures II Limited Partnership
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Bruns Grayson
---------------------------- ---------------------------------
Title: Name: ABS Ventures II Limited Partnership
--------------------------- -------------------------------
by Bruns Grayson
Title: Managing Partner
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 101
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and
Mayfield VI; and (vii) any shares of the Company's Common Stock issued
in respect of the Common Stock set forth in clauses (i)-(vi) immediately
above pursuant to any stock split, stock dividend, recapitalization or
similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
Brown Technology Associates
Limited Partnership
By: ------------------------------
Partnership Printed Name of MSI Securityholder
Name:
---------------------------- By: /s/Brown Technology Associates
Limited Partnership
Title: -----------------------------------
--------------------------- Name: Bruns Greyson
---------------------------------------
Title: General Partner
BIOCAD STOCKHOLDERS:
---------------------------------------
Printed Name of BioCAD Stockholder
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 102
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i)-(vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
KME Venture Capital,
Limited Partnerhsip
By: Safat Ltd., its General Partner
By: ------------------------------ ---------------------------------------
Printed Name of MSI Securityholder
Name: ----------------------------
By: /s/Abdulwahab Al-Qatami
Title: --------------------------- -----------------------------------
Name: Abdulwahab Al-Qatami
---------------------------------------
Title: Attorney-In-Fact
BIOCAD STOCKHOLDERS:
---------------------------------------
Printed Name of BioCAD Stockholder
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
3
<PAGE> 103
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i)-(vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
GC&H INVESTMENTS
By:
------------------------------- ---------------------------------------
Name: Printed Name of MSI Securityholder
-----------------------------
Title: By: /s/John L. Cardoza
---------------------------- -----------------------------------
Name: John L. Cardoza
---------------------------------------
Title: Executive Partner
BIOCAD STOCKHOLDERS:
---------------------------------------
Printed Name of BioCAD Stockholder
---------------------------------------
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
3
<PAGE> 104
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i)-(vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By:
------------------------------- ---------------------------------------
Printed Name of MSI Securityholder
Name:
-----------------------------
By: /s/Charles A. Reid
Title: -----------------------------------
---------------------------- Name: EGC II LIMITED PARTNERSHIP BY
GENERAL PARTNER
BALTIMORE STREET CAPITAL III
-----------------------------------------
Title: BY GENERAL PARTNER CHARLES A. REID
-----------------------------------------
BIOCAD STOCKHOLDERS:
---------------------------------------
Printed Name of BioCAD Stockholder
---------------------------------------
By:
-----------------------------------
Name:
--------------------------------
Title:
--------------------------------
3
<PAGE> 105
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i)-(vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
/s/ Charles D. Shuey
By: ______________________________ ---------------------------------------
Printed Name of MSI Securityholder
Name: ____________________________
By: /s/ Charles D. Shuey 6-27-94
Title: ___________________________ -----------------------------------
Name: /s/ Charles D. Shuey
---------------------------------------
Title: ________________________________
BIOCAD STOCKHOLDERS:
---------------------------------------
Printed Name of BioCAD Stockholder
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
3
<PAGE> 106
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect to the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
MELLON BANK, N.A. MASTER TRUSTEE FOR
BELL ATLANTIC MASTER PENSION TRUST
(AS DIRECTED BY CHANCELLOR TRUST
BY: COMPANY INVESTMENT MANAGER)
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Allan M. Seaman
---------------------------- ---------------------------------
Title: Name: ALLAN M. SEAMAN
--------------------------- -------------------------------
Title: ASSOCIATE COUNSEL
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
The Decision to participate in this investment, any representation made herein
by the participant, and any holders taken hereunder by the participant has/have
been made solely at the direction of the investment fiduciary who has sole
investment discretion with respect to this investment.
[EXAMINED AND
APPROVED
AS TO FORM
/S/ BTA
----------------
LEGAL DEPARTMENT SEAL]
3
<PAGE> 107
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant
to any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto and each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By:
------------------------------- Mellon Bank, N.A. Master trustee for
Name: Bell Atlantic Master Pension Trust
----------------------------- (as directed by Chancellor Trust
Title: Company, Investment Manager)
---------------------------- ----------------------------------
Printed Name of MSI Securityholder
By: /s/ ALLAN M. SEAMAN
--------------------------------
Name: ALLAN M. SEAMAN
------------------------------
Title: ASSOCIATE COUNSEL
-----------------------------
BIOCAD STOCKHOLDERS:
-----------------------------------
Printed Name of BioCAD Stockholder
By:
--------------------------------
Name:
------------------------------
Title:
The decision to participate in this investment, any
representations made herein by the participant, and any
actions taken hereunder by the participant has/have been
made solely at the direction of the investment fiduciary who
has sole investment discretion with respect to this
investment.
[EXAMINED AND APPROVED
AS TO FORM
/s/ BON
------------------
LEGAL DEPARTMENT SEAL]
3
<PAGE> 108
the Company's Common Stock issued to the BioCAD Stockholders
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and
Mayfield VI; and (vii) any shares of the Company's Common Stock issued
in respect of the Common Stock set forth in clauses (i) - (vi)
immediately above pursuant to any stock split, stock dividend,
recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto and each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: LYNXVALE LIMITED
------------------------------ -------------------------------------------
Printed Name of MSI Securityholder
Name:
----------------------------- By: /s/ J. Womack
---------------------------------------
Title:
---------------------------- Name: Mrs. J.M. Womack
-------------------------------------
Title: Director
------------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------------
Name:
-------------------------------------
Title:
-----------------------------------
3
<PAGE> 109
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant
to any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and
provisions of the Investor Rights Agreement shall remain in full force
and effect.
6. This Second Amendment may be executed in any number of
counterparts, each of which may be executed by less than all of the
parties hereto and each of which shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By:________________________________ /s/ Fred C. Laccabue, Trustee
____________________________________
Printed Name of MSI Securityholder 7/5/9L
Name:______________________________
By:__________________________________
Title:______________________________
Name: FRED C. LACCABUE
_____________________________________
Title: TRUSTEE FOR THE LACCABUE
LIVING TRUST U/A DATED 2/21/91
BIOCAD STOCKHOLDERS:
_____________________________________
Printed Name of BioCAD Stockholder
By:__________________________________
Name:________________________________
Title:_________________________________
3
<PAGE> 110
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forTH in clauses (i) - (vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
CONTINENTAL BANK NATIONAL ASSOCIATION
AS CUSTODIAN, FOR THE POLICEMEN'S
ANNUITY AND BENEFIT FUND OF CHICAGO,
AT THE DIRECTION OF CHANCELLOR CAPITAL
By: MANAGEMENT, INC. INVESTMENT MANAGER.
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name:
---------------------------- By: /s/ William J. Uher
---------------------------------
Title:
--------------------------- Name: WILLIAM J. UHER
-------------------------------
Title: VICE PRESIDENT
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
3
<PAGE> 111
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: InnoVen IV Corporation
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name:
---------------------------- By: /s/ Gerald A. Lodge
---------------------------------
Title:
--------------------------- Name: Gerald A. Lodge
-------------------------------
Title: Asst. Treasurer
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
3
<PAGE> 112
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: InnoVen III Corp
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name:
---------------------------- By: /s/ Raun J. Rasmussen
---------------------------------
Title:
--------------------------- Name: Raun J. Rasmussen
-------------------------------
Title: Vice President
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
3
<PAGE> 113
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect of the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: SIF Limited Partnership
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name:
---------------------------- By: /s/ Guy de Chazal
---------------------------------
Title:
--------------------------- Name:
-------------------------------
Title:
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 114
the Company's Common Stock issued to the BioCAD Stockholders pursuant to
the Agreement and Plan of Merger dated May 27, 1994 by and among the
Company, MSI Merger Corporation, BioCAD Corporation and Mayfield VI; and
(vii) any shares of the Company's Common Stock issued in respect to the
Common Stock set forth in clauses (i) - (vi) immediately above pursuant to
any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: Morgan Stanley Venture Capital Fund L.P.
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Guy de Chazal
---------------------------- ---------------------------------
Title: Name:
--------------------------- -------------------------------
Title:
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 115
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and
Mayfield VI; and (vii) any shares of the Company's Common Stock issued
in respect of the Common Stock set forth in clauses (i) - (vi)
immediately above pursuant to any stock split, stock dividend,
recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto and each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: International Business Machines Corporation
------------------------------ -------------------------------------------
Printed Name of MSI Securityholder
Name:
----------------------------- By: /s/ Joseph J. Martin
---------------------------------------
Title:
---------------------------- Name: Joseph J. Martin
-------------------------------------
Title: IBM Assistant Controller
------------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------------
Name:
-------------------------------------
Title:
-----------------------------------
<PAGE> 116
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and
Mayfield VI; and (vii) any shares of the Company's Common Stock issued
in respect of the Common Stock set forth in clauses (i) - (vi)
immediately above pursuant to any stock split, stock dividend,
recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto and each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: GeoCapital II
------------------------------- Printed Name of MSI Securityholder
Name:
----------------------------- By: /s/ STEPHEN J. CLEARMAN
Title: --------------------------------
----------------------------
Name: Stephen J. Clearman
------------------------------
Title: General Partner
-----------------------------
BIOCAD STOCKHOLDERS:
-----------------------------------
Printed Name of BioCAD Stockholder
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 117
pursuant to the Agreement and Plan of Merger dated May 27, 1994 by and
among the Company, MSI Merger Corporation, BioCAD Corporation and Mayfield
VI; and (vii) any shares of the Company's Common Stock issued in respect of
the Common Stock set forth in clauses (i) - (vi) immediately above pursuant
to any stock split, stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions of
the Investor Rights Agreement shall remain in full force and effect.
6. This Second Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: GeoCapital Ventures
------------------------------- --------------------------------------
Printed Name of MSI Securityholder
Name: By: /s/ Stephen J. Clearman
---------------------------- ---------------------------------
Title: Name: Stephen J. Clearman
--------------------------- -------------------------------
Title: General Partner
------------------------------
BIOCAD STOCKHOLDERS:
-------------------------------------
Printed Name of BioCAD Stockholder
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 118
AMENDMENT NO. 3 TO AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amendment No. 3 to Amended and Restated Investor Rights Agreement
("Amendment No. 3") is made this 29th day of September, 1994, pursuant to
paragraph 3.3 of the Amended and Restated Investor Rights Agreement dated as of
October 18, 1991 (the "Investor Rights Agreement") by and among Molecular
Simulations Incorporated, a Delaware corporation (the "Company") and various
investors in the Company, as amended on February 14, 1992 and July 14, 1994. All
terms capitalized but not otherwise defined herein shall have the meanings
ascribed to them in the Investor Rights Agreement. The undersigned
securityholders hereby agree as follows:
RECITALS
WHEREAS, on October 18, 1991, certain of the securityholders listed
below (the "MSI Securityholders") and the Company entered into the Investor
Rights Agreement to provide for certain registration, information and other
rights set forth therein for such MSI Securityholders;
WHEREAS, on February 14, 1992, the Company, the MSI Securityholders and
Teijin Limited entered into an Amendment to the Investor Rights Agreement for
purposes of adding Teijin Limited as a party to the Investor Rights Agreement;
WHEREAS, on July 14, 1994, the Company, the MSI Securityholders and
certain former stockholders of BioCAD Corporation entered into a Second
Amendment to the Investor Rights Agreement for purposes of adding such former
stockholders of BioCAD Corporation as parties to the Investor Rights Agreement;
WHEREAS, concurrent with the execution of this Amendment No. 3, the
Company and D. E. Shaw & Co., L.P. and/or its affiliates (the "Purchasers") are
entering into a Series A Convertible Preferred Stock Purchase Agreement (the
"Series A Purchase Agreement") pursuant to which the Purchasers will purchase an
aggregate of 2,222,223 shares of the Company's Series A Convertible Preferred
Stock (the "Series A Preferred Shares");
WHEREAS, in connection with the issuance of such Series A Preferred
Shares pursuant to the terms of the Series A Purchase Agreement, the Company,
the Purchasers and the undersigned MSI Securityholders desire that each of the
Purchasers be granted the rights as well as the obligations of an MSI
Securityholder as set forth in the Investor Rights Agreement;
WHEREAS, this Amendment No. 3 requires the approval of the Company
and the Holders of at least 60% of the Registrable Securities.
1
<PAGE> 119
NOW, THEREFORE, BE IT RESOLVED, for good and valuable consideration,
receipt of which is hereby acknowledged, the Company, the Purchasers and the
undersigned MSI Securityholders hereby agree that the Investor Rights Agreement
shall be amended by this Amendment No.3 as follows:
1. Upon the issuance of the Series A Preferred Shares to the Purchasers
pursuant to the Series A Purchase Agreement, each Purchaser shall become a party
to the Investor Rights Agreement and shall be entitled to all of the rights and
agrees to be bound by all of the obligations of an "Investor", a "Holder," a
"Holder of Registrable Securities" and a "Holder of Restricted Securities," as
each such term is defined in the Investor Rights Agreement. For purposes of the
Investor Rights Agreement, each Purchaser shall be deemed to be a "Significant
Rightsholder" so long as it owns an aggregate of at least 26,666 Series A
Preferred Shares and/or shares of the Company's Common Stock (subject to
adjustment for stock splits, stock dividends, reverse stock splits,
recapitalizations and the like).
2. A new Section 1.18 shall be added to the Investor Rights Agreement
as follows:
"1.18 Observer Rights. So long as D. E. Shaw & Co., L.P.
and/or its affiliates ("D. E. Shaw") continue to own an aggregate of at
least 250,000 shares of the Company's Series A Convertible Preferred
Stock, until the time of the effectiveness of the Company's
registration statement covering the Company's initial public offering
of equity securities with gross proceeds to the Company of at least
$7,500,000 (an "IPO"), D. E. Shaw (or its representative) shall have
the right to attend all meetings of the Company's Board of Directors in
a nonvoting observer capacity, to receive notice of such meetings and
to receive the information provided by the Company to the Company's
Board of Directors; provided, however, that D. E. Shaw (or its
representative) shall agree to hold all information so provided in
accordance with the terms of the Mutual Non-Disclosure Agreement dated
July 7, 1994; and, provided further, that the Company reserves the
right to exclude D. E. Shaw (or its representative) from any meeting or
portion thereof to which attendance by D. E. Shaw (or its
representative) would adversely affect the attorney-client privilege
between the Company and its counsel."
3. Section 2.1 of the Investor Rights Agreement shall apply to each
Purchaser as if it read as follows:
2.1 Restrictions on Transferability. All shares of capital
stock of the Company held by the Holders (as hereinafter defined),
including the Series A Preferred Shares and the shares of the Company's
Common Stock issuable upon conversion of the Series A Preferred Shares,
shall not be transferable, except upon the conditions specified in this
Section 2, which conditions are intended to ensure compliance with the
provisions of the Securities Act, or, in the case of Section 2.15
hereof, to assist in an orderly distribution, as the case may be. Each
2
<PAGE> 120
Holder will cause any proposed transferee of Restricted Securities (as
hereinafter defined) held by that Holder to agree to take and hold
those securities subject to the provisions and upon the conditions
specified in this Section 2.
4. The definition of "Restricted Securities" contained in Section 2.2
of Investor Rights Agreement shall be deemed to include the Series A Preferred
Shares and the shares of the Company's Common Stock issuable upon conversion of
the Series A Preferred Shares.
5. The paragraph entitled "Registrable Securities" of Section 2.2 of
the Agreement shall be deleted in its entirety and shall read as follows:
"Registrable Securities" shall mean (i) shares of the
Company's Common Stock issued upon the automatic conversion of shares
of each of the Series A, Series B, Series C and Series D Preferred
Stock of the Company pursuant to an amendment to the Company's
Certificate of Incorporation concurrently with the consummation of the
Merger; (ii) shares of the Company's Common Stock issued to MSI common
stockholders pursuant to the Merger Agreement; (iii) shares of the
Company's Common Stock issuable upon the exercise of the Company's
Common Stock purchase warrants issued to Technology Funding Secured
Investors II ("TFSI"); (iv) shares of the Company's Common Stock issued
to Teijin Limited pursuant to the Common Stock Purchase Agreement
between the Company and Teijin Limited dated February 14, 1992; (v)
shares of the Company's Common Stock issuable upon the exercise of
common stock options and common stock purchase warrants issued by MSI
to and held by the former MSI optionholders and MSI warrantholders
assumed by the Company in connection with the Merger; (vi) the shares
of the Company's Common Stock issued to the former stockholders of
BioCAD Corporation pursuant to the Agreement and Plan of Merger dated
May 27, 1994 by and among the Company, MSI Merger Corporation, BioCAD
Corporation, Mayfield VI and Mayfield Associates, provided that such
former stockholders of BioCAD Corporation are parties to this
Agreement; (vii) the shares of the Company's Common Stock issuable upon
conversion of the Company's Series A Convertible Preferred Stock issued
to D. E. Shaw pursuant to the Series A Convertible Preferred Stock
Purchase Agreement dated September _, 1994 between the Company and D.
E. Shaw; and (viii) any shares of the Company s Common Stock issued in
respect of the Common Stock set forth in clauses (i) - (vii)
immediately above pursuant to any stock split, stock dividend,
recapitalization or similar event."
6. Except as otherwise amended herein, the other terms and provisions
of the Investor Rights Agreement shall remain in full force and effect.
3
<PAGE> 121
7. This Amendment No. 3 may be executed in any number of counterparts,
each of which may be executed by less than all of the parties hereto and each of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
No. 3 as of the date first above written.
MOLECULAR SIMULATIONS INCORPORATED MSI SECURITYHOLDERS:
By: /s/ Michael J. Savage Patricia Schreiner-Engel
------------------------------- -----------------------------------
Printed Name of MSI Securityholder
Name: Michael J. Savage
----------------- By: Sept. 25, 1996
--------------------------------
Title: President & CEO
--------------- Name: Patricia Schreiner-Engel
-----------------------------
Title:
-----------------------------
PURCHASERS: MSI SECURITYHOLDERS:
D.E.SHAW INVESTMENT GROUP, L.P. Peter Engel
-----------------------------------
By: D. E. Shaw & Co., L.P. Printed Name of MSI Securityholder
Its General Partner
By: /s/ Peter Engel
By: D.E. Shaw & Co., Inc. --------------------------------
Its General Partner
Name:
By: /s/ David E Shaw ------------------------------
------------------------------
David E. Shaw, President Title:
-----------------------------
<PAGE> 122
MSI SECURITYHOLDERS:
MacNeal Schwendler Corp.
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Louis A. Greco
--------------------------------
Name: Louis A. Greco
------------------------------
Title: Chief Financial Officer
-----------------------------
*255,032 SHARES*
MSI SECURITYHOLDERS:
BOSTON SAFE DEPOSIT & TRUST COMPANY
AS TRUSTEE FOR US WEST MAST TRUST
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ RICHARD J. GIBBONS JR.
--------------------------------
Name:
------------------------------
Title: OFFICER
-----------------------------
SEPTEMBER 20, 1994
MSI SECURITYHOLDERS:
LYNXVALE LTD.
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ MRS. J.M. WOMACK
--------------------------------
Name: MRS. J.M. WOMACK
------------------------------
Title: DIRECTOR
-----------------------------
MCI SECURITYHOLDERS:
Banc Boston Ventures, Inc.
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Marcia T. Bates
--------------------------------
Name: Marcia T. Bates
------------------------------
Title: Director
-----------------------------
<PAGE> 123
MSI SECURITYHOLDERS:
InnoVen IV Corporation
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Gerald A. Lodge
--------------------------------
Name: Gerald A. Lodge
------------------------------
Title: Assistant Treasurer
-----------------------------
MSI SECURITYHOLDERS:
Stephen L. Mayo
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Stephen L. Mayo 9/21/94
--------------------------------
Name: Stephen L. Mayo
------------------------------
Title:
-----------------------------
MSI SECURITYHOLDERS:
InnoVen III Corporation
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Raun J. Rasmussen
--------------------------------
Name: Raun J. Rasmussen
------------------------------
Title: Vice President
-----------------------------
MSI SECURITYHOLDERS:
Mayfield VI
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ W.S. Van Auhen
--------------------------------
Name:
------------------------------
Title: General Partner
-----------------------------
<PAGE> 124
MSI SECURITYHOLDERS:
Mayfield Associates
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ W.S. Van Auhen
--------------------------------
Name:
------------------------------
Title: General Partner
-----------------------------
MSI SECURITYHOLDERS:
/s/ A. Barr Dolan
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ A. Barr Dolan
--------------------------------
Name: A. Barr Dolan
------------------------------
Title: General Partner
Charter Ventures
-----------------------------
MSI SECURITYHOLDERS:
Jeffrey M. Wales
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Jeffrey M. Wales
--------------------------------
Name: Jeffrey M. Wales
------------------------------
Title:
-----------------------------
MSI SECURITYHOLDERS:
Barry D. Olafson
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Barry D. Olafson
--------------------------------
Name: Barry D. Olafson
------------------------------
Title:
-----------------------------
<PAGE> 125
MSI SECURITYHOLDERS:
William A. Goddard III and
Amelia Yvonne Correy Goddard
-----------------------------------
Printed Name of MSI Securityholder
By:/s/ Amelia Yvonne Correy Goddard
--------------------------------
Name: /s/ William Goddard III
------------------------------
Title:
-----------------------------
MSI SECURITYHOLDERS:
Teijin Limited
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Takehisa Tokunaga
--------------------------------
Name: Takehisa Tokunaga
------------------------------
Title: Manager, Information Systems
Business Division
-----------------------------
MSI SECURITYHOLDERS:
American Consulting Corporation
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ P. Engel
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MSI SECURITYHOLDERS:
Michael J. Savage
-----------------------------------
Printed Name of MSI Securityholder
By: Michael J. Savage
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 126
MSI SECURITYHOLDERS:
EGC II LIMITED PARTNERSHIP
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Charles A. Reid
--------------------------------
Name: EGC II LIMITED PARTNERSHIP BY
GENERAL PARTNER BALTIMORE
STREET
------------------------------
Title: CAPITAL III BY GENERAL
PARTNER
CHARLES A. REID
-----------------------------
MSI SECURITYHOLDERS:
Gregory E. Presson
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Gregory E. Presson
--------------------------------
Name: Gregory E. Presson
------------------------------
Title: Managing Director
-----------------------------
MSI SECURITYHOLDERS:
ABS Ventures II Limited Partnership
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Bruns Grayson
--------------------------------
Name: Bruns Grayson
------------------------------
Title: Managing Partner
-----------------------------
MSI SECURITYHOLDERS:
Brown Technology Associates Limited
Partnership
-----------
Printed Name of MSI Securityholder
By: /s/ Bruns Grayson
--------------------------------
Name: Bruns Grayson
------------------------------
Title: General Partner
-----------------------------
<PAGE> 127
MSI SECURITYHOLDERS:
Kevin Cable
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Kevin Cable
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MSI SECURITYHOLDERS:
KME Venture Capital L.P.
By: Safat Ltd., its General Partner
-----------------------------------
Printed Name of MSI Securityholder
By: Abdulwahab Al-Qatami
--------------------------------
Name: /s/ Abdulwahab Al-Qatami
------------------------------
Title: Attorney-In-Fact
-----------------------------
MSI SECURITYHOLDERS:
Irwin Lieber
-----------------------------------
Printed Name of MSI Securityholder
By: /s/Irwin Lieber
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MSI SECURITYHOLDERS:
Mellon Bank N.A., Master Trustee for
Bell Atlantic Master Pension Trust
(AS directed by Abbott Capital
Management)
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Judith A. Manion
--------------------------------
Name: Judith A. Manion
------------------------------
Title: Assistant Officer
-----------------------------
[Examined and Approved As to Form
/s/ Jam Legal Department Seal]
<PAGE> 128
MSI SECURITYHOLDERS
GC&H INVESTMENTS
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ John Cardoza
--------------------------------
Name: John L. Cardoza
------------------------------
Title: Executive Partner
-----------------------------
MSI SECURITYHOLDERS:
WS Investment Company 91C
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Linda G. Wilson
--------------------------------
Name:
------------------------------
Title: Administrator
-----------------------------
MSI SECURITYHOLDERS:
WS Investment Company 90A
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Linda G. Wilson
--------------------------------
Name:
------------------------------
Title: Administrator
-----------------------------
MSI SECURITYHOLDERS:
MENLO VENTURES III
By: Menlo Management Partners,
its General Partner
By: /s/ Thomas H. Bredt
--------------------------------
Name: Thomas H. Bredt
------------------------------
Title: General Partner
-----------------------------
<PAGE> 129
MSI SECURITYHOLDERS:
Morgan Stanley Venture Capital
Fund L.P.
---------
Printed Name of MSI Securityholder
By: /s/ Guy de Chazal
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MSI SECURITYHOLDERS:
/s/ Illegible
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Lee A. Dayton
--------------------------------
Name: /s/ Lee A. Dayton
------------------------------
Title: General Manager, Business
Development
-----------------------------
MSI SECURITYHOLDERS:
International Business Machines
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Lee A. Dayton
--------------------------------
Name: /s/ Lee A. Dayton
------------------------------
Title: General Manager,
Business Development
-----------------------------
MSI SECURITYHOLDERS:
CH Investment Partners
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Thomas J. Cable
--------------------------------
Name: Thomas J. Cable
------------------------------
Title: General Partner
-----------------------------
<PAGE> 130
MSI SECURITYHOLDERS:
CH Partners IV
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Thomas J. Cable
--------------------------------
Name: Thomas J. Cable
------------------------------
Title: General Partner
-----------------------------
MSI SECURITYHOLDERS:
Human Factors, Inc.
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ James L. Thompson
--------------------------------
Name: James L. Thompson
------------------------------
Title: Corp. Secretary
-----------------------------
PURCHASERS:
/s/ Ralph Korpman
- ----------------------------------
Printed Name of Purchaser
By: /s/ Ralph Korpman
-------------------------------
Name:
-----------------------------
Title:
----------------------------
MSI SECURITYHOLDERS:
[Illegible]
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Charles R. Stetson, Jr.
--------------------------------
Name: Charles R. Stetson, Jr.
------------------------------
Title: President
-----------------------------
<PAGE> 131
MSI SECURITYHOLDERS:
SIF Limited Partnership
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Guy de Chazal
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MSI SECURITYHOLDERS:
Patrick D. Coulter
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ PATRICK D. COULTER
--------------------------------
Name: P. Coulter
------------------------------
Title: Dr
-----------------------------
MSI SECURITYHOLDERS:
CONTINENTAL TRUST CO CUST
POLICEMEN'S ANNUITY & BENEFIT FUND
OF CHGO
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ WILLIAM J. UHER
--------------------------------
Name: WILLIAM J. UHER
------------------------------
Title: Vice President
-----------------------------
MSI SECURITYHOLDERS:
-----------------------------------
Printed Name of MSI Securityholder
By: [/s/ Signature Illegible]
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 132
MSI SECURITYHOLDERS:
-----------------------------------
Printed Name of MSI Securityholder
By: [/s/ Signature Illegible]
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MSI SECURITYHOLDERS:
/s/ Steven Teig
-----------------------------------
Printed Name of MSI Securityholder
By: /s/ Steven Teig
--------------------------------
Name: Steven Teig
------------------------------
Title:
-----------------------------
4
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.22
SOFTWARE LICENSE AGREEMENT
This Software License Agreement (this "Agreement") is made and entered
into as of December 10, 1985 (the "Effective Date") by and among Martin Karplus
("Author") and the President and Fellows of Harvard University ("Harvard") as
co-licensors (which parties are hereafter referred to collectively as
"Licensor"), and Polygen Corporation, a Massachusetts corporation ("Licensee").
RECITALS
A. Author has and has had developed a computer program.
B. Harvard has certain rights in such program.
C. Licensor is not properly equipped or in a position to successfully
market such program and prefers to grant Licensee exclusive rights to
commercially exploit such program, and any future-developed computer programs of
substantially similar commercial applicability developed by Author and which are
owned or controlled by Harvard, in return for certain royalties and promises by
Licensee to use its best efforts to exploit such programs as described below.
AGREEMENT
In consideration of the mutual covenants and promises herein contained,
the parties hereto agree as follows:
1. Definitions
1.1 Original Works. The reference manuals and other materials listed on
Exhibit A hereto, and the computer program described on Exhibit B hereto, in
source code, executable object code and all other forms.
1.2 Functional Definition of the Works. The functional description of
the Works described on Exhibit I.
1.3 Derivative Works. A revision, enhancement, improvement,
modification, translation, condensation, or expansion of the Works or any other
form in which the Works may be recast, transferred or adapted. In addition,
"Derivative Works" shall include any computer programs developed by or for
Author, either prior to or subsequent to the Effective Date, which are included
within the Functional
<PAGE> 2
Definition of the Works and which Licensor controls to the extent of being able
to grant Licensee the rights contemplated hereunder. In addition, "Derivative
Works" shall also include any computer programs developed by or for Licensee
subsequent to the Effective Date which are included within the Functional
Definition of the Works and which Licensee controls to the extent of being able
to grant Licensor the rights contemplated hereunder. Licensor and Licensee
hereby agree to exercise their respective best efforts to obtain, exercise, and
maintain the control referred to in this Section 1.3 and Sections 1.4 and 1.5
with respect to Derivative Works for so long as this provision of this Agreement
shall remain in effect.
1.4 Licensor Improvements. Derivative Works to the extent that such
Works are created by or for Author and which Licensor controls to the extent of
being able to grant the rights contemplated hereunder.
1.5 Licensee Improvements. Derivative Works to the extent that such
Works are created by Licensee and are not created by or for Author within the
meaning of Section 1.4 above.
1.6 Works. The Original Works, Licensor Improvements, and Licensee
Improvements, collectively.
1.7 Commercial Software Version. Any specific version of the Works
which is marketed generally by Licensee for commercial purposes and which may be
differentiated from other Commercial Software Versions according to any
combination of functional specifications, performance specifications, or the
associated type of computer hardware.
1.8 Academic Software Version. Any specific version of the Works which
is made available pursuant to this Agreement by Licensor for Non-Commercial Use
and which may be differentiated from other Academic Software Versions according
to any combination of functional specifications, performance specifications, or
the associated type of computer hardware.
1.9 Non-Commercial Use. Academic research or other non-profit
educational use which is: (1) not-for-profit; (2) not conducted or funded
(unless such funding confers no commercial rights to the funding entity) by an
entity engaged in the commercial use, application or exploitation of works
similar to the Works; and (3) not intended to produce works for commercial use.
1.10 Licensed Works. The Original Works and Licensor Improvements,
collectively.
2.
<PAGE> 3
2. License.
2.1 Grant of Exclusive License. Licensor hereby grants
Licensee an exclusive (even as to Licensor), perpetual, worldwide license
(sublicenseable at any level) under and to Licensor' s patents, patent
applications, copyrights, know-how, and other intellectual property and rights
of all kinds to: (i) use, reproduce, distribute, and sell or otherwise dispose
of the Works; and (ii) create Derivative Works. The license granted in this
Section 2.1 may be revoked only as expressly provided in this Agreement.
2.2 Grantback of Rights. Licensee grants to Licensor the
non-exclusive right to use the Works and to develop Derivative Works (but not
reproduce or distribute except as otherwise expressly provided under this
Agreement) solely for Non-Commercial Use, which for purposes of this Agreement
shall be deemed to include uses contemplated by the terms of the Sponsored
Research Agreement between Licensee and Harvard dated 6/23/86, 1986 (the
"Sponsored Research Agreement").
2.3 Ownership. Title to the Licensed Works shall remain the
exclusive property of Licensor All rights in Licensee Improvements shall be held
exclusively by Licensee; Licensor may not use, reproduce or distribute Licensee
Improvements in any manner except as otherwise expressly provided under this
Agreement.
3. Provision of Product by Licensee for Non-Commercial Use.
3.1 Loaner Copy to Licensor. During the term of this
Agreement, Licensee shall grant to Licensor, on the terms and conditions set
forth in Exhibit C hereto (including ongoing maintenance) but without fee, a
license to use Licensee's then-current Commercial Software Versions, on such
Licensee-supported types of machine configurations as Licensor and Licensee may
from time to time select, exclusively for Non-commercial Use, which for purposes
of this Agreement shall be deemed to include uses contemplated by the terms of
the Sponsored Research Agreement (such copy of the Commercial Software Versions
is referred to herein as the "Loaner Copy"). Licensee reserves the right to
limit the number of machine configuration versions installed at Licensors' site
at any one time to two (2) and to require sixty (60) days written notice in
order to replace any version with another.
3.
<PAGE> 4
3.2 Distribution.
(a) Licensor shall have the right to distribute copies of the
Academic Software Versions solely for Non-Commercial Use to each person
designated by Author; provided, however, that (i) such copies shall be
distributed only to responsible parties at accredited universities or other
non-profit organizations who shall have first entered into written license
agreements with Licensor in the form of Exhibit D, or such other written form as
may from time to time be agreed in writing between Licensor and Licensee; (ii)
the recipients of such Academic Software Versions under this subsection 3.2(a)
shall not be entitled to any maintenance service, enhancements, or upgrades from
Licensee, except as may be otherwise agreed in writing between a recipient and
Licensee in any particular instance. Such copies shall be distributed at no
charge other than the marginal cost of media, copying and distribution, which
costs are currently estimated at U.S.$400.00 for points within the continental
United States. Any changes to such charge shall be as agreed in writing between
Licensor and Licensee. No recipient of copies under this Section 3.2 shall be
eligible to receive another copy under this Section until the first copy shall
have been returned to Licensee. Licensee shall have the right to require
Licensor to comply with the reporting, record-keeping, and audit provisions of
Section 7, generally, in order to determine Licensor' s compliance with the
provisions of this Section 3.2. Licensor shall furnish Licensee with written
notice of the identity and location of each recipient of a copy of the Academic
Software Version and an executed copy of the applicable license agreement no
later than thirty (30) days following the date of distribution to such
recipient.
(b) Licensor shall have the right to direct the distribution
of copies by Licensee of the Commercial Software Versions solely for
Non-Commercial Use to each person designated by Author; provided, however, that
(i) Works which are computer programs shall, at Licensee's option, be
distributed only in binary object code format ("Object Form"); (ii) such copies
shall be distributed only to responsible parties at accredited universities or
other non-profit organizations who shall have first entered into written license
agreements with Licensor in the form set forth in Exhibit C, or such written
form as may from time to time be agreed in writing between Licensor and
Licensee, and have delivered an executed copy thereof to Licensee; (iii) the
recipients of such software under this subsection 3.2(b) shall not be entitled
to any maintenance service, enhancements, or upgrades from Licensee, except as
may be otherwise agreed in writing between a recipient and
4.
<PAGE> 5
Licensee in any particular instance; and (iv) such copies shall only be
distributed in accordance with Licensee's commercial release schedule. Such
copies shall be distributed at no charge other than the marginal cost of media,
copying and distribution, which costs are currently estimated at U.S.$500.00 for
points within the continental United States. Any changes to such charge shall be
as agreed in writing between Licensor and Licensee. No recipient of copies under
this Section 3.2(b) shall be eligible to receive another copy under this Section
until the first copy shall have been returned to Licensee. Licensee shall notify
Author of each copy distributed pursuant to this Section.
(c) The parties agree that no distribution under the provisions of
subsection 3.2(a) shall be permitted in source code form unless the recipient
shall have previously established to the satisfaction of Author that thespecific
lines or modules of the source code to be distributed are necessary or desirable
in order to permit the attainment of academic research or educational
objectives. The parties further agree to cooperate technically with a view
toward eliminating the functional necessity in the future for the distribution
of all or any portion of the Academic Software Versions in the form of source
code.
(d) The parties recognize that users of Works distributed pursuant to
Section 3.2(b) may require the ability, for research purposes, to interface user
or third party-developed software to the Commercial Software Versions or to
replace certain subsystems included within the Commercial Software Versions with
user or third party-developed subsystems. The parties agree to cooperate on the
development of specifications for enhancements to the Commercial Software
Versions which (although all Works distributed in accordance with Section 3.2(b)
which are computer programs will be distributed solely in Object Form) will
operate to facilitate such interfacing or subsystem substitution activities in a
manner that will not compromise the functional integrity or supportability of
the Commercial Software Versions as installed in the field. Such enhancements
would include, but not necessarily be limited to, the ability to substitute
certain types of user-defined force field parameters, the ability to invoke
certain functions of the Commercial Software Versions at subroutine level, and
the production of documentation describing mechanisms whereby certain defined
ASCII data file formats can be passed to and from the Commercial Software
Versions or to and from certain functional subsystems included within the
Commercial Software Versions.
5.
<PAGE> 6
4. Product Delivery and Acceptance.
4.1 Initial Delivery. Within fifteen (15) days after the Effective
Date, Licensor shall deliver to Licensee a copy of the Original Works.
4.2 Delivery of Derivative Works. Licensor shall promptly deliver to
Licensee a copy of all Licensor Improvements created during the term of this
Agreement. Nothing in this Agreement shall obligate Licensor to create Licensor
Improvements.
5. Improvement and Commercial Exploitation.
5.1 Technical Development by Licensee. Licensee shall use its best
efforts to meet the technical development goals listed on Exhibit G hereto
within time schedules that the parties shall agree to from time to time.
5.2 Licensee Marketing Obligations. Licensee agrees to use its best
efforts to promote the Works in the normal course of Licensee's business, as
Licensee shall deem commercially appropriate.
5.3 Control of Marketing and Distribution. Subject to the provisions of
Section 5.2 hereof, all aspects of the distribution and marketing of the Works
shall be in Licensee's sole control, including without limitation the methods of
marketing, pricing, naming, packaging, labelling, and advertising, the terms and
conditions of sale and/or license, and the collection of fees. Licensee agrees
that all advertising material shall be in good taste and avoid product
performance claims which are untruthful or intentionally misleading. Licensee
may distribute the Works through any combination of direct marketing,
distributors, representatives, original equipment manufacturers, and other
means, and either alone or in combination with other products. Licensee shall,
in distributing the Commercial Software Versions, use a form of End-User License
Agreement which is similar in substance to that attached hereto as Exhibit E.
5.4 Promotional Use. It is expressly understood that, pursuant to
Section 5.3, Licensee may, without incurring any royalty pursuant to Section 6
hereof: (i) make copies of the Works available to potential customers without
charge for periods [*]; and (ii) make copies of any
corrected or updated Works and distribute them without charge to all previous
customers for the Works which were so corrected or updated.
*CONFIDENTIAL TREATMENT REQUESTED
6.
<PAGE> 7
5.5 Referral of Inquiries. Licensor shall refer any inquiries received
by it regarding the commercial use of the Works to Licensee and shall notify
Licensee of each such referral.
5.6 Technical Communications. For the [*] that this Agreement remains
in effect and so long as the royalty provisions of Section 6 remain in force,
Licensor agrees to cooperate with Licensee in the joint solicitation, collection
and collation from recipients of Academic Software Versions no less frequently
than annually their oral and written comments, requests for enhancement,
software bug reports and other technical matters of interest concerning their
use of the Academic Software Version (hereinafter "Technical Communications")
and to make available such Technical Communications to Licensee for presentation
in a forum open to licensed users of the Academic and Commercial Software
Versions where review and discussion of these Technical Communications can be
promoted with a view toward improving the quality, functionality and technical
standards of the Works. In organizing such forums, each party shall be
responsible for its own costs, and every effort will be made to ensure that the
forum is self-supporting on the basis of admission charges to attendees.
Licensor may elect to discontinue its participation in the activities
contemplated under this Section 5.6 upon written notice to Licensee at any time
after this Agreement has been in effect for [*].
6. Royalty Payments to Licensor.
6.1 Royalty Amount. Licensee shall pay to Licensor royalties equal to
the product of the Royalty Rate applicable to each Commercial Software Version
and the Net License Fees applicable to such Commercial Software Version.
6.2 Net License Fees.
(a) Subject to the remainder of this Section 6.2, the "Net License
Fees" shall be the aggregate License Fees (as described on Exhibit F) received
by the Licensee for each Mainframe or Workstation Configuration installation of
the Commercial Software Versions, less the following deductions to the extent
such deductions are directly attributable to such installation and are stated
separately in the applicable invoice or in a later statement:
(i) Trade or quantity discounts allowed and
taken by customers, including advertising
allowances and
* CONFIDENTIAL TREATMENT REQUESTED
7.
<PAGE> 8
marketing fees or commissions of any kind.
(ii) Actual credits to customers on account of
any returns of such Commercial Software
Versions.
(iii) Any of the following, when charged to
customers:
(x) transportation and insurance costs
from place of shipment to point of
delivery;
(y) excise, sales, value-added,
property and use taxes; and
(z) import and export duties, taxes and
surcharges.
(b) If any Works are distributed with other products in a
package for a single charge, the Net License Fees attributable to such Works
shall be determined by prorating the receipts from the sale or license of the
package according to the published list charges established by Licensee for the
separate products contained in the package whether or not such products are
distributed separately, but shall not exceed the Licensee's published list
License Fee for the applicable Commercial Software Version.
(c) Amounts received by Licensee as deposits or advances shall
not be deemed to have been received until installations of Commercial Software
Versions have occurred with respect to such deposits or advances. If Licensee
receives a partial payment for any invoice which includes both the Works and
other products, Licensee shall calculate Net License Fees by prorating
Licensee's actual receipts over the published list charges established by
Licensee for the separate products included in the invoice.
6.3 Royalty Rates. The "Royalty Rate" for the Commercial Software
Versions shall be as set forth on Exhibit F.
6.4 Maximum Royalty.
(a) In the event that (i) the total aggregate royalties paid
to Licensor pursuant to this Agreement equals or exceeds the Maximum Royalty
specified on Exhibit F and (ii) Licensor shall have elected not to or
8.
<PAGE> 9
shall have failed or been unable to comply with the provisions of Section 5.6
hereof, and (iii) this Agreement shall have been in effect for [*], then
Licensee's obligations to pay any royalties pursuant to this Agreement shall
immediately terminate, the licenses granted pursuant to Sections 2.1 and 8.1
shall then immediately become irrevocable, and Licensee's obligations under
Sections 5.1 and 5.2 shall terminate.
(b) Notwithstanding the provisions of subsection (a) above, in the
event of and from the date that the conditions of subsections (a)(ii) and (iii)
above are satisfied, Licensee shall have the option thereafter to pay the
balance of the Maximum Royalty amount then unpaid, whereupon Licensee's
obligations to pay any royalties pursuant to this Agreement shall immediately
terminate, the licenses granted pursuant to Sections 2.1 and 8.1 shall then
immediately become irrevocable, and Licensee's obligations under Sections 5.1
and 5.2 shall terminate.
6.5 Taxes. Licensee shall pay or reimburse Licensor for amounts equal
to any taxes, other duties, tax penalties, or amounts in lieu thereof however
designated, now or hereafter levied or based on payments due under this
Agreement, exclusive of taxes based upon Licensor' 5 net income. In lieu
thereof, Licensee may provide to Licensor an exemption certificate acceptable to
the taxing or levying authority.
7. Payments and Records.
7.1 Quarterly Reports and Payments. Licensee shall deliver written
reports to Licensor within 30 days after the last day of each calendar quarter
stating the number and type of Commercial Software Versions that were installed
during such quarter, the Net License Fees attributable thereto, and the
royalties thereon, and enclosing payment of royalties due for such quarter.
7.2 Records. Licensee agrees that it shall maintain complete, clear and
accurate records sufficient to establish the royalties payable pursuant to
Section 6.
7.3 Audit. Licensor shall have the right, upon reasonable notice and
during normal business hours, to have independent certified public accountants
acceptable to Licensee examine, at Licensor's expense except as set forth
below, Licensee's records relating to the royalties payable pursuant to this
Agreement; provided, that such accountants must agree in advance in writing to
maintain in confidence
* CONFIDENTIAL TREATMENT REQUESTED
9.
<PAGE> 10
and not to disclose to any party any information obtained during the course of
such examination, other than a disclosure to Licensor of the amounts of fees
that should have been paid for the period covered by the examination. It is
agreed that Licensor may utilize its internal auditing staff to perform any
examinations permitted hereunder except that in the event of any dispute,
Licensee may elect by notice in writing to require an examination by independent
certified public accountants acceptable to Licensee. Any errors discovered
during such examination shall be corrected by the appropriate party. In no event
shall any such adjustment be made more than 3 years after the end of the period
in error. In the event such an audit reflects an underpayment of ten percent or
more of the amount that should have been paid to Licensor for the period
examined, then the expense of such examination shall be borne by Licensee.
8. Proprietary Rights.
8.1 Trademark Rights. Licensor hereby grants to Licensee the
exclusive right (excepting only the right of Licensor to use the name CHARMM
itself for purposes of identifying the Academic Software Version, which is
hereby reserved) to use a mutually agreeable distinctive variant or stylized
version of the name "CHARMM" for purposes of marketing and promoting the Works
and agrees to refrain from granting to any third party any right of any kind
whatsoever to use the name CHARMM. Licensee shall have no right to use the name
"Harvard" or "Harvard University" without the express written permission of
Harvard. Licensee may, if it so elects, market the Works under a name of its own
choosing.
8.2 Copyright and Proprietary Notices. Licensee shall
reproduce and include copyright and proprietary notices on all copies of the
Licensed Works in the same form and manner that such copyright and proprietary
notices are included on the original copies thereof or in such other form and
manner as may be agreed to by Licensor; provided, however, that Licensee may add
its own copyright and proprietary notices to the Licensed Works. Licensee shall
use its best efforts to ensure compliance herewith by all of Licensee's
distributors.
8.3 Registrations. Licensor agrees to cooperate with Licensee
in obtaining in Licensor's name for Licensee as exclusive licensee any patent,
copyright, or other statutory protections for the Licensed Works in any country.
Licensee agrees to reimburse Licensor for ordinary and necessary out-of-pocket
expenses incurred by Licensor in connection with such cooperation.
10.
<PAGE> 11
9. Infringement by Others.
9.1 Notification. Each party shall notify the other of any
infringements of rights in the Licensed Works that come to such party's
attention.
9.2 Actions. In the event of any infringement of any rights
granted to Licensee hereunder, Licensee shall have the first option to bring any
action for such infringement on behalf of itself and Licensor, and Licensor
shall cooperate fully with Licensee in such action. Licensee agrees to reimburse
Licensor for ordinary and necessary out-of-pocket expenses incurred by Licensor
in connection with such cooperation. In such event, Licensee shall bear the
expenses of the action and shall retain any sums recovered in the action. If
Licensee declines in writing to bring any such action, Licensor may proceed and
shall bear all expenses of the action, and shall be entitled to retain all
proceeds of such action.
10. Protection of Confidential Information. Licensor shall not disclose
any information received from Licensee pursuant to Section 7 to any party
without Licensee's prior written consent, excepting financial information in
such form as may be required by and for Licensor' s independent certified public
accountants or as may be required in order to comply with governmental reporting
requirements. The restrictions of this Section 10 shall not apply to information
which: (a) is, at the time, in the public domain through no act of Licensor; or
(b) is lawfully known by Licensor from a source other than Licensee with no
restriction of confidentiality.
11. Warranties and Indemnification.
11.1 Ownership Warranty. Except as discussed in Section 11.2,
Licensor represents and warrants to Licensee that: (i) the Licensed Works are
original with Licensor; (ii) to the best of its knowledge, the Licensed Works do
not infringe upon any patent, copyright, trade secret or other proprietary
rights of others; (iii) to the best of its knowledge, Licensor is the sole and
exclusive owner of the Licensed Works, all rights therein, and the rights
granted herein to Licensee; (iv) Licensor has not previously or otherwise
granted any other rights in the Licensed Works to any third party which conflict
with the rights herein granted to Licensee; and (v) Licensor has full power to
grant the rights herein granted to Licensee.
11.
<PAGE> 12
THE FOREGOING WARRANTY IS THE SOLE WARRANTY OF LICENSOR TO LICENSEE AND
IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
11.2 Exceptions.
(a) It is understood that Author has made all or portions of
the Original Works available pursuant to non-exclusive licenses for internal use
by [*]. Licensor agrees to notify such companies of the execution of this
Agreement and to cooperate to the extent required if such companies request that
their licenses be transferred to Licensee. In addition, it is understood that
Licensor has made all or portions of the Original Works available to the persons
named on Exhibit H under arrangements which restrict their use to Non-Commercial
Use only. It is understood that the contents of Exhibit H are incomplete as of
the date of execution of this Agreement and that Licensor undertakes to complete
the contents of Exhibit H promptly upon receipt of the relevant information from
Author. Licensor agrees to write those persons listed in Exhibit H who have not
signed Academic Software License Agreements confirming that the software which
has been provided by Author is for Non-Commercial Use only.
(b) It is understood that the United States Government holds a
non-exclusive license to use solely those blocks of code contained within the
Original Works which are identified on Exhibit J, which constitute in the
aggregate substantially less than the majority of the Original Works.
Notwithstanding the foregoing and anything to the contrary contained herein,
Section 11.1 shall be construed to include a warranty that the rights granted
Licensee pursuant to this Agreement with respect to the remainder of the blocks
of code making up the Original Works shall in no way be impaired in the event
that the United States Government exercises all or any part of its license
rights with respect to those blocks of code identified on Exhibit J.
11.3 Power and Authority. Each of Licensor and Licensee represents and
warrants to the other that it has full legal power and authority to enter into
this agreement and to carry out its obligations contained herein.
11.4 Right of Set Off. In the event Licensee becomes subject to any
claim, demand, or suit resulting from a breach of any of the warranties set
forth above in Section 11.1, as qualified by Section 11.2, Licensee shall
* CONFIDENTIAL TREATMENT REQUESTED
12.
<PAGE> 13
have the right to set off, as incurred, (a) its attorneys' fees and expenses
arising from such claim, demand, or suit, (b) costs and damages awarded against
it, in connection with any such claim, demand or suit, by any court or
arbitrator having jurisdiction, or (c) the amount of any settlement concluded in
connection with the same, against royalties otherwise due Licensor subsequent to
the date of notice to Licensor of such claim, demand or suit. Licensor shall
cooperate with Licensee by providing all available assistance and information
necessary to enable Licensee to carry out its defense. Should the above costs
exceed the royalties due in any particular calendar year, Licensee may offset
the excess against royalties due in subsequent years.
In addition, Licensor shall be permitted, at its own option
and expense: to procure for Licensee the right to continue the use of the
Licensed Works subject to such claim, demand or suit; or having failed to obtain
such right, to replace or modify such Licensed Works to make them
non-infringing. If Licensor elects to replace or modify any of the Licensed
Works, such replacement or modification shall substantially meet the performance
and interface specifications of the replaced or modified Licensed Works. In the
event Licensor declines to replace or modify the Licensed Works, Licensee may,
upon written consent of Licensor, replace or modify a portion of the Licensed
Works to eliminate any infringement. In the latter case, Licensee shall be
entitled to set off against royalties otherwise due Licensor subsequent to the
date of notice to Licensor of such claim, demand or suit, Licensee's actual
costs incurred in connection with the replacement or modification of the
Licensed Works. If such costs exceed the royalties due in any particular
calendar year, Licensee may offset the excess against royalties due in
subsequent years.
11.5 Combinations. Licensor shall have no liability for any
claim of infringement based on Licensee's combination of the Licensed Works with
programs or data not supplied by Licensor hereunder, if such claim would have
been avoided by the use of the Licensed Works without such specific program or
data.
11.6 Survival. The warranties and indemnities stated in this
Section 11 shall survive the expiration or termination of this Agreement.
Section 11.4 above states Licensor's exclusive liability to Licensee for breach
of the warranties set forth in Section 11.1 and 11.2.
13.
<PAGE> 14
12. Term and Termination.
12.1 Term. This Agreement shall continue until terminated by
written mutual consent of the parties unless earlier terminated as provided
herein.
12.2 Termination for Non-Marketability. If Licensee determines
that due to changes in market conditions or for any other reason Licensee will
not, or will not continue to, market or distribute the Licensed Works, Licensee
may terminate this Agreement at any time upon thirty (30) days' written notice
to Licensor.
12.3 Termination for Breach; Bankruptcy. If either party
materially breaches or fails to perform any obligation under this Agreement and
fails to remedy such breach within thirty (30) days after receiving written
notice of the breach from the other party, or if either party makes any
assignment for the benefit of creditors, or if any bankruptcy, reorganization,
or other proceeding under any bankruptcy or insolvency law is initiated by it,
or is initiated against it and not dismissed or stayed within thirty days, the
other party may terminate this Agreement effective upon notice. For purposes of
this Section 12.3, Licensee's failure without cause to provide the research
support called for by the terms of the Sponsored Research Agreement shall be
deemed a material breach of this Agreement.
13. Effect of Termination.
13.1 Termination of License. Upon termination of this
Agreement, all rights and licenses to the Licensed Works granted to Licensee
hereunder shall, subject to Section 6.4, automatically cease, except that for a
period not longer than [*], Licensee may continue to license pursuant to the
terms of this Agreement a number of copies of the Works in Licensee 's inventory
at the time of termination which does not exceed [*] and, except further, that
Licensee may retain and use copies of any version of the Works for the purpose
of providing support to its then-existing customers.
13.2 Survival of Obligations. The provisions of Sections 1,
2.3, 6.4, 8.3, 9.2, 10, 11, 12, 13, and 14 (and, if provided by Section 6.4,
Sections 2.1 and 8.1) shall survive termination of this Agreement and shall
continue in full force and effect thereafter.
* CONFIDENTIAL TREATMENT REQUESTED
14.
<PAGE> 15
13.3 Survival of Customers' Rights. All rights and licenses
granted by Licensee to third parties prior to termination shall continue
indefinitely in full force and effect.
13.4 Option to Acquire Commercial Software Version. In the
event this Agreement is terminated by Licensee pursuant to Section 12.2 or there
is a final adjudication that this Agreement has been lawfully terminated by
Licensor pursuant to Section 12.3, Licensor may elect by notice in writing to
Licensee to transfer to itself and assume or to arrange for the transfer and
assumption of the responsibility for the marketing and support for the
Commercial Software Version, in which case Licensee shall grant to Licensor a
license to all Licensee Improvements included in the most recent Commercial
Software Version. Such license shall be in substance identical to that
originally granted to Licensee except that royalty obligations in favor of
Licensee shall be determined from the date of any such transfer as if Licensee
were Licensor hereunder, based upon the proportion that the Licensee
Improvements then bear to the whole of the Commercial Software Version.
14. General.
14.1 Notices. All notices, demands or consents required or
permitted hereunder shall be in writing and shall be delivered, sent by telegram
or telex, or mailed to the respective parties at the addresses set forth below
or at such other address as shall have been given to the other party in writing
for the purposes of this clause. Such notices and other communications shall be
deemed effective upon the earliest to occur of (i) actual delivery, (ii) five
days after mailing, addressed and postage prepaid, return receipt requested, or
(iii) one day after transmission by telex or telegram.
14.2 Waiver and Amendment. No waiver, amendment or
modification of any provision hereof shall be effective unless in writing and
signed by the party against whom such waiver, amendment or modification is
sought to be enforced. No failure or delay by either party in exercising any
right, power or remedy hereunder shall operate as a waiver of any such right,
power or remedy.
14.3 Assignment. Either party may assign this Agreement to an
entity which acquires, directly or indirectly, substantially all of its assets
or merges with it. Except as set forth herein, neither this Agreement nor any
15.
<PAGE> 16
rights hereunder, in whole or in part, shall be assignable or otherwise
transferable by either party without the express written consent of the other
party. Subject to the above, this Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the parties hereto.
14.4 Governing Law. This Agreement shall be governed by the
law of the Commonwealth of Massachusetts as such law is applied by Massachusetts
courts to contracts between Massachusetts residents entered into and to be
performed within the Commonwealth of Massachusetts.
14.5 Integration. This Agreement, including any attached
Exhibits, constitutes the final, complete and exclusive agreement of the parties
concerning the subject matter hereof, and supersedes any other communication
related thereto.
14.6 Severability. In the event that any provision of this
Agreement shall be unenforceable or illegal, such provision shall be deemed
modified or, if necessary, deleted so that the entire Agreement shall not fail,
but shall continue in force and effect.
14.7 Arbitration. With the exception of an action seeking
injunctive relief for breach of Section 10 hereof, any dispute, controversy or
claim arising out of or relating to this Agreement, the subject matter hereof,
or the breach hereof shall be settled by binding arbitration in Boston,
Massachusetts, in accordance with the Commercial Arbitration Rules then
prevailing of the American Arbitration Association. Judgment upon any award made
in such arbitration may be entered and enforced in any court of competent
jurisdiction.
14.8 Attorney's Fees. The prevailing party in any arbitration
or judicial action brought to enforce or interpret this Agreement or for relief
for its breach shall be entitled to recover its costs (including its share of
arbitration fees) and its reasonable attorney's fees therein incurred.
14.9 Export.
(a) Licensor is familiar with and agrees to comply with
all Export Administration Regulations of the United States Department of
Commerce (and other United States government regulations relating to the export
of technical data and equipment and product(s) produced therefrom) which are
applicable to Licensee with regard to any distribution under Section 3.2(a)
hereof by Licensor or
16.
<PAGE> 17
any distribution under Section 3.2(b) hereof which is directed by Licensor.
(b) Licensee is familiar with and agrees to comply with all
Export Administration Regulations of the United States Department of Commerce
(and other United States government regulations relating to the export of
technical data and equipment and product(s) produced therefrom) which are
applicable to Licensee with regard to any distribution of the Licensed Works.
(c) Licensor shall provide to Licensee all assistance
reasonably necessary to obtain any United States or foreign import or export
license relating to the Works.
14.10 Products Liability Indemnity. Licensee agrees to indemnify, hold
harmless and defend Licensor, its trustees, officers, faculty, employees and
agents against any and all claims arising out of this Agreement in connection
with any damages, losses or liabilities whatsoever with respect to death or
injury to person or damage to property from or out of the possession, use or
operation of the Licensed Works by the Licensee, or its customers, in any manner
whatsoever.
14.11 Certain Notices. Licensee agrees that the documentation
accompanying the Licensed Works shall include the substance of the following
acknowledgment and disclaimer: "Some portions of the licensed software were
developed with support from the National Science Foundation (NSF) and The
National Institutes of Health (NIH) under grant numbers: CHE-76-17569;
CHE-79-20433; CHE-82-12921; EX00062; and GM30809, but such support does not
imply the endorsement of NSF or NIH."
14.12 Compliance With NSF Regulations. To the extent necessary for
Licensor to comply with NSF Regulations, Licensee agrees to permit the NSF to
examine, audit, and copy those of Licensee's records relative to those
NSF-supported blocks of code described in Exhibit J.
14.13 Rights and Remedies Cumulative. The rights and remedies herein
provided shall be cumulative and not exclusive of any other rights or remedies
provided by law or otherwise.
14.14 Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
17.
<PAGE> 18
14.15 Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
AGREED:
THE PRESIDENT AND FELLOWS
OF HARVARD UNIVERSITY /s/ Martin Karplus
------------------------------------------
Martin Karplus
Address: 133 Irving St
----------------------------------
Cambridge, MA 02158
/s/ Joyce Brinton ------------------------------------------
- --------------------------- __________________________________________
Authorized Signature
Name: Joyce Brinton POLYGEN CORPORATION
Title: Director, Patents,
---------------------
Copyrights & Licensing
- ---------------------------
Address: 1350 Mass. Ave. /s/ Jeffrey M. Wales
------------------- ------------------------------------------
Cambridge, MA 02138 Authorized Signature
- ---------------------------
___________________________ Name: Jeffrey M. Wales
--------------------------------------
Title: President & Chief Executive Officer
-------------------------------------
Address: 100 Fifth Avenue
Waltham, MA 02154
18.
<PAGE> 19
EXHIBIT A
DESCRIPTION OF DELIVERABLE DOCUMENTATION
<PAGE> 20
Exhibit A
Directory WORK01:[CHARMM.DOC19]
ANALYSIS.DOC:34 41
CHMIDX.DOC:28 5
CHMIDXSRT.DOC:28 5
COMMANDS.DOC:10 3
COMPARE.DOC:40 40
CONS.DOC:53 31
CORMAN.DOC:46 37
CORREL.DOC:26 61
DIR.DOC:18 3
DYNAMC.DOC:23 52
DYNANAL.DOC:30 39
ENERGY.DOC:77 23
GRAMPS.DOC:19 15
HBONDS.DOC:17 11
HBUILD.DOC:14 14
IMAGES.DOC:30 28
IMPLEM.DOC:57 67
IMFO.DOC:43 68
INTCOR.DOC:32 26
IO.DOC:95 61
MINIMIZ.DOC:15 26
MISCOM.DOC:21 25
MONITOR.DOC:6 7
NBONDS.DOC:46 31
PARMFILE.DOC:21 40
PLOT.DOC:13 19
RTOP.DOC:16 3
SEOUND.DOC:5 4
SCALAR.DOC:22 7
SELECT.DOC:30 14
STORAGE.DOC:45 68
STRUCT.DOC:32 24
SUPPORT.DOC:28 17
TABLE.DOC:39 63
TEST.DOC:5 6
USAGE.DOC:91 49
VIBRAN.DOC:94 91
Total of 37 files, 1124 blocks.
A-1
<PAGE> 21
Directory WORK01:[CHARMM.DOC19]
INFO.DOC:43 68
INFO.EMA:110 47
INFO.TEC:77 12
INFO.TEC:76 12
INFOCH.COM:6 2
INFOCH.EMA:33 26
INFOCH.TEC:21 7
Total of 7 files, 174 blocks.
A-2
<PAGE> 22
Directory WORK01:[CHARMM.DOC19]
COMMANDS.OUT:1 769
IMPLEM.OUT:1 135
SUPPORT.OUT:1 29
USAGE.OUT:1 91
Total of 4 files, 1024 blocks.
A-3
<PAGE> 23
EXHIBIT B
SOFTWARE SPECIFICATIONS
<PAGE> 24
EXHIBIT B
Directory WORK01:[CHARMM]
CHARMM.EXE:1 2410
CHARMM.OLB:1 3770
B-1
<PAGE> 25
Directory WORK01:[CHARMM.SOURCE19]
CHARMM.FLX;5 101
USERSB.FLX;1 14
Total of 2 files, 115 blocks.
Directory WORK01:[CHARMM.SOURCE19.ANAL]
ADATST.FLX;1 54
ADDTAB.FLX;1 62
ANALYS.FLX;1 52
ANARRAY.FLX;1 30
APRINT.FLX;1 52
ASTRING.FLX;1 11
AUTIL.FLX;1 53
BLOFTB.FLX;1 97
BLDTAB.FLX;1 46
COMPAR.FLX;1 121
DELTAB.FLX;1 30
DYNANAL.FLX;1 80
DYNCOM.FLX;1 62
GTCLCO.FLX;1 59
GTSNDT.FLX;1 75
HOMOL.FLX;1 20
PLOT.FLX;1 37
PLOTLP.FLX;1 34
PRESOT.FLX;1 71
SELECT.FLX;1 14
Total of 20 files, 1060 blocks.
Directory WORK01:[CHARMM.SOURCE19.CORREL]
ANACOR.FLX;1 26
CORDYN.FLX;2 32
CORFUN.FLX;2 20
CORREL.FLX;2 51
CORRIO.FLX;2 24
MANCOR.FLX;2 3
MANTIM.FLX;2 29
Total of 7 files, 185 blocks.
Directory WORK01:[CHARMM.SOURCE19.DYNAMC]
DCNTRL.FLX;1 36
DYNAMC.FLX;2 24
DYNLNG.FLX;1 5
DYNSUB.FLX;1 34
DYNUTIL.FLX;1 40
TRNPHI.FLX;1 26
Total of 6 files, 165 blocks.
Directory WORK01:[CHARMM.SOURCE19.ENERGY]
ABNER.FLX;1 41
[illegible] [illegible]
B-2
<PAGE> 26
ENERFAST.FLX.1 [illegible]
ENERGY.FLX;2 25
ENSTZ.FLX;1 61
INTERE.FLX;1 14
MINMIZ.FLX;1 27
PRINTE.FLX;2 11
Total of 12 files, 445 blocks.
Directory WORK01:[CHARMM.SOURCE19.GENER]
GENPSF.FLX;2 49
HBONDS.FLX;2 56
MODPSF.FLX;2 79
NBONDS.FLX;2 101
UPDATE.FLX;2 53
Total of 5 files, 338 blocks.
Directory WORK01:[CHARMM.SOURCE19.IMAGE]
IMAGES.FLX;1 55
IMAGIO.FLX;1 31
UPIMAG.FLX;1 86
Total of 3 files, 172 blocks.
Directory WORK01:[CHARMM.SOURCE19.IO]
COORIO.FLX;2 41
PARMIO.FLX;2 85
PSFRES.FLX;1 29
RTFIO.FLX;1 71
Total of 4 files, 226 blocks.
Directory WORK01:[CHARMM.SOURCE19.MANIP]
CORMAN.FLX;2 55
CORMAN2.FLX;2 39
CSTRAN.FLX;1 38
INTCOR.FLX;3 65
INTCOR2.FLX;2 55
RGYR.FLX;1 17
ROTLSQ.FLX;1 28
SCALAR.FLX;2 31
SHAKE.FLX;1 26
Total of 9 files, 354 blocks.
Directory WORK01:[CHARMM.SOURCE19.MISC]
DRAWSP.FLX;1 7
EEXEL.FLX;1 30
ETABLE.FLX;1 18
GRAMPS.FLX;1 85
ABUILD.FLX;1 85
NOE.FLX;2 27
POWELL.FLX;1 38
SBOUND.FLX;1 31
SURFAC.FLX;1 34
TESTCH.FLX;1 32
[illegible]
B-3
<PAGE> 27
Directory WORK01:[CHARMM.SOURCE19.[illegible]]
CHUTIL.FLX;1 19
DATSTR.FLX;1 31
DIAGQ.FLX;1 29
MISCOM.FLX;1 44
SELCTA.FLX;1 64
SORT.FLX;1 22
STRING.FLX;2 80
UTIL.FLX;1 34
Total of 9 files, 341 blocks.
Directory WORK01:[CHARMM.SOURCE19.VAX]
EVDWF.FLX;1 15
VAXDEP.FLX;1 33
Total of 2 files, 48 blocks.
Directory WORK01:[CHARMM.SOURCE19.VIBPAN]
GAUSHS.FLX;1 68
NRAPH.FLX;1 21
PFSUBS.FLX;2 59
QUASI.FLX;1 10
REDBAS.FLX;2 22
VIBCOM.FLX;1 17
VIBIO.FLX;2 39
VIBRAN.FLX;2 73
VIBSUB.FLX;1 59
VIBUTIL.FLX;2 53
Total of 10 files, 421 blocks.
Grand total of 13 directories, 99 files, 4257 blocks.
B-4
<PAGE> 28
Directory Work01:[CHARMM.SOURCE19.F0M]
BASES.FCM:1 1
CMDPAR.FCM:1 1
CNST.FCM:1 6
CODE.FCM:1 2
COMAND.FCM:1 1
CONSTA.FCM:1 4
CONTRL.FCM:1 3
COORD.FCM:1 1
COORDC.FCM:1 2
CSTACK.FCM:1 1
CTITLA.FCM:1 1
DEFLTS.FCM:1 8
DERIV.FCM:1 1
ENACCM.FCM:1 4
ENER.FCM:1 6
ETABLE.FCM:1 2
FAST.FCM:1 1
GRAMPS.FCM:1 1
HBONO.FCM:1 4
HEAP.FCM:1 1
HEAPPR.FCM:1 1
IAVXV.FCM:1 6
ICNST.FCM:1 1
ICODE.FCM:1 1
ICOMP.FCM:1 3
ICOOR.FCM:1 1
IHBND.FCM:1 1
IICAV.FCM:1 7
IICNST.FCM:1 1
IICODE.FCM:1 1
IICOOR.FCM:1 1
IIMGND.FCM:1 1
IIPARM.FCM:1 2
IIPSF.FCM:1 3
IMAGE.FCM:1 11
IMPNON.FCM:1 1
IMPNONE.FCM:1 7
INBND.FCM:1 13
INTCR.FCM:1 4
IPARM.FCM:1 2
IPAXV.FCM:1 3
IPSF.FCM:1 2
ISLCT.FCM:1 3
ITABL.FCM:1 9
ITBST.FCM:1 4
NOE.FCM:1 3
PARAM.FCM:1 11
PSF.FCM:1 11
REAWRI.FCM:1 1
RTF.FCM:1 14
SBOUND.FCM:1 3
SCALAR.FCM:1 1
SELCTA.FCM:1 2
SMAKE.FCM:1 3
STACK.FCM:1 1
STREAM.FCM:1 1
STRING.FCM:1 2
[illegible]
Total of [illegible] files, [illegible] blocks
B-5
<PAGE> 29
Directory WORK01:[CHARMM.SUPPORT19.FLECS.VAX]
- ------------------------------------------------------------------------
<TABLE>
<S> <C>
CVAX.FLI:1 163
- ------------------------------------------------------------------------
CVAX.FLX:4 99
CVAX.FOR:1 314
EXAMPLE.FLX:3 6
- ------------------------------------------------------------------------
FLECS.EXE:1 57
FLECS.MLP:5 5
FLECS.TXT:4 9
- ------------------------------------------------------------------------
FLIFIX.EXE:49 18
FLIFIX.FLI:2 33
FLIFIX.FLX:1 21
- ------------------------------------------------------------------------
FLIFIX.FOR:2 56
MAKE.COM:1 1
SCVAX.FLI:1 74
- ------------------------------------------------------------------------
SCVAX.FLX:35 52
SCVAX.FOR:1 72
- ------------------------------------------------------------------------
</TABLE>
B-6
<PAGE> 30
Directory WORK01:[CHARMM.TEST19]
00READ.ME;1 1
B.TEC;1 1
BRBTEST.COM;1 1
BRBTEST.CRD;1 2
BRBTEST.INP;1 3
BRBTEST.OUT;2 112
BRBTEST.OUT;1 112
BREAKDYN.TEC;1 1
CLEAN.COM;1 1
CONSTEST.COM;1 1
CONSTEST.INP;1 8
CONSTEST.OUT;1 139
CONTROL.COM;1 1
CONTROL.INP;1 1
CONTROL.OUT;1 6
CORREL.DIR;1 1
DEP727.PFD;1 2
DEPMIN.CRD;1 2
DEPM00P7.BIN;1 13
DJSTEST.COM;1 1
DJSTEST.CRD;1 12
DJSTEST.INP;2 7
DJSTEST.OUT;2 2
DJSTEST.OUT;1 132
DOALL.COM;2 3
DYNTEST1.COM;1 1
DYNTEST1.INP;3 11
DYNTEST1.OUT;2 677
DYNTEST1.TRN;1 5
DYNTEST2.COM;1 1
DYNTEST2.INP;2 11
DYNTEST2.OUT;1 664
ENBTEST.COM;1 1
ENBTEST.INP;1 18
ENBTEST.OUT;1 157
ENERTEST.COM;1 1
ENERTEST.CRD;1 82
ENERTEST.INP;7 6
ENERTEST.OUT;1 51
FOR024.DAT;4 19
FOR024.DAT;3 19
FOR024.DAT;2 19
FOR024.DAT;1 19
FOR034.DAT;4 27
FOR034.DAT;3 27
FOR034.DAT;2 27
FOR034.DAT;1 27
GENERTEST.COM;1 1
GENERTEST.INP;1 1
GENERTEST.OUT;1 31
H20TST.COM;1 1
H20TST.CRD;1 1
H20TST.INP;1 2
B-7
<PAGE> 31
<TABLE>
<S> <C>
HBMECOMP.COM:1 1
HBMBCOMP.INP:2 20
HBMBCOMP.CUT:1 567
HBMBCOMP.TM1:1 96
HBONDTEST.COM:1 1
HBONDTEST.INP:1 25
HBONDTEST.OUT:1 164
HBUILDST2.COM:1 1
HBUILDST2.INP:1 22
HBUILDST2.OUT:1 142
ICTEST.COM:1 1
ICTEST.INP:3 6
ICTEST.OUT:1 110
IMBETASH.COM:1 1
IMBETASH.CRD:1 2
IMBETASH.IMG:1 1
IMBETASH.INP:1 3
IMBETASH.MOD:1 2
IMBETASH.OUT:1 71
IMH2OTEST.COM:1 1
IMH2OTEST.CRD:1 39
IMH2OTEST.IMG:1 3
IMH2OTEST.INP:2 2
IMH2OTEST.OUT:1 64
IMST2TEST.COM:1 1
IMST2TEST.CRO:1 39
IMST2TEST.IMG:1 3
IMST2TEST.INP:1 3
IMST2TEST.OUT:1 25
IMTEST.COM:1 1
IMTEST.CRD:1 9
IMTEST.IMG:1 1
IMTEST.INP:1 2
IMTEST.MOD:1 2
IMTEST.OUT:1 78
LANGTEST1.COM:1 1
LANGTEST1.INP:1 3
LANGTEST1.OUT:1 244
LANGTESTN.INP:1 4
LSQPTEST.COM:2 1
LSQPTEST.INP:1 4
LSQPTEST.OUT:1 29
MAATEST.COM:1 1
MAATEST.CRD:1 3
MAATEST.INP:1 18
MAATEST.OUT:1 144
NANATST1.COM:1 1
NANATST1.CRD:1 47
NANATST1.HBD:1 7
NANATST1.INP:1 15
NANATST1.MOD:1 45
NANATST1.OUT:1 746
NANATST2.CHR:1 60
NANATST2.COM:1 1
NANATST2.INP:1 8
NANATST2.OUT:1 550
NANATST2.PSF:1 56
NANATST3.COM:1 1
NANATST3.HBD:1 4
NANATST3.INP:1 33
NANATST3.OUT:1 1542
</TABLE>
B-8
<PAGE> 32
PARTEST.COM;5 1
PARTEST.INP;1 2
PARTEST.OUT;3 164
PARTEST.PAR;3 27
PARTEST.RTF;1 24
PATCHTEST.COM;1 1
PATCHTEST.INP;1 7
PATCHTEST.OUT;1 79
PFTEST.COM;1 2
PFTESTA.INP;1 3
PFTESTA.OUT;1 32
PFTESTA.PFD;1 4
PFTESTB.INP;1 3
PFTESTB.OUT;1 44
PFTESTB.PFD;1 3
PFTESTC.INP;1 4
PFTESTC.OUT;1 145
PFTESTC.PFD;1 3
PFTESTC.PFR;6 4
PFTESTC.PFR;5 5
PFTESTC.PFR;4 18
PHPARM.INP;1 3
PHPARM.MOD;1 6
PHPARMA.INP;1 4
PHPARMA.MOD;1 6
PHPARMB.INP;1 4
PHPARMB.MOD;1 7
PHPARMC.INP;1 4
PHPARMC.MOD;1 6
PHTOP.INP;1 6
PHTOP.MOD;1 5
POWELLTES.COM;1 1
POWELLTES.INP;1 3
POWELLTES.MAN;1 81
POWELLTES.OUT;1 43
POWELLTES.SOL;1 4
PSFTEST.COM;1 1
PSFTEST.INP;1 2
PSFTEST.OUT;1 19
PSFTEST.PSP;4 18
QUASI.AVE;4 1
QUASI.COM;1 1
QUASI.INP;1 3
QUASI.OUT;1 195
RGYRTEST.COM;2 1
RGYRTEST.INP;1 2
RGYRTEST.OUT;1 14
RIGIDST2.COM;1 1
RIGIDST2.INP;1 5
RIGIDST2.OUT;1 87
RTFTEST.COM;2 1
RTFTEST.DNA;1 1
RTFTEST.INP;1 2
RTFTEST.OUT;1 14
RTFTEST.PSF;5 22
RTFTEST.PSP;5 79
RTFTEST.RTF;1 106
B-9
<PAGE> 33
[illegible]
SBDTEST2.INP;1 [illegible]
SBDTEST2.OUT;1 83
SBDTEST2.POT;1 61
SBPGENTST.COM;1 1
SBPGENTST.INP;1 1
SBPGENTST.OUT;1 9
SBPGENTST.SBT;1 2
SIMP.COM;1 1
SIMP.CRD;1 2
SIMP.INP;1 1
SIMP.OUT;1 15
ST2TEST.COM;1 1
ST2TEST.CRD;1 39
ST2TEST.INP;2 2
ST2TEST.OUT;1 47
SURFTST.CHR;1 12
SURFTST.COM;1 1
SURFTST.INP;1 2
SURFTST.OUT;1 21
SYSTEM.GIN;10 1
TEST.ANA;1 4
TEST.AUT;1 2
TEST.COM;1 1
TEST.CRD;1 7
TEST.HBO;1 2
TEST.INP;1 7
TEST.JFM;2 1
TEST.OUT;5 145
TEST.OUT;4 145
TEST.OUT;3 61
TEST.OUT;2 145
TEST.OUT;1 145
TEST.PSF;1 28
TESTCONS.CMX;1 1
TESTCONS.COM;1 1
TESTCONS.INP;1 5
TESTCONS.MOD;1 26
TESTCONS.OUT;1 59
TESTGRA.COM;1 2
TESTGRA.GIN;4 1
TESTGRA.INP;1 4
TESTGRA.OUT;1 31
TESTGRA2.GIN;4 1
TESTGRA2A.QIX;4 43
TESTGRA2B.QIX;4 10
TESTGRA2H.QIX;4 3
TESTGRA2N.QIX;4 7
TESTGRA2T.PIX;4 1
TESTGRA3.GIN;4 1
TESTGRA3B.PIX;4 109
TESTGRA3L.PIX;4 83
TESTGRA3T.PIX;4 3
TESTGRAA.PIX;4 3
TESTGRAB.PIX;4 28
TESTGRAH.PIX;4 7
TESTGRAL.PIX;4 24
TESTGRAN.PIX;4 20
TESTGRAT.PIX;4 1
TESTSEL2.COM;1 1
TESTSEL2.INP;1 7
TESTSEL2.OUT;1 69
TIPSTEST1.COM;1 1
B-10
<PAGE> 34
- ------------------------------------------------------------
<TABLE>
<S> <C>
TRNP4I.INP;1 4
TRNPHI.OUT;1 180
VIBRAN.COM;1 1
- ------------------------------------------------------------
VIBRAN.GIN;4 1
VIBRAN.INP;1 8
VIBRAN.OUT;1 288
- ------------------------------------------------------------
VIBRANB.QIX;4 4
VIBRANT.PIX;4 1
VIBRTST.BAS;1 13
- ------------------------------------------------------------
VIBRTST.COM;1 1
VIBRTST.CRD;1 2
VIBRTST.INN;1 2
- ------------------------------------------------------------
VIBRTST.INP;1 9
VIBRTST.OUT;2 242
VIBWAT.COM;1 1
- ------------------------------------------------------------
VIBWAT.INP;1 3
VIBWAT.OUT;1 27
- ------------------------------------------------------------
Total of 278 files, 12235 blocks.
<CAPTION>
Directory WORK01;[CHARMM.TEST19.CORREL]
- ------------------------------------------------------------
<S> <C>
CORTST.AAA;1 6
CORTST.BBB;1 6
- ------------------------------------------------------------
CORTST.CCC;1 3
CORTST.COM;3 1
CORTST.INP;13 3
- ------------------------------------------------------------
CORTST.OUT;35 12
COS.DIR;1 1
DUMP.EXE;1 6
- ------------------------------------------------------------
DUMP.FLX;6 2
FOR080.DAT;1 8
FOR081.DAT;1 8
- ------------------------------------------------------------
FOR082.DAT;1 8
FOR083.DAT;1 8
FOR084;DAT;1 8
- ------------------------------------------------------------
FOR085.DAT;1 8
FOR086.DAT;1 8
- ------------------------------------------------------------
Total of 16 files, 101 blocks.
<CAPTION>
Directory WORKO1;[CHARMM.TEST19.CORREL.COS]
- ------------------------------------------------------------
<S> <C>
MAKTIM.EXE;3 5
MAKTIM.FLX;5 2
- ------------------------------------------------------------
PLOTW.STR;6 1
TEST.COM;3 1
TEST.INP;39 3
- ------------------------------------------------------------
TEST.OUT;42 14
TEST2.COM;2 1
TEST2.IMP;17 2
- ------------------------------------------------------------
TEST2.OUT;19 15
Total of 9 files, 45 blocks.
- ------------------------------------------------------------
Grand total of 3 directories, 303 files, 12331 blocks.
- ------------------------------------------------------------
</TABLE>
B-11
<PAGE> 35
<TABLE>
<CAPTION>
Directory WORK01:[CHARMM.TOPPAR19]
----------------------------------
<S> <C>
AMBONATOP.INP;1 45
AMBERPARM.INP;25 51
AMBERPARM.MOD;2 49
AMBERTOPM.INP;46 87
AMBERTOPH.MOD;1 51
*PARALLM19.INP;12 16
*PARAM19.INP;12 37
*PARAM19.MOD;1 24
PARDNA10.INP;11 39
PARDNA10.MOD;2 34
PARMDNAK.INP;16 31
PARMDNAK.MOD;2 20
PARNAH1.INP;6 41
PARNAH1.MOD;2 27
PARNAH1E.INP;1 27
PARWAT.INP;3 2
PARWAT.MOD;1 6
*TOPALLH19.INP;4 59
TOPALLH2.INP;6 48
*TOPH19.INP;21 96
*TOPH19.MOD;1 57
TOPNAH1.INP;4 103
TOPNAH1E.INP;1 63
TOPNAH1R.INP;6 108
TOPNAH1R.MOD;1 59
TOPRNA10.INP;2 89
TOPRNA10R.INP;3 91
TOPRNA10R.MOD;1 51
TOPRNAK.INP;3 42
TOPRNAK.MOD;1 24
TOPTRNAK.INP;21 54
TOPWAT.INP;1 2
TOPWAT.MOD;1 2
Total of 46 files, 2126 blocks.
</TABLE>
B-12
<PAGE> 36
EXHIBIT C
LOANER COPY LICENSE AGREEMENT
for Harvard
POLYGEN STANDARD SOFTWARE LICENSE AGREEMENT (U.S.)
Rev. 85.1
Modified As Follows:
1. Paragraph 4.1 - It is agreed that the definition of "Equipment" shall
consist of a valid Digital Equipment Corporation VAX configuration.
2. Paragraph 6.1(b) - Add the phrase " . . .and shall exert reasonable
efforts to obtain compliance by its employees." to the first sentence.
3. Paragraphs 10.1, 10.2, and 10.3 - Strike in their entirety, and replace
with the following text:
"Customer agrees that the Software constitutes Polygen Proprietary
Information and shall exercise the same standard of care with respect
to protecting Polygen's ownership interest therein as Customer does
with respect to its own proprietary information. To this end, Customer
agrees to provide appropriate notice to all authorized persons who are
permitted access to the Software of Polygen's exclusive ownership
rights therein.
Notwithstanding the foregoing, Polygen Proprietary Information does not
include information which:
(a) becomes available without fault of Customer and without the fault
of any person, firm, or corporation having apparent authority to
act for Customer;
(b) is rightfully obtained by Customer from a third party without
restrictions as to disclosure;
(c) is shown by written record to have been developed by customer,
independently of Polygen;
(d) is shown by written record to have been known or available to
Customer without restriction as to disclosure at the time of
receipt from Polygen; or
(e) is generally furnished to others by Polygen without restriction on
disclosure.
<PAGE> 37
4. The "Customer" notice address shall be as follows:
- Dr. Martin Karplus
Department of Chemistry
Harvard University
12 Oxford Street
Cambridge, MA 02138
with copy to:
Ms. Joyce Brinton
Director - Office for Patents,
Copyrights and Licensing
Holyoke Center, 449
1350 Massachusetts Ave.
Cambridge, MA 02136
5. In the event of any conflict between this Agreement and the Software
License Agreement by and between Polygen, Harvard University and Dr.
Martin Karplus dated December 10, 1985 (the "Harvard-Polygen
Agreement"), it is agreed that the terms of the Harvard-Polygen
Agreement shall prevail.
2.
<PAGE> 38
EXHIBIT C
LOANER COPY LICENSE AGREEMENT
for Licensees other than Harvard
POLYGEN STANDARD SOFTWARE LICENSE AGREEMENT (U.S.)
Rev. 85.1
Modified As Follows:
1. Paragraph 5.2(b) - Insert the stylized version of the name "CHARMM"
which is used to market the software.
2. Paragraph 6.1(b) - Add the phrase " . . .and shall exert reasonable
efforts to obtain compliance by its employees." to the first sentence.
3. Paragraphs 10.1, 10.2, and 10.3 - Strike in their entirety, and replace
with the following text:
"Customer agrees that the Software constitutes Polygen Proprietary
Information and shall exercise the same standard of care with respect
to protecting Polygen's ownership interest therein as Customer does
with respect to its own proprietary information. To this end, Customer
agrees to provide appropriate notice to all authorized persons who are
permitted access to the Software of Polygen's exclusive ownership
rights therein.
Notwithstanding the foregoing, Polygen Proprietary Information does not
include information which:
(a) becomes available without fault of Customer and without the fault
of any person, firm, or corporation having apparent authority to
act for Customer;
(b) is rightfully obtained by Customer from a third party without
restrictions as to disclosure;
(c) is shown by written record to have been developed by Customer,
independently of Polygen;
(d) is shown by written record to have been known or available to
Customer without restriction as to disclosure at the time of
receipt from Polygen; or
(e) is generally furnished to others by Polygen without restriction on
disclosure.
<PAGE> 39
EXHIBIT D
ACADEMIC SOFTWARE VERSION LICENSE AGREEMENT
HARVARD UNIVERSITY DEPARTMENT OF CHEMISTRY
Dear:
In consideration of $400 to be paid with a check made payable to
Harvard University (hereinafter referred to as the "LICENSOR") and sent to The
Office for Patents, Copyrights & Licensing at Harvard University, and upon
receipt of a copy of this license duly signed by your institution (hereinafter
referred to as the "LICENSEE"), one copy of the Academic Software Version of
CHARMM (Copyright 192 _ [indicate year] by the President and Fellows of
Harvard University), Version __ [indicate Version No.], a system of computer
programs for macromolecular energy minimization and dynamics, will be delivered
to you. The computer programs and the magnetic tape on which the programs are
delivered, as well as any modifications or derivative works made by the
LICENSEE, are hereinafter referred to collectively as the "SOFTWARE"; an
approximate descriptive list of the information contained on the magnetic tape
is given in Appendix A (attached).
Terms
1. A non-exclusive nontransferable license is granted to the LICENSEE
to install and use the SOFTWARE on a _______ [indicate machine type] or
compatible computer system located at LICENSEE's institution to which the
LICENSEE has authorized access. Use of the SOFTWARE is restricted to the
LICENSEE and collaborators at his institution who have agreed to accept the
terms of this license.
2. The LICENSOR retains exclusive ownership of all materials (including
SOFTWARE and documentation) delivered to the LICENSEE. Any modification or
derivative works based on the SOFTWARE are considered part of the SOFTWARE and
ownership thereof is retained by the LICENSOR. Annual reports of such
modifications or derivative works are to be made to the LICENSOR.
3. The LICENSEE shall not use the SOFTWARE for any purpose (research or
otherwise) that is supported by a "for profit" organization without prior
written authorization from the LICENSOR.
<PAGE> 40
4. The LICENSEE shall not disclose in any form either the delivered
SOFTWARE or any modifications or derivative works based on the SOFTWARE to third
parties without prior written authorization from the LICENSOR.
5. The LICENSEE may make a reasonable number of copies of the SOFTWARE
for the purposes of backup, maintenance of the SOFTWARE, or the development of
derivative works based on the SOFTWARE. These additional copies will carry the
copyright notice and will be subject to the terms of, and controlled by this
license, and will be destroyed by the LICENSEE upon termination of this license.
6. If the LICENSEE receives a request to furnish all or any portion of
the SOFTWARE to any third party, he will not fulfill such a request and will
refer it in writing to the LICENSOR.
7. Documented written requests from LICENSEE for additional source code
on which the delivered SOFTWARE is based (see Appendix A) can be made to the
LICENSOR; such source code will be subject to and controlled by the terms of
this license; any such request will be honored at the sole discretion of the
LICENSOR.
8. THE LICENSEE AGREES THAT THE SOFTWARE Is FURNISHED ON AN "AS IS"
BASIS AND THAT THE LICENSOR IN NO WAY WARRANTS THE SOFTWARE OR ANY OF ITS
RESULTS AND IS IN NO WAY LIABLE FOR ANY USE LICENSEE MAKES OF THE SOFTWARE.
9. LICENSEE agrees that any reports or publications of results obtained
with the SOFTWARE will acknowledge its use by an appropriate citation. Until
further notice this would refer to the CHARMM program as obtained from the
LICENSOR. One copy of each of such reports or publications will be supplied to
the LICENSOR.
10. The term of this license shall be 5 (five) years from the date of
the signing of this license. Upon termination of this license, all SOFTWARE and
other materials delivered to the LICENSEE shall be returned to the LICENSOR or
destroyed by the LICENSEE if so desired by the LICENSOR.
2.
<PAGE> 41
To evidence your acceptance of the terms and conditions set forth
above, please sign in the indicated space and return this letter and your check
to the Office for Patents, Copyrights and Licensing, Holyoke Center, 1350
Massachusetts Avenue, Room 449, Cambridge, MA 02138.
Sincerely yours,
Martin Karplus
Department of Chemistry
Harvard University
Joyce Brinton
Director, Office for
Patents, Copyrights and
Licensing
READ AND APPROVED:
_______________________________ Licensee Organization
_______________________________ Name and Signature
_______________________________ Title
_______________________________ Date
3.
<PAGE> 42
EXHIBIT E
END-USER LICENSE AGREEMENT
<PAGE> 43
POLYGEN DOMESTIC SOFTWARE
- LICENSE AGREEMENT (U.S.) - REV. 85.1
LICENSE AGREEMENT (hereinafter referred to as "Agreement") made this
____ day of ______________ , 19__, between POLYGEN CORPORATION, a Delaware
corporation with its principal office located at 100 Fifth Avenue, Waltham,
Massachusetts (hereinafter referred to as "Polygen"), and
__________________________________________ , a _________________ corporation
with its principal office located at _____________________________ (hereinafter
referred to as "Customer").
WITNESSETH
1.1 WHEREAS, Polygen has the right to distribute certain proprietary Software
(as that term is defined under this Agreement) which, when used with Equipment
(as that term is defined under this Agreement), functions as a system for the
design and analysis of chemical structures.
1.2 WHEREAS, Polygen is willing to license the use of such Software to Customer
solely upon the terms and conditions set forth in this Agreement, with the
understanding that Customer shall thereby enter into a confidential relationship
with Polygen with respect to the subject matter of the Software, and
1.3 WHEREAS, the respective parties hereto warrant that they have full authority
to enter into this Agreement,
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and promises contained herein, Polygen and Customer do hereby mutually
covenant and agree as follows:
TERM
2.1 This Agreement is made for an initial term of two (2) years commencing on
the earlier of the date first written above or execution of the attached
"Licensee Statement of Acceptance" (Appendix B), and shall be deemed renewed
from year to year thereafter unless terminated by either party upon at least
thirty (30) days written notice given by one party to the other prior to the end
of the initial or any renewal term hereof.
<PAGE> 44
CONTENTS OF THE AGREEMENT
3.1 This Agreement constitutes the entire agreement and understanding between
the parties in reference to the subject matter of this Agreement. Any and all
discussions, promises, representations or understandings related to the subject
matter of this Agreement, whether written or oral, shall be void and without
effect to the extent not expressly set forth herein. The following Appendices
are incorporated herein by reference and shall be considered an integral part of
this Agreement:
<TABLE>
<CAPTION>
<S> <C>
Appendix A: Acceptance Test Procedure
Appendix B: Licensee Statement of Acceptance
Appendix C: Licensee Statement of Return
Appendix D: Employee Statement of Return
Appendix E: Polygen License Quotation
Appendix F: Polygen Training Policy
Appendix G: Required Minimum Equipment Configuration
Appendix H: Polygen Software Price Schedule
Appendix I: CPU Identification Schedule
</TABLE>
3.2 This Agreement, as hereinabove defined, shall be known and designated as the
"Polygen Standard Software License Agreement (U.S.) - Rev. 85.1."
EQUIPMENT DEFINITION
4.1 The required configuration of computer hardware and associated peripheral
devices with respect to which (a) the Software is licensed for use by Customer
hereunder and (b) upon or in which Polygen is obliged to install the Software
shall be as set forth in the attached "Required Minimum Equipment Configuration"
(Appendix G) which shall hereinafter be defined and referred to as "Equipment".
Customer agrees to make available for the installation of the Software
at Customer's Design Site or Sites identified in the attached "CPU
Identification Schedule" (Appendix I) within sixty (60) days following execution
of this Agreement, or, if different, the installation date specified in the
attached "Polygen License Quotation" (Appendix E), either (a) solely those items
of Equipment described in the attached "Required Minimum Equipment
Configuration" (Appendix G) or (b) solely those items of Equipment described in
any different or alternative equipment configuration which shall have been
agreed to in writing by the parties by way of a modification made to Appendix G
of this Agreement in accordance with the procedures set forth in paragraph 17.1
hereof no later than fifteen (15) days following execution of this Agreement, or
ten (10) days prior to any installation date scheduled pursuant to paragraph
12.1 hereof, whichever date occurs first.
2.
<PAGE> 45
Customer agrees to place the Equipment under Polygen or applicable
manufacturers' authorized on-site maintenance arrangements at its own expense
effective no later than the date on which Customer gives Polygen written notice
of installation site readiness pursuant to the provisions of paragraph 12.1
hereof.
SOFTWARE DEFINITION
5.1 Those software programs identified immediately below in the form described
by the applicable Program Reference Guides identified at paragraph 5.2 below,
are being licensed for use by Customer solely under the terms of and subject to
the conditions of this Agreement, and shall be collectively referred to and
defined hereunder as "Software:"
A. The CHEMX(TM) Program
B. The CHARMM(TM) Program
C. The HYDRA(TM) Program
5.2 The Program Reference Guides referred to in paragraph 5.1 above
are as follows:
LICENSE
6.1 Polygen grants to Customer a non-exclusive, non-transferable license to use
the Software as herein defined (including any and all enhancements to or
revisions thereof released generally by Polygen to Software licensees during the
term of this Agreement) in connection with the Equipment as herein defined for
the purpose of analyzing, designing, and documenting electronics packaging
applications in the manner set forth in the applicable Program Reference Guides,
subject to the following conditions and limitations:
(a) Customer shall use the Software only in connection with the Central
Processing Unit(s) whose serial number(s) is (are) identified in the
attached "CPU Identification Schedule" (Appendix I) (hereinafter
referred to as "CPU"). With respect to all CPUs upon which Software is
installed, Customer shall provide Polygen with thirty (30) days advance
written notice of Customer's transfer of the use of such Software and
CPU(s) to a different Design Site and the specific location thereof.
3.
<PAGE> 46
(b) Customer shall not copy, reproduce, or duplicate the Software or
any documentation relating thereto by any means whatsoever except for
archive or emergency restart purposes, without having first obtained
Polygen's written consent. Notwithstanding the foregoing, any such
otherwise authorized copy, reproduction, or duplication of the Software
or any documentation relating thereto shall be deemed unauthorized and
shall constitute a breach of this Agreement, unless all Polygen
copyright, trademark, and proprietary notices contained upon or within
the original Software or documentation are incorporated therein.
(c) Customer shall not permit or suffer the use of the Software by any
person, firm, or corporation, other than a corporation more than 50% of
whose voting stock is owned by Customer (hereinafter referred to as
"Affiliated Company"), or any otherwise Polygen-licensed user of the
Software, in which case Customer may provide such Affiliated Company or
Polygen-licensed user with time-sharing or batch-service use of the
Software only.
(d) Customer shall not modify or suffer the modification of the
Software by any person, firm, or corporation, whether or not an
Affiliated Company, parent, or subsidiary of Customer, nor shall
Customer otherwise disclose the contents of the Software to any person,
firm, or corporation other than employees of Customer who are on
Customer's premises for purposes specifically related to Customer's
otherwise authorized use of the Software.
(e) Customer shall not use the Software in connection with the
operation of what is known in the trade as a "commercial service
bureau."
(f) Customer shall not add to, expand, alter, or modify the Equipment
with respect to which the Software was originally installed without
Polygen's prior written consent.
(g) Customer agrees that use of the Software shall be subject to the
terms of the "Polygen Software Price Schedule" (Appendix H) regarding
Customer's liability for payment of Initial and Monthly License Fees
and that Customer shall acquire no right to use the Software upon or in
connection with any CPU, except in accordance with this Agreement and
in particular, but not by way of limitation, upon Customer's timely
payment to Polygen of those Initial and Monthly License Fees then
applicable to the use of the Software upon or in connection with each
such CPU.
4.
<PAGE> 47
TRAINING
7.1 Polygen shall provide training to Customer in the use of the Software
licensed under this Agreement in accordance with the terms of the attached
"Polygen Training Policy" (Appendix F).
WARRANTY
8.1 Polygen warrants (a) that it has the right to enter into this Agreement; (b)
that the Software and all improvements thereto, including but not limited to
Software enhancements and revisions, will operate in accordance with the
applicable Program Reference Guides, as the same may be revised from time to
time; (c) that Customer's use of the Software solely in accordance with the
terms of this Agreement will not in and of itself infringe or violate any third
party's rights under any patent, copyright, trademark, or trade secret; and (d)
that the Software shall be capable of performing the then current "Acceptance
Test Procedure" applicable to the Software which is in effect for purposes of
initial acceptance under the then current form of standard Polygen Software
license agreement, provided such Software is installed upon and used in
connection with Equipment which is operating in accordance with equipment
manufacturers' specifications.
8.2 In the event it is determined that the Software contains a "bug," Polygen
shall devote its best and continuous effort to providing Customer, at the
earliest practicable date, with a "workaround" procedure that will allow the
Software to operate in such a manner as will permit the achievement of results
which are substantially similar in functional content to those described in the
applicable Software specification identified in paragraph 5.2 hereof,
notwithstanding the existence of the "bug." Polygen shall follow a general
policy of correcting or disabling identified Software "bugs" (to the end that
any such "workaround" procedures are no longer required) in the context of
succeeding standard Software releases, but notwithstanding the foregoing, the
content and/or frequency of any such Software release(s) shall be at all times
committed to the sole and absolute discretion of Polygen
8.3 EXCEPT FOR THE FOREGOING EXPRESS WARRANTY, POLYGEN DISCLAIMS ALL WARRANTIES,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE SOFTWARE, INCLUDING BUT NOT
LIMITED TO ANY WARRANTIES AS TO MERCHANTABILITY OF THE SOFTWARE OR THE FITNESS
OF THE SOFTWARE FOR A PARTICULAR USE. POLYGEN SHALL NOT BE LIABLE FOR ANY
SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF SOFTWARE
BY THE CUSTOMER UNDER ANY CIRCUMSTANCES WHATSOEVER. CUSTOMER'S SOLE AND
EXCLUSIVE REMEDY FOR ANY BREACH OF THE WARRANTIES SET FORTH IN PARAGRAPHS 8.1
AND 8.2 ABOVE SHALL CONSIST OF CUSTOMER'S RIGHT TO TERMINATE THIS AGREEMENT
PROSPECTIVELY ON THIRTY (30) DAYS WRITTEN NOTICE TO POLYGEN WHEREUPON THE
PROVISIONS OF PARAGRAPH 13.2 OF THIS AGREEMENT SHALL THEN APPLY.
5.
<PAGE> 48
8.4 In the event that any party commences an action, claim, or proceeding
(hereinafter referred to as "claim") against Customer and/or Polygen alleging
that the Software or Customer's use thereof in accordance with this Agreement
directly infringes any patent, copyright, or trademark, or violates the trade
secret rights of a third party, Customer may, at its option, cease all payment
of any license fees hereunder upon condition that Customer also ceases all use
of the Software until such time as Polygen satisfactorily resolves any such
claim to the end that Customer's use of the Software in accordance with this
Agreement is thereafter unencumbered and free of any such claim. Polygen shall
have the affirmative obligation to defend, or at Polygen's option, to settle,
any such claim adversely affecting Customer's use of the Software at Polygen's
expense, provided such use is in accordance with the terms and conditions of
this Agreement. During the pendency of any such claim referred to above, Polygen
may, at its sole option, substitute fully equivalent non-infringing or
non-violative Software, modify the Software so that it no longer infringes or
violates but remains equivalent, or obtain for Customer, at the expense of
Polygen, the right to continue use of the Software in accordance with the terms
of this Agreement. Customer and Polygen shall give prompt written notice to the
other of the institution of any such claim, and Customer shall cooperate fully
with Polygen in the defense or settlement thereof. The provisions of this
paragraph 8.4 state the entire liability of Polygen and Customer's exclusive
remedy for any such infringement or violations.
8.5 Customer acknowledges that is has either (a) inspected the Software on
Polygen premises during the course of a "benchmark demonstration" thereof or (b)
declined in writing to obtain such an inspection, and agrees that it is
licensing the Software hereunder subject to any and all defects therein that
were apparent (or would have been apparent in the event (b) applies) as a result
of such an inspection.
OWNERSHIP
9.1 Notwithstanding any other provision of this Agreement to the contrary, it is
hereby agreed that this Agreement constitutes only a license for the use of the
Software by Customer and that nothing contained herein shall operate to convey
to Customer any title to or ownership interest of any kind or nature whatsoever
in the Software or any Polygen Proprietary Information, including, but not
limited to, Program Reference Guides. All materials which would disclose all or
any portion of the content of the Software or any Polygen Proprietary
Information shall be returned to Polygen by Customer upon termination of this
Agreement. Notwithstanding anything to the contrary contained herein, Polygen
expressly reserves to itself any and all copyright and/or industrial property
rights in and to the licensed Software arising under the laws of the United
States or any foreign jurisdiction,
6.
<PAGE> 49
except that nothing herein is intended or shall be construed as constituting or
permitting a publication or disclosure of the licensed Software under the
copyright and/or industrial property laws of the United States or any foreign
jurisdiction.
NO OFFICER, EMPLOYEE, OR AGENT OF POLYGEN IS CAPABLE OF TRANSFERRING OR
AUTHORIZING THE TRANSFER OF ANY OWNERSHIP INTEREST IN OR TO THE SOFTWARE OR
POLYGEN PROPRIETARY INFORMATION OR ANY PORTION THEREOF, TO ANY PERSON, FIRM,
CORPORATION, OR GOVERNMENTAL AUTHORITY WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF POLYGEN'S BOARD OF DIRECTORS.
9.2 Any modifications, improvements, and/or enhancements to the Software which
are developed by Polygen shall be considered the sole property of Polygen,
regardless of whether any such modification, improvement, and/or enhancement to
the Software is developed at the request of a Customer, and regardless of
whether or not special fees have been paid to Polygen by Customer in order to
induce Polygen to initiate any such development.
9.3 Any software or program developed by Customer at its own expense which
constitutes a "Pre-Processor" or "Post-Processor" shall be the property of
Customer. A "Pre-Processor" shall mean software which produces data which is
suitable in content and format for use as standard input to the licensed Polygen
Software, and does not require any modification to the licensed Polygen Software
in order to operate. A "Post-Processor" shall mean software which accepts as
input the standard data output of the licensed Polygen Software, and does not
require any modification to the licensed Polygen Software in order to operate.
9.4 Customer shall not subject or suffer the subjection of the Software or any
Polygen Proprietary Information to any form of attachment, sequestration, claim,
lien, or encumbrance of whatsoever kind or nature other than those imposed
thereon by Polygen. Any voluntary or involuntary act of Customer purporting to
create any such attachment, sequestration, claim, lien, or encumbrance shall be
void and without effect.
CONFIDENTIALITY
10.1 This Agreement has been entered into by Polygen in express reliance upon
Customer's representation to Polygen that Customer shall, and by these presents
Customer hereby does, agree to treat the Software and any written material or
electronic storage media, including, but not limited to, magnetic tapes or
disks, Program Reference Guides, training materials, or other materials which
describe the nature, operation, or use of the Software, including the contents
thereof, which are received by Customer from Polygen pursuant
7.
<PAGE> 50
to or in connection with this Agreement and which have been physically marked or
otherwise designated by Polygen as "Proprietary" and/or "Confidential"
(collectively referred to in this Agreement as "Polygen Proprietary
Information") as strictly confidential and as a Polygen trade secret.
Without limiting the generality of the foregoing or any other provision
of this Agreement relating to Customer's confidentiality obligations, Customer
shall, upon the receipt of any such Polygen Proprietary Information, and during
and subsequent to the term of this Agreement, prevent the disclosure of any
Polygen Proprietary Information to any person, firm, or corporation (other than
employees of Customer while on Customer's premises for purposes specifically
related to Customer's authorized use of the Software); Customer shall not permit
any Polygen Proprietary Information to be copied, reproduced, or duplicated by
any means or under any circumstances whatsoever, including, but not by way of
limitation, any transfer of the Software to any form of electronic storage media
other than that upon or in which the Software was first installed by Polygen at
Customer's Design Site or Sites identified in the attached "CPU Identification
Schedule" (Appendix I), except to the extent otherwise expressly provided under
paragraph 6.1 of this Agreement; Customer shall not discharge its duties under
this Agreement at any time with any less care than that employed by Customer in
protecting the confidentiality of Customer's own trade secrets or proprietary
information; Customer shall take appropriate action, by instructions, agreement,
or otherwise, with any persons permitted access to Polygen Proprietary
Information so as to enable the Customer to satisfy Customer's confidentiality
obligations under this Agreement.
10.2 Notwithstanding the foregoing, Customer's confidentiality obligations
hereunder with respect to Polygen Proprietary Information do not extend to
information which:
(a) becomes publicly available without fault of Customer and without
the fault of any person, firm, or corporation having apparent authority
to act for Customer,
(b) is rightfully obtained by Customer from a third party without
restrictions as to disclosure,
(c) is shown by written record to be developed by Customer,
independently of Polygen,
(d) is shown by written record to have been known or available to
Customer without restriction as to disclosure at the time of receipt
from Polygen, or
(e) is generally furnished to others by Polygen without restriction on
disclosure.
8.
<PAGE> 51
10.3 Customer acknowledges that Polygen shall be entitled to preliminary
injunctive relief in order to enforce the provisions of this Agreement relating
to the confidentiality of Polygen Proprietary Information in addition to and not
by way of limitation upon any other legal or equitable remedies available to
Polygen under the circumstances.
SOFTWARE LICENSE FEES
11.1 So long as this Agreement remains in effect, and subject to the provisions
of paragraph 11.2 hereof, Customer shall pay to Polygen on the first day of each
month a Monthly License Fee in the amount specified in the attached "Polygen
License Quotation" (Appendix E) with respect to each of the applicable Software
components described at subparagraphs A., B., and C. of paragraph 5.1 licensed
by Customer, the first such payment to become due and payable in United States
dollars on the first day of the month which is the same as or first follows the
date on which Customer has or is deemed to have accepted the Software pursuant
to the provisions of paragraph 12.2 of this Agreement. Customer shall be liable
for a pro rata Monthly License Fee with respect to the period of time that
elapses between Customer acceptance and the first day of the month following
such acceptance, which amount shall become due and payable at the time
Customer's first full Monthly License Fee becomes due and payable hereunder. In
addition, Customer shall pay to Polygen the Initial License Fee(s) in the amount
specified in the attached "Polygen License Quotation" (Appendix E) with respect
to each of the applicable Software components described at subparagraphs A. and
B. of paragraph 5.1 licensed by Customer, which payment(s) shall become due and
payable in United States dollars as of the date on which Customer has or is
deemed to have accepted the Software pursuant to the provisions of paragraph
12.2 of this Agreement.
11.2 The Monthly and Initial Licensee Fees described in paragraph 11.1 above
shall remain in effect for a period of twelve (12) calendar months following the
date of execution of the attached "Licensee Statement of Acceptance" (Appendix
B), whereupon Polygen shall thereafter have the unilateral right to increase the
license fees on an annual basis, provided that any such increase shall be
applied in a uniform manner to all Polygen licensees. Polygen shall provide
Customer with three (3) months advance written notice of any increase in the
amount of the Monthly or Initial License Fees hereunder, which increase shall
take effect with respect to the Monthly Licensee Fees due on the first day of
the month which is three (3) months following the date on which the Customer is
furnished with the notice referred to above.
9.
<PAGE> 52
SOFTWARE INSTALLATION AND ACCEPTANCE
12.1 Following execution of this Agreement and Polygen's receipt of written
notification from Customer that the Equipment is available for installation,
Polygen installation personnel will install the Software upon or within the
CPU(s). Installation shall be scheduled during normal working hours (8:00 am to
6:00 pm) on normal working days (Monday through Friday), excepting Polygen or
Customer observed holidays. Customer shall pay to Polygen an installation fee in
the amount specified in the attached "Polygen License Quotation" (Appendix E).
Customer agrees to permit complete shut-down of the computer system
component of the Equipment and dedication to Polygen Software installation for
all periods of time during which actual installation activities occur. Customer
shall allow Polygen full and free access to the installation site during
installation. Waiver of liability or other restrictions shall not be imposed by
Customer as a site access requirement. Customer will allow Polygen to use
necessary machines, communication facilities and other equipment (except as
normally supplied by Polygen) at no charge. Customer shall provide Polygen
installation technicians with reasonable working facilities including, but not
limited to, secure storage space, a designated work area with adequate heat and
light, and access to a telephone line, upon request of and at no charge to
Polygen. Customer agrees to provide at no charge to Polygen suitable storage and
scratch media (including spare tapes and disk pack as required) necessary for
installation services.
12.2 Polygen installation personnel will subject the Software, as installed upon
or within the CPU(s) physically located at Customer's Design Site or Sites
identified in the attached "CPU Identification Schedule" (Appendix I), to the
attached "Acceptance Test Procedure" (Appendix A). Successful execution of the
Acceptance Test Procedure by the Software, or Customer's use of Software for
design activities other than user training or testing purposes, shall be
conclusively deemed to constitute acceptance of the Software by Customer, and
Customer agrees that a duly authorized representative of Customer shall
thereupon confirm such acceptance to Polygen in writing as to each CPU on which
the Software is installed by execution and delivery of the attached "Licensee
Statement of Acceptance" (Appendix B).
12.3 No modification or alteration of or to the Software acceptance criteria of
whatsoever kind or nature shall be effective unless and until any such
modification shall be agreed to in writing by Polygen and Customer and set forth
in full as part of the "Acceptance Test Procedure" (Appendix A).
10.
<PAGE> 53
TERMINATION AND DEFAULT
13.1 Customer's failure to pay to Polygen any license fees when due hereunder,
or Customer's failure to adhere to any of the terms and conditions of this
Agreement, or Customer's failure to perform any of its obligations hereunder
shall constitute a breach of this Agreement and an event of default hereunder
which shall give Polygen the right (in addition to, and not by way of limitation
upon Polygen's rights to obtain any other legal or equitable relief available to
Polygen under the circumstances) to terminate this Agreement in the event any
such default remains uncured for more than thirty (30) days following receipt of
written notice thereof from Polygen. Receipt of any such notice shall be deemed
to occur on the next day following the wiring of any such notice, or on the
fifth (5th) business day following the mailing of any such notice, to Customer's
address set forth in paragraph 19.1 of this Agreement.
13.2 Upon termination of this Agreement, the license granted to Customer under
this Agreement shall terminate and Customer shall immediately pay to Polygen any
then outstanding license fees or other amounts owed to Polygen, and Customer
shall (a) return to Polygen management control by physical delivery each and
every item of Polygen Proprietary Information furnished to Customer pursuant to,
arising out of, or in connection with this Agreement, (b) delete by total
erasure or destruction any Polygen Proprietary Information embodied on or in any
disk or other form of electronic storage media located upon Customer's premises
or under the supervision, control, or custody of Customer, (c) warrant to
Polygen that no Polygen Proprietary Information has been retained by Customer in
any form whatsoever, (d) execute and deliver to Polygen a "Licensee Statement of
Return" (Appendix C), and (e) take appropriate action by instructions,
agreement, or otherwise to ensure that every employee of Customer who shall have
had access to Polygen Proprietary Information during the course of his or her
employment with Customer complies with the substance of the provisions contained
in the "Employee Statement of Return" (Appendix D).
13.3 In the event that Customer is otherwise entitled to use the Software
pursuant to more than one valid and subsisting license agreements with Polygen,
and any one or more of such agreements shall remain in effect following the
termination of this Agreement with respect to Software running on a CPU
identified in the "CPU Identification Schedule" (Appendix I) or any successor
Design Site otherwise permitted under the provisions of paragraph 6.1(a) of this
Agreement, then the provisions of paragraph 13.2 above shall only apply and
relate to Polygen Proprietary Information furnished to Customer in connection
with this Agreement.
11.
<PAGE> 54
BUSINESS TERMINATION
14.1 In the event that either party shall cease conducting business in the
normal course, become insolvent, make a general assignment for the benefit of
creditors, suffer or permit the appointment of a receiver for its business or
assets, or shall avail itself of, or become subject to, any proceeding under the
Bankruptcy Reform act (other than a proceeding under Chapter 11 of Title I of
such Act) or any other statute of any governing authority relating to insolvency
or the protection of rights of creditors, then at the option of the other party,
this Agreement shall be deemed to have terminated and the provisions of
paragraphs 13.1, 13.2, and 13.3 of this Agreement, as applicable, shall then
apply. This paragraph 14.1 will not be construed to modify any part of all or
paragraphs 20.1 and 20.2 of this Agreement.
SUCCESSORS IN INTEREST
15.1 All covenants, stipulations, and promises in this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors in interest, assignees, and legal representatives. Neither party
shall have the right to assign or otherwise transfer its rights or obligations
under this Agreement without the prior written consent of the other party;
provided, however, that a successor in interest to a party by merger, by
operation of law, or by assignment, purchase, or otherwise, of the entire
business of either party, shall acquire all the rights and be subject to all the
obligations of such party hereunder, without the necessity of obtaining such
prior written consent; provided, however, that nothing herein shall prevent
Polygen from assigning this Agreement to a wholly-owned subsidiary of Polygen or
from assigning the license fees payable to Polygen under this Agreement. On
receiving written notice of any such assignment from Polygen, Customer shall
make payment of such license fees as Polygen shall direct in writing. Any such
payment by Customer to Polygen's assignee in accordance with Polygen directions
shall be treated as payment to Polygen for all purposes of this Agreement.
CONSTRUCTION
16.1 Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or be invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
of the remaining provisions of this Agreement. The singular and plural forms of
words used
12.
<PAGE> 55
in this Agreement may be used interchangeably to conform to the factual
situation described. Headings used in this Agreement are included solely for
purposes of reference, and are to be ignored in the construction thereof.
MODIFICATIONS, AMENDMENTS, AND WAIVERS
17.1 No modifications, amendments, or waivers of any of the provisions or terms
of this Agreement shall be effective unless the same shall be made in a writing
and manually signed by an officer of Polygen and a duly authorized
representative of Customer which shall be conspicuously marked as follows:
"MODIFICATION to Polygen Standard Software License Agreement (U.S.) - Rev.
85.1."
NON-WAIVER
18.1 No delay of failure of either party in exercising any right hereunder, and
no partial or single exercise thereof, shall be deemed to constitute a waiver of
such right or any other rights hereunder. Any consent by either party to, or
waiver of, a breach by the other, whether express or implied, shall not
constitute a consent to, waiver of, or excuse for any other different or
subsequent breach.
NOTICES
19.1 All notices, requests, and demands given to or made upon either party shall
be in writing and be delivered or mailed to the other party at its address as
specified below:
_________________________
_________________________
_________________________
Polygen Corporation
100 Fifth Avenue
Waltham, Massachusetts 02154
Either party may designate a changed address by giving appropriate written
notice to the other party.
13.
<PAGE> 56
SOFTWARE DOCUMENTATION
20.1 Polygen agrees to maintain the Software source code in both human readable
and machine readable form, and all releases, updates, revisions, improvements,
add-ons, enhancements, and other changes thereto (hereinafter collectively
referred to as "Software Documentation") in a secure off-site storage location
and in the event that Polygen dissolves, ceases to do business in the normal
course, becomes insolvent, makes an assignment for the benefit of creditors, or
becomes a party voluntarily or involuntarily to any proceeding under the
Bankruptcy Reform Act (excepting any proceeding under Chapter 11 of Title I of
such Act), Polygen shall be obligated, on Customer's written demand, to transfer
to Customer such Software Documentation for the sole purpose of enabling
Customer to continue to use the Software without interruption, in accordance
with this Agreement and for no other purpose whatsoever.
20.2 In the event of a transfer to Customer of the Software Documentation under
the circumstances described above, the Customer shall continue to be bound by
all of the terms and conditions of this Agreement, including, without
limitation, the provisions of paragraphs 10.1, 10.2, and 10.3 hereof relating to
the confidentiality of Polygen Proprietary Information.
TAXES
21.1 Unless otherwise specifically stated on any invoices, the license fees
payable to Polygen under the terms of this Agreement are net of and shall not be
reduced by any use tax, sales tax, property tax imposed upon or with respect to
this license, import tax, duty, export fee, withholding tax, gross receipts tax,
turn-over tax, value-added tax, or other tax or charge of a like or similar
nature, other than a tax upon Polygen's net business income, to which such
license fee, Polygen or Customer shall be subject to under the laws or
administrative practice of any governmental jurisdiction. Customer agrees to
report and pay any such tax or charge imposed upon Customer or upon the license
fees due Polygen hereunder to the appropriate governmental jurisdiction and to
indemnify and hold Polygen harmless therefrom. Customer agrees to pay Polygen
for any such tax or charge referred to above to which Polygen may become subject
upon presentation of Polygen's invoice with respect thereto.
ENFORCEMENT
22.1 The parties hereby agree that any and every controversy arising out of or
relating to this Agreement, or any breach thereof, shall be subject to the
exclusive jurisdiction of the United States District Court for the Eastern
District of Massachusetts if such District Court
14.
<PAGE> 57
shall have subject matter jurisdiction thereof, otherwise exclusive jurisdiction
thereof shall lie in the Commonwealth of Massachusetts, City of ___________,
County of ________ . Any and all objections or defenses as to proper forum or
venue are hereby waived.
GOVERNING LAW
23.1 This Agreement shall be governed, construed, and enforced in accordance
with the laws of the Commonwealth of Massachusetts of the United States of
America.
SURVIVAL BEYOND COMPLETION
24.1 The parties' respective obligations, representations, and warranties under
this Agreement shall survive the installation of the Software and the payment of
license fees hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their undersigned duly authorized representatives.
POLYGEN CORPORATION ________________________________________
BY________________________________ By______________________________________
TITLE_____________________________ TITLE___________________________________
DATE______________________________ DATE____________________________________
15.
<PAGE> 58
EXHIBIT F
ROYALTY RATE
1. Royalty Rate.
A "Workstation Configuration" shall be defined as a central processing
unit which has access to a single copy of the Licensed Works at any one time and
is intended to provide computing capabilities to a single user, which
incorporates an interactive graphics display, and is of a type upon which the
Licensee's interactive molecular graphics software can be installed and operate
in accordance with its specifications. For purposes of this definition, the
Digital MicroVax2 and VaxMate; Sun Microsystems 3/5O and 3/160; and IBM PC and
AT computers shall each be considered a Workstation Configuration.
A "Mainframe Configuration" shall be defined as a central processing
unit which is intended to provide general purpose computing capabilities to
multiple batch or interactive users through the medium of alphanumeric
terminals. For purposes of this definition, the VAX 11/780, 11/785 and 8600; IBM
43XX and 3XXX; Cray; and CDC Cyber computers shall each be considered a
Mainframe Configuration.
The parties agree to cooperate in determining the proper classification
of any central processing unit, other than those mentioned above, upon which
Licensee may choose to commercially distribute the Licensed Works, based upon
the general criteria described above.
The Royalty Rate shall be determined by application of the following
table:
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 59
Notwithstanding the foregoing, there shall be a Minimum Royalty due under this
Agreement in the sum of [*] per year, which shall be payable thirty (30) days
following the end of the first and subsequent anniversaries of the Effective
Date hereof. The Minimum Royalty shall be fully credited against any royalties
otherwise payable hereunder.
2. License Fees.
License Fees include all initial and ongoing fees for the right of use
of the Commercial Software Versions, on the assumption that Licensee's pricing
policy is based on a single license fee inclusive of the provision of right of
use, software maintenance, application support and software enhancements and
upgrades. In the event that Licensee's pricing policy were to exclude or make
optional the provisions of software maintenance, application support and/or
software enhancements or upgrades (for or in exchange for which additional or
separate sums were to be charged by Licensee), then the License Fees received
for copies of the Commercial Software Versions installed upon Workstation or
Mainframe Configurations would be treated as being [*] of the License Fees as
otherwise calculated.
3. Maximum Royalty.
The Maximum Royalty shall be [*].
4. Royalty Rate on the Documentation.
The Royalty Rate on the materials listed on Exhibit A and all
Derivative Works derived from such materials shall be [*].
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 60
EXHIBIT G
TECHNICAL DEVELOPMENT GOALS
1. Improvements to user interface and data interchange with other software
applications.
2. Improvements in data analysis and hard-copy output facilities.
3. Generalization of Works to handle broader classes of chemical structure
types, user substitution of modelling parameters, types of graphical
output data, including but not limited to small molecules, peptides,
proteins, nucleic acids, organometallic compounds, polymers, and
crystalline structures.
4. Restructuring of Works to permit integration with dedicated hardware
architectures in order to increase speed of calculations.
5. Development of comprehensive user application support material training
and seminar program materials, including test cases, textual material
and required audio-visual aids.
6. Generally develop and enhance the Works to improve its capabilities,
based on input from the scientific and user community.
<PAGE> 61
EXHIBIT H
NON-COMMERCIAL USERS
Individuals who have signed a version of the Academic Software License
[*]
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 62
Individuals who have not signed an Academic Software License
[*]
* CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 63
EXHIBIT I
FUNCTIONAL DESCRIPTION OF THE WORKS
CHARMM (Chemistry at Harvard Macromolecular Mechanics) is a highly
flexible computer program designed for the simulation of atoms and molecules of
chemical and physical interest with specific emphasis on the efficient treatment
of macromolecules in a wide range of environments. The organization of the
program is such that one can treat systems as simple as an individual water
molecule and as complex as a crystal or a disordered solid. The program in its
present form contains the information needed for the simulation of a range of
macromolecules, including proteins, nucleic acids, saccharides, and some
hydrocarbons, as well as a variety of small molecules. Special design features
are present to efficiently treat such molecules in vacuum, in the condensed
phase, in solution, in a crystal, or in other solid environments. However, the
various parts of the program are designed so that within the CHARMM concept
simulations of any other molecular, macromolecular, or condensed phase system
are possible. For example, if one were interested in more general hydrocarbon
polymers,
<PAGE> 64
zeolites, organic or organometallic systems, the functionalities included in
CHARMM would be able to incorporate the data necessary for treating these
systems in a simple and direct fashion.
To make clear the functional properties of CHARMM, it is best to couch
the description in terms of the macromolecular systems for which the program was
developed originally. However, this is done purely for the purpose of
illustration, and should be in no way be regarded as limiting the more general
potential of the CHARMM program and its applications. In recent years, the
usefulness of simulation methods for investigating the chemical and physical
properties of atoms and molecules has been clearly demonstrated. Significant
studies range from those concerned with the structures, energies, and
vibrational frequencies of small molecules, through those dealing with Monte
Carlo and molecular dynamics simulations of pure liquids and solutions, to the
analysis of the conformational energies and fluctuations of large molecules,
such as proteins and nucleic acids in vacuum, in solution, and in a crystal
environment. CHARMM is a general and flexible computer program which can
efficiently handle all aspects of such computations for the various systems of
interest. It is possible with the present version of the program to model build
the structure of interest, energy minimize that
2.
<PAGE> 65
structure by first- and second-derivative techniques, perform a normal mode or
molecular dynamics simulation, and analyze the structural, equilibrium, and
dynamic properties determined in these calculations. The information for
proteins, nucleic acids, prosthetic groups (e.g., heme groups), and substrates
is available, and the extension to other molecules is straightforward. A wide
range of analysis is possible, including static structure and energy analysis,
structure and energy comparisons, time series, correlation functions and
statistical properties of molecular dynamic trajectories, and interfaces to
computer graphics programs.
To further delineate the various functions of CHARMM, we outline below
the major aspects of the program.
A) Generation
A method of generating an energy expression is to specify all of the
bonds, angles, dihedral angles, etc., as input. For very small molecules, this
is a task that does not require much effort, but for larger systems, another
method must be used. In most macromolecules or crystalline structures, there is
a large amount of redundancy as similar subgroups can appear many times, and
there are only a finite number of subgroups. In CHARMM, these subgroups are
referred to as residues, and the definitions of the energy terms associated with
each type of residue constitutes the
3.
<PAGE> 66
(residue) topology file (RTF). The actual storage of energy terms for a
particular system is represented in the structure file (PSF). The generation
process involves the construction of the PSF from a specified sequence of
residues and the RTF. The terms residue and protein are employed in an extended
sense; i.e., they are applicable to small molecules, peptides, proteins, nucleic
acids, sugars, substrates, solvent, etc.
The most fundamental data structure used in CHARMM is the (protein)
structure file (PSF) in that very little can be done until the PSF is generated
or read from an existing file. With the addition of parameters and coordinates,
the PSF contains all of the information necessary to generate the interaction
lists and evaluate the energy.
The (residue) topology file (RTF) contains local information about
atoms, bond, angles, etc., for each possible type of monomer unit (residue) that
can be used in building a particular type of macromolecule or other complex
system. The concept of residue as used in CHARMM is fundamental from an
organizational point of view. It may be an amino acid residue as in a protein,
but in the DNA topology files, for example, a single residue corresponds to one
nucleotide unit along a single strand of DNA (i.e., a phosphate group, ribose,
and base). The protein topology files contain residue information for each of
the 20 amino
4.
<PAGE> 67
acids (the titratable acids are present in multiple forms), terminal groups,
heme, water, and assorted other small molecules such as ethanol. The DNA
topology files contain one residue for each of the four different bases,
terminal groups, and water. In addition to actual residues, topology files also
contain information required to patch structures where special bonds and other
features are needed.
From the description of the PSF and RTF it is clear that it provides a
functional basis for simulating a wide range of molecules and molecular systems,
including all of those mentioned in the introduction.
B) Coordinate Manipulation
CHARMM has generalized facilities for the construction, manipulation,
transformation, and interconversion of Cartesian, crystal, and internal
coordinates as well as a specialized routine for the generation of hydrogen
bonding proton coordinates. While crystallographic and simulation results are
usually obtained and stored in Cartesian coordinates, it is frequently desirable
to transform them either to reoriented Cartesian frames or to internal
coordinates. All of the reorientations and transformations presented can be
applied to an arbitrary (and easily specified) set of atoms. Internal
coordinates may be specified without regard to the
5.
<PAGE> 68
bonding of atoms. This generality makes the routines useful in analysis as well
as in setup and generation.
Coordinate generation is an important function. There are often
situations where all coordinates are not available, or where some or all of a
structure must be modified or built from internal coordinate values. The
internal coordinates (ICs) used to build a structure may be specified
arbitrarily, taken from an existing structure, or chosen from the minimum energy
values in the parameter tables. For example, specified ICs could be used to
construct coordinates for a peptide backbone when only a phi-psi plot is
available. The ability to take a Cartesian coordinate structure, fill and edit
the internal coordinate (IC) table (i.e., specify what distances, angles, or
dihedral values are to be modified), and then construct a new structure, is
extremely useful. With this feature, entire sections of a protein can be moved
relative to one another in an arbitrary but eaily specified manner.
The internal coordinate file is supported by several commands that
allow the user to build or modify a coordinate set in terms of internal angles
and distances. These commands include a complete editing facility (used to add
or modify table entries), options that approximate unknown internal coordinate
values based on the parameters, commands
6.
<PAGE> 69
that build a Cartesian coordinate set from internal coordinates and the inverse,
and I/O facilities.
C) Energy Calculations and Minimization
For most applications, CHARMM makes use of an empirical energy
function. Given the structure file (PSF) and the parameter file for the molecule
or molecules of interest, the empirical energy function determines the energy
for a given set of atomic coordinates. The energy is usually expressed in a
functional form that is relatively simple yet sufficiently accurate for the
problems for which CHARMM addresses itself. Facilities are available for
determining the first, second, and higher derivatives, analytically or
numerically, as necessary. Thus, the CHARMM concept is easily generalizable to
other ways of determining the energy, though whether it is useful depends on
sufficient computer time. All that is required is a method for evaluating energy
derivatives of which finite difference methods are most general. If a quantum
mechanical calculation were the source of the energy, standard analytic gradient
methods could be applied. Then the CHARMM program would be able to deal with
this type of energy function in a manner corresponding to that now being used
and all the facilities that are available would be able to be employed.
Given a potential energy function, it is often desirable to find
minimum-energy configurations of a
7.
<PAGE> 70
system. In same cases, minimization is performed to relieve strain in
conformations obtained experimentally or by the averaging of several structures.
In other cases, finding a local or global energy minimum may be of prime
interest, e.g., for determining the configuration of a peptide. For
macromolecular systems, the number of local minima and the cost of the
computations prevent exhaustive search of the energy surface, so it is
frequently impossible to determine the global energy minimum; generally, a local
minimum in the neighborhood of the x-ray structure, if available, is examined .
To provide flexibility in minimizing the energy of a range of systems
for a variety of purposes, CHARMM presently supports five different, iterative
minimization algorithms. They are steepest descents, two convergent methods
which make local harmonic approximations (conjugate gradients and ABNR), an
explicit second derivative method (Newton-Raphson), and quenched dynamics.
However, the program is set up so other minimization methods could easily be
incorporated.
D) Molecular Dynamics
Dynamical simulations are usually performed by classical mechanics and
involve the integration of Newton's equations of motion for a suitable prepared
system. Semiclassical or quantum dynamics can be introduced into the
8.
<PAGE> 71
CHARMM program for parts of a system for Which nonclassical effects are
important. CHARMM can solve the equations of motion numerically for all the
atoms in a molecule or a more general system. Since the numerical solution is
obtained sequentially, there is potential for roundoff errors to accumulate. To
control such errors, the algorithm uses double-precision arithmatic for most of
the problems, though a fast single precision facility for preliminary studies is
available.
A variety of dynamical methods exist in CHARMM. They include vacuum
dynamics, dynamics in solution or in crystals, activated dynamics, stochastic
dynamics, and dynamics with stochastic boundary conditions; extension to Monte
Carlo simulations is in progress. Each simulation approach has important
applications. Of particular interest for the study of active sites of enzymes,
or proteins modified by site directed mutagenesis, and/or drug binding, is the
stochastic boundary molecular dynamics simulation method. Free energy and NOE
restrained simulations are also possible.
E) Normal Mode Calculation
CHARMM has a generalized procedure for generating normal mode vectors
and for their analysis. This approach gives an accurate local description of the
potential energy surface. The normal modes can also be used to interpret IR
9.
<PAGE> 72
spectra or allow one to improve the force constant parameters in an attempt to
match the spectra.
Using a mass weighted form of the second-derivative matrix of the
potential, the normal modes can be obtained through diagonalization. The
eigenvectors correspond to the mass-weighted normal-mode displacements, and the
eigenvalues are proportional to the square of frequencies. For small systems (up
to 200 atoms or so), this can be performed by straightforward procedures. The
treatment becomes somewhat more difficult for larger systems where virtual
memory capacities are exceeded. For these systems, CHARMM can save the
second-derivative matrix in a compressed form, which can then be diagonalized
externally followed by a refinement step. In this manner, it is feasible to find
the modes of a system with approximately 1000 atoms. For significantly larger
systems (more than 1000 atoms), it becomes necessary either to reduce the size
of the secular equation by removing degrees of freedom (a projection method for
this has been developed), or to apply an iterative eigenvector extraction
procedure to obtain the modes of interest.
Normal modes are particularly important for determining the local
motions and for estimating the entropic contribution to the free energy of and
the binding of substrates and inhibitors.
10 .
<PAGE> 73
F) Analysis
An essential part of dealing with calculations of the properties of
large systems is an effective procedure for analyzing the results. CHARMM has an
extensive facility for analyzing structural data and the results of the various
calculations and options. It is designed for the large variety and quantity of
data that are of interest in the study of molecules. Its fundamental operations
are as follows: (i) Creation, manipulation, printing, and graphical displays of
tables: a data structure with the generality needed to effectively store and
manipulate the variety of data generated by CHARMM. (ii) Comparison of two
different structures, even if the chemical composition is different but related
by partial sequence homology. (iii) Manipulation of a time series of any
particular quantity calculated during a molecular dynamics calculation and the
computation of correlation functions. (iv) Searches for close contacts between
atoms of an entire structure or particular parts of it.
G) Graphical Display
An essential part of macromolecular calculations is the display of the
results. CHARMM is designed to be compatible with a range of graphic packages.
What is required is simply a coordinate set in the appropriate format. For use
with the E&S Multipicture system, an
11.
<PAGE> 74
interface with the program GRAMPS was implemented. More recently, collaborative
work with Rod Hubbard was initiated at Harvard to develop the general display
program HYDRA and to integrate HYDRA and CHARMM
H) Documentation
An essential part of the program is good documentation on how to use
CHARMM and how it is written. The documentation on its usage currently comprises
some 100,000 words of text stored in a hierarchical, on-line data base. General
information on the implementation details are kept in the code. CHARMM has about
10,000 lines of text embedded in the comments.
In addition to the main documentation, a CHARMM primer has been
prepared to initiate new users of the program. This is supplemented by a set of
notes with exercises that rapidly aid in learning how to utilize the most
important parts of CHARMM
I) Program Design
The design of CHARMM has a number of features distinct from most
scientific programs. These features have been introduced to make the program
convenient to use and to facilitate its orderly evolution. Since the methodology
used in CHARMM is constantly evolving, it is essential that the program be
easily modified and maintained.
12.
<PAGE> 75
Transportability of the program and its data files is also desirable.
CHARMM is a single program that contains about 100,000 lines of code
and requires about 1 megabyte of memory for the compiled machine instructions
and 1.5 megabytes for static storage. Using one program maximizes its
versatility in combining various calculations while minimizing the number of
intermediate files a user must save. A single program also facilitates
development, because it guarantees that support and utility functions are always
available. In addition, the overhead for maintaining one program is less than
that for maintaining many programs of similar capabilities, as logical
inconsistencies are easier to detect and testing is simplified. A set of test
cases is maintained that utilizes most of the features of CHARMM. Such periodic
testing is essential to preserving the integrity and reliability of the program.
Although CHARMM was originally optimized for the VAX, it is now written
in FORTRAN 77 (with a FLEX preprocessor) and runs on the CRAY 1, IS, and XMP.
Adaptations to IBM machines, to array processors (e.g. CSPI, FPSI64, STAR), to
the Apollo and other work stations are contemplated or in progress. Vectorized
versions of the most time consuming portions of CHARMM have been prepared for
the CRAY and can be extended to other computers.
13.
<PAGE> 76
EXHIBIT J
PORTIONS CREATED WITH GOVERNMENT FUNDING
NSF and NIH Research Grant Funding
Image facility
(IMAGES.FLX, IMAGIO.FLX, UPIMAG.FLX)
(172 blocks)
Energy routines, nonbond and fast option routines plus second derivatives
(ENBOND.FLX, EINTERN.FLX)
(200 blocks)
Utility routines (Array manipulations, etc.)
(ARRAY.FLX, CHUTIL.FLX, DATSTR.FLX, SORT.FLX,
STRING.FLX, UTIL.FLX)
(120 blocks)
Surface Area routine
(SURFAC.FLX)
(20 blocks)
NIH Fellowship Funding
phi angle in dynamics
(16 blocks)
Solvent boundary calculation
(19 blocks)
Old parts of energy routine; old parts of I/O routines; old parts of
manipulation routines
(50 blocks)
Modifications of correlation function routines
(19 blocks)
Old parts of dynamics routines; nonbond generation; I/O section -
coordinates, parameters & sequence reader; utility routines - wild card
processing
(225 blocks)
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.23
SOFTWARE LICENSE AGREEMENT
This Software License Agreement (this "Agreement") is made and
entered into as of September 21, 1987 (the "Effective Date") by and among
Axel T. Brunger and Martin Karplus ("Collaborators") and the President and
Fellows of Harvard University ("Licensor") and Polygen Corporation, a Delaware
corporation ("Licensee").
RECITALS
A. Axel T. Brunger ("Brunger"), in collaboration with Martin
Karplus, has developed a computer program and has assigned all rights in it to
Licensor. Brunger intends to continue the development of such program at Yale
University ("Yale") and has agreed to assign all rights to such further
development to Yale.
B. Licensor has certain rights in such program.
C. Licensor is not properly equipped or in a position to
successfully market such program and prefers to grant Licensee exclusive rights
to commercially exploit such program, and any future-developed computer programs
of substantially similar commercial applicability developed by Collaborators and
which are owned or controlled by Harvard, in return for certain royalties and
promises by Licensee to use its best efforts to exploit such programs as
described below.
D. Licensor has entered into an agreement with Yale under
which Yale has granted Licensor the sole right to license Derivative Works made
by or for Brunger which come under the control of Yale, except to the extent
Yale is granted the right to distribute the Academic Software Versions and to
the extent Yale must grant non-exclusive licenses to the Howard Hughes Medical
Institute or to the Federal government.
AGREEMENT
In consideration of the mutual covenants and promises herein
contained, the parties hereto agree as follows:
1. Definitions
1.1 Original Works. The reference manuals and other
materials listed on Exhibit A hereto, and the computer program described on
Exhibit B hereto, in source code, executable object code and all other forms.
<PAGE> 2
1.2 Functional Definition of the Works. The functional
description of the Works described on Exhibit H.
1.3 Derivative Works. A revision, enhancement, improvement,
modification, translation, condensation, or expansion of the Works or any other
form in which the Works may be recast, transferred or adapted. In addition,
"Derivative Works" shall include any computer programs developed by or for
Collaborators, either prior to or subsequent to the Effective Date, which are
included within the Functional Definition of the Works and which Licensor
controls to the extent of being able to grant Licensee the rights contemplated
hereunder. In addition, "Derivative Works" shall also include any computer
programs developed by or for Licensee subsequent to the Effective Date which are
included within the Functional Definition of the Works and which Licensee
controls to the extent of being able to grant Licensor the rights contemplated
hereunder. Licensor and Licensee hereby agree to exercise their respective best
efforts to obtain, exercise, and maintain the control referred to in this
Section 1.3 and Sections 1.4 and 1.5 with respect to Derivative Works for so
long as this provision of this Agreement shall remain in effect.
1.4 Licensor Improvements. Derivative Works to the extent that
such Works are created by or for Collaborators and which Licensor controls to
the extent of being able to grant the rights contemplated hereunder.
1.5 Licensee Improvements. Derivative Works to the extent that
such Works are created by Licensee and are not created by or for Collaborators
within the meaning of Section 1.4 above.
1.6 Works. The Original Works, Licensor Improvements, and
Licensee Improvements, collectively.
1.7 Commercial Software Version. Any specific version of the
Works which is marketed generally by Licensee for commercial purposes and which
may be differentiated from other Commercial Software Versions according to any
combination of functional specifications, performance specifications, or the
associated type of computer hardware.
1.8 Academic Software Version. Any specific version of the
Works which is made available pursuant to this Agreement by Licensor for
Non-Commercial Use and which may be differentiated from other Academic Software
Versions according to any combination of functional specifications, performance
specifications, or the associated type of computer hardware.
2.
<PAGE> 3
1.9 Non-Commercial Use. Academic research or other non-profit
educational use which is: (1) not-for-profit; (2) not conducted or funded
(unless such funding confers no commercial rights to the funding entity) by an
entity engaged in the commercial use, application or exploitation of works
similar to the Works; and (3) not intended to produce works for commercial use.
1.10 Licensed Works. The Original Works and Licensor
Improvements, collectively.
1.11 CHARMM A computer program that is the subject of a
Software License Agreement dated as of December 10, 1986, by and among Martin R.
Karplus and the President and Fellows of Harvard University, jointly the
licensor thereunder, and Licensee.
2. License.
2.1 Grant of Exclusive License. Licensor hereby grants
Licensee an exclusive (even as to Licensor), perpetual, worldwide license
(sublicenseable at any level) under and to Licensor's patents, patent
applications, copyrights, know-how, and other intellectual property and rights
of all kinds to: (i) use, reproduce, distribute, and sell or otherwise dispose
of the Works; and (ii) create Derivative Works. The license granted in this
Section 2.1 may be revoked only as expressly provided in this Agreement .
2.2 Grantback of Rights. Licensee grants to Licensor the
non-exclusive right to use the Works and to develop Derivative Works (but not
reproduce or distribute except as otherwise expressly provided under this
Agreement) solely for Non-Commercial Use and Licensor may grant these rights to
Yale. The right granted to Licensor under this Section 2.2 shall include the
right to engage in scientific collaborations involving private companies other
than Licensee with the aim of making the Works more efficient or exploring
implementation of the Works on additional types of computer equipment, it being
understood that any developments resulting from such collaborations will be
considered Licensor Improvements.
2.3 Ownership. Title to the Licensed Works shall remain the
exclusive property of Licensor and/or Yale. All rights in Licensee Improvements
shall be held exclusively by Licensee; Licensor may not use, reproduce or
distribute Licensee Improvements in any manner except as otherwise expressly
provided under this Agreement. Modifications or
3.
<PAGE> 4
improvements made by Licensee to the Works that could reasonably be expected to
affect the scientific results obtained through use of the Works shall be
submitted to Collaborators for review prior to general release by Licensee.
3. Provision of Product by Licensee for Non-Commercial Use.
3.1 Loaner Copy to Licensor and to Yale. During the term of
this Agreement, Licensee shall grant to Licensor and to Yale, on the terms and
conditions set forth in Exhibit C hereto (including ongoing maintenance) but
without fee, a license to use Licensee's then-current Commercial Software
Versions, on such Licensee-supported types of machine configurations as Licensor
and/or Yale and Licensee may from time to time select, exclusively for
Non-commercial Use, which for purposes of this Agreement shall be deemed to
include uses contemplated by the terms of the Sponsored Research Agreement
between Licensor and Licensee (such copy of the Commercial Software Versions is
referred to herein as the "Loaner Copy"). Licensee reserves the right to limit
the number of machine configuration versions installed at Licensor's and Yale's
sites at any one time to two (2) and to require sixty (60) days written notice
in order to replace any version with another.
3.2 Distribution.
(a) Licensor shall have the right to distribute copies of the
Academic Software Versions solely for Non-Commercial Use to each person
designated by Brunger; provided, however, that (i) such copies shall be
distributed only to responsible parties at accredited universities or other
non-profit organizations who shall have first entered into written license
agreements with Licensor in the form of Exhibit D, or such other written form as
may from time to time be agreed in writing between Licensor and Licensee; (ii)
the recipients of such Academic Software Versions under this subsection 3.2(a)
shall not be entitled to any maintenance service, enhancements, or upgrades from
Licensee, except as may be otherwise agreed in writing between a recipient and
Licensee in any particular instance. Such copies shall be distributed at no
charge other than the marginal cost of media, copying and distribution, which
costs are currently estimated at U.S.$250.00 for points within the continental
United States. Any changes to such charge shall be as agreed in writing between
Licensor and Licensee. No recipient of copies under this Section 3.2 shall be
eligible to receive another copy under this Section until the first
4.
<PAGE> 5
copy shall have been returned to Licensee. Licensee shall have the right to
require Licensor to comply with the reporting, record-keeping, and audit
provisions of Section 7, generally, in order to determine Licensor's compliance
with the provisions of this Section 3.2. Licensor shall furnish Licensee with
written notice of the identity and location of each recipient of a copy of the
Academic Software Version and an executed copy of the applicable license
agreement no later than thirty (30) days following the date of distribution to
such recipient. Licensor may grant these distribution rights to Yale providing
that Yale meets Licensor's responsibilities to Licensee.
(b) Brunger shall have the right to direct the distribution of
copies by Licensee of the Commercial Software Versions solely for Non-Commercial
Use to each person designated by Brunger; provided, however, that (i) Works
which are computer programs shall, at Licensee's option, be distributed only in
binary object code format ("Object Form"); (ii) such copies shall be distributed
only to responsible parties at accredited universities or other non-profit
organizations who shall have first entered into written license agreements with
Licensee in the form set forth in Exhibit D, or such other written form as may
from time to time be agreed in writing between Licensor and Licensee, and have
delivered an executed copy thereof to Licensee; (iii) the recipients of such
software under this subsection 3.2(b) shall not be entitled to any maintenance
service, enhancements, or upgrades from Licensee, except as may be otherwise
agreed in writing between a recipient and Licensee in any particular instance;
and (iv) such copies shall only be distributed in accordance with Licensee's
commercial release schedule. Such copies shall be distributed at no charge other
than the marginal cost of media, copying and distribution, which costs are
currently estimated at U.S.$250.00 for points within the continental United
States. Any changes to such charge shall be as agreed in writing between
Licensor and Licensee. No recipient of copies under this Section 3.2(b) shall be
eligible to receive another copy under this Section until the first copy shall
have been returned to Licensee. Licensee shall notify Collaborators of each copy
distributed pursuant to this Section.
(c) The parties agree that no distribution under the
provisions of subsection 3.2(a) shall be permitted in source code form unless
the recipient shall have previously established to the satisfaction of
Collaborators that the specific lines or modules of the source code to be
distributed are necessary or desirable in order to permit the attainment of
academic research or educational objectives.
5.
<PAGE> 6
The parties further agree to cooperate technically with a view toward
eliminating the functional necessity in the future for the distribution of all
or any portion of the Academic Software Versions in the form of source code.
(d) The parties recognize that users of Works distributed
pursuant to Section 3.2(b) may require the ability, for research purposes, to
interface user or third party-developed software to the Commercial Software
Versions or to replace certain subsystems included within the Commercial
Software Versions with user or third party-developed subsystems. The parties
agree to cooperate on the development of specifications for enhancements to the
Commercial Software Versions which (although all Works distributed in accordance
with Section 3.2(b) which are computer programs will be distributed solely in
Object Form) will operate to facilitate such interfacing or subsystem
substitution activities in a manner that will not compromise the functional
integrity or supportability of the Commercial Software Versions as installed in
the field. Such enhancements would include, but not necessarily be limited to,
the ability to substitute certain types of user-defined force field parameters,
the ability to invoke certain functions of the Commercial Software Versions at
subroutine level, and the production of documentation describing mechanisms
whereby certain defined ASCII data file formats can be passed to and from the
Commercial Software Versions or to and from certain functional subsystems
included within the Commercial Software Versions.
4. Product Delivery and Acceptance.
4.1 Initial Delivery. Within fifteen (15) days after the
Effective Date, Licensor and Collaborators shall deliver to Licensee a copy of
the Original Works.
4.2 Delivery of Derivative Works. Licensor and Brunger shall
promptly deliver to Licensee a copy of all Licensor Improvements created during
the term of this Agreement. Nothing in this Agreement shall obligate Licensor or
Collaborators to create Licensor Improvements.
5. Improvement and Commercial Exploitation.
5.1 ChemNote Interface. Brunger and Licensee will collaborate
on the development of an interface between the Works and Licensee's ChemNote
program in accordance with the specifications set forth on Exhibit G hereto.
Licensee will provide Brunger with a copy of the
6.
<PAGE> 7
current version of the ChemNote program and associated materials at no charge
for his own use and will provide a single copy of any subsequent releases or
updates thereof on the same basis during the term of this Agreement.
5.2 Licensee Marketing Obligations. Licensee agrees to use its
best efforts to promote the Works in the normal course of Licensee's business,
as Licensee shall deem commercially appropriate.
5.3 Marketing Focus. The Works, although based on CHARMM, are
functionally distinct from CHARMM, and the parties intend that the Works be
marketed as and perceived by users as distinct from and capable of being used
either separately from or in conjunction with CHARMM. Each party will use its
best efforts in such party's distribution and further development of the Works
to maintain such distinction.
5.4 Control of Marketing and Distribution. Subject to the
provisions of Section 5.2 hereof, all aspects of the distribution and marketing
of the Works shall be in Licensee's sole control, including without limitation
the methods of marketing, pricing, naming, packaging, labelling, and
advertising, the terms and conditions of sale and/or license, and the collection
of fees. Licensee agrees that all advertising material shall be in good taste
and avoid product performance claims which are untruthful or intentionally
misleading. Licensee may distribute the Works through any combination of direct
marketing, distributors, representatives, original equipment manufacturers, and
other means, and either alone or in combination with other products. Licensee
shall, in distributing the Commercial Software Versions, use a form of End-User
License Agreement which is similar in substance to that attached hereto as
Exhibit E.
5.5 Promotional Use. It is expressly understood that, pursuant
to Section 5.4, Licensee may, without incurring any royalty pursuant to Section
6 hereof: (i) make copies of the Works available to potential customers without
charge for periods [*]; and (ii) make copies of any corrected or updated Works
and distribute them without charge to all previous customers for the Works which
were so corrected or updated.
5.6 Referral of Inquiries. Licensor and Collaborators shall
refer any inquiries received by them regarding the commercial use of the Works
to Licensee and shall notify Licensee of each such referral.
* CONFIDENTIAL TREATMENT REQUESTED
7.
<PAGE> 8
5.7 Technical Communications. For the first [*] that this Agreement
remains in effect and so long as the royalty provisions of Section 6
remain in force, Licensor agrees to cooperate with Licensee in the joint
solicitation, collection and collation from recipients of Academic Software
Versions no less frequently than annually their oral and written comments,
requests for enhancement, software bug reports and other technical matters of
interest concerning their use of the Academic Software Version (hereinafter
"Technical Communications") and to make available such Technical Communications
to Licensee for presentation in a forum open to licensed users of the Academic
and Commercial Software Versions where review and discussion of these Technical
Communications can be promoted with a view toward improving the quality,
functionality and technical standards of the Works. In organizing such forums,
each party shall be responsible for its own costs, and every effort will be made
to ensure that the forum is self-supporting on the basis of admission charges to
attendees. Licensor may elect to discontinue its participation in the activities
contemplated under this Section 5.7 upon written notice to Licensee at any time
after this Agreement has been in effect for [*].
6. Royalty Payments to Licensor.
6.1 Royalty Amount. Licensee shall pay to Licensor royalties equal to
the product of the Royalty Rate applicable to each Commercial Software Version
and the Net License Fees applicable to such Commercial Software Version.
6.2 Net License Fees.
(a) Subject to the remainder of this Section 6.2, the "Net
License Fees" shall be the aggregate License Fees (as described on Exhibit F)
received by the Licensee for each Mainframe or Workstation Configuration
installation of the Commercial Software Versions, less the following deductions
to the extent such deductions are directly attributable to such installation and
are stated separately in the applicable invoice or in a later statement:
(i) Trade or quantity discounts allowed and taken by
customers, including advertising allowances and
marketing fees or commissions of any kind.
* CONFIDENTIAL TREATMENT REQUESTED
8
<PAGE> 9
(ii) Actual credits to customers on account of any
returns of such Commercial Software Versions.
(iii) License fees, if any, payable to IMSL, Inc.
("IMSL") with respect to such Mainframe or
Workstation Configuration, for a run-time license
covering routines within the Licensed Works as to
which IMSL has proprietary rights ("IMSL Routines").
(iv) Any of the following, when charged to customers:
(x) transportation and insurance costs from place
of shipment to point of delivery;
(y) excise, sales, value-added, property and use
taxes; and
(z) import and export duties, taxes and
surcharges.
(b) If any Works are distributed with other products in a
package for a single charge, the Net License Fees attributable to such Works
shall be determined by prorating the receipts from the sale or license of the
package according to the published list charges established by Licensee for the
separate products contained in the package whether or not such products are
distributed separately, but shall not exceed the Licensee's published list
License Fee for the applicable Commercial Software Version.
(c) Amounts received by Licensee as deposits or advances shall
not be deemed to have been received until installations of Commercial Software
Versions have occurred with respect to such deposits or advances. If Licensee
receives a partial payment for any invoice which includes both the Works and
other products, Licensee shall calculate Net License Fees by prorating
Licensee's actual receipts over the published list charges established by
Licensee for the separate products included in the invoice.
6.3 Royalty Rates. The "Royalty Rate" for the Commercial Software
Versions shall be as set forth on Exhibit F.
9.
<PAGE> 10
6.4 Maximum Royalty.
(a) In the event that (i) the total aggregate royalties paid to
Licensor pursuant to this Agreement equals or exceeds the Maximum Royalty
specified on Exhibit F and (ii) Licensor shall have elected not to or shall have
failed or been unable to comply with the provisions of Section 5.7 hereof, and
(iii) this Agreement shall have been in effect for [*], then
Licensee's obligations to pay any royalties pursuant to this Agreement shall
immediately terminate, the licenses granted pursuant to Sections 2.1 and 8.1
shall then immediately become irrevocable, and Licensee's obligations under
Sections 5.1 and 5.2 shall terminate.
(b) Notwithstanding the provisions of subsection (a) above, in the
event of and from the date that the conditions of subsections (a)(ii) and (iii)
above are satisfied, Licensee shall have the option thereafter to pay the
balance of the Maximum Royalty amount then unpaid, whereupon Licensee's
obligations to pay any royalties pursuant to this Agreement shall immediately
terminate, the licenses granted pursuant to Sections 2.1 and 8.1 shall then
immediately become irrevocable, and Licensee's obligations under Sections 5.1
and 5.2 shall terminate.
6.5 Taxes. Licensee shall pay or reimburse Licensor for amounts equal
to any taxes, other duties, tax penalties, or amounts in lieu thereof however
designated, now or hereafter levied or based on payments due under this
Agreement, exclusive of taxes based upon Licensor's net income. In lieu thereof,
Licensee may provide to Licensor an exemption certificate acceptable to the
taxing or levying Collaboratorsity.
7. Payments and Records.
7.1 Quarterly Reports and Payments. Licensee shall deliver written
reports to Licensor within 30 days after the last day of each calendar quarter
stating the number and type of Commercial Software Versions that were installed
during such quarter, the Net License Fees attributable thereto, and the
royalties thereon, and enclosing payment of royalties due for such quarter.
7.2 Records. Licensee agrees that it shall maintain complete, clear and
accurate records sufficient to establish the royalties payable pursuant to
Section 6.
10.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 11
7.3 Audit. Licensor shall have the right, upon reasonable notice and
during normal business hours, to have independent certified public accountants
acceptable to Licensee examine, at Licensor's expense except as set forth
below, Licensee's records relating to the royalties payable pursuant to this
Agreement; provided, that such accountants must agree in advance in writing to
maintain in confidence and not to disclose to any party any information obtained
during the course of such examination, other than a disclosure to Licensor of
the amounts of fees that should have been paid for the period covered by the
examination. It is agreed that Licensor may utilize its internal auditing staff
to perform any examinations permitted hereunder except that in the event of any
dispute, Licensee may elect by notice in writing to require an examination by
independent certified public accountants acceptable to Licensee. Any errors
discovered during such examination shall be corrected by the appropriate party.
In no event shall any such adjustment be made more than 3 years after the end of
the period in error. In the event such an audit reflects an underpayment of ten
percent or more of the amount that should have been paid to Licensor for the
period examined, then the expense of such examination shall be borne by
Licensee.
8. Proprietary Rights.
8.1 Trademark Rights. Licensor hereby grants to Licensee the exclusive
right (excepting only the right of Licensor, Yale and Collaborators to use the
name X-PLOR themselves for purposes of identifying the Academic Software
Version, which is hereby reserved) to use a distinctive variant or stylized
version of the name "X-PLOR" for purposes of marketing and promoting the Works
and agrees to refrain from granting to any third party any right of any kind
whatsoever to use the name X-PLOR. Licensee shall have no right to use the
name "Harvard", or "Harvard University , "Yale" , or "Yale University" without
the express written permission of Harvard or Yale, as the case may be. Licensee
may, if it so elects, market the Works under a name of its own choosing.
8.2 Copyright and Proprietary Notices. Licensee shall reproduce and
include copyright and proprietary notices on all copies of the Licensed Works in
the same form and manner that such copyright and proprietary notices are
included on the original copies thereof or in such other form and manner as may
be agreed to by Licensor; provided, however, that Licensee may add its own
copyright and
11.
<PAGE> 12
proprietary notices to the Licensed Works. Licensee shall use its best efforts
to ensure compliance herewith by all of Licensee's distributors.
8.3 Registrations. Licensor agrees to cooperate with Licensee in
obtaining in Licensor's and/or Yale's name for Licensee as exclusive licensee
any patent, copyright, or other statutory protections for the Licensed Works in
any country. Licensee agrees to reimburse Licensor for ordinary and necessary
out-of-pocket expenses incurred by Licensor in connection with such cooperation.
9. Infringement by Others.
9.1 Notification. Each party shall notify the other of any
infringements of rights in the Licensed Works that come to such party's
attention.
9.2 Actions. In the event of any infringement of any rights granted to
Licensee hereunder, Licensee shall have the first option to bring any action for
such infringement on behalf of itself and Licensor, and Licensor shall cooperate
fully with Licensee in such action. Licensee agrees to reimburse Licensor for
ordinary and necessary out-of-pocket expenses incurred by Licensor in connection
with such cooperation. In such event, Licensee shall bear the expenses of the
action and shall retain any sums recovered in the action. If Licensee declines
in writing to bring any such action, Licensor may proceed and shall bear all
expenses of the action, and shall be entitled to retain all proceeds of such
action.
10. Protection of Confidential Information. Licensor shall not disclose
any information received from Licensee pursuant to Section 7 to any party
without Licensee's prior written consent, excepting financial information in
such form as may be required by and for Licensor's independent certified public
accountants or as may be required in order to comply with governmental reporting
requirements. The restrictions of this Section 10 shall not apply to information
which: (a) is, at the time, in the public domain through no act of Licensor; or
(b) is lawfully known by Licensor from a source other than Licensee with no
restriction of confidentiality.
12.
<PAGE> 13
11. Warranties and Indemnification.
11.1 Ownership Warranty. Licensor and Collaborators represent
and warrant to Licensee that: (i) the Licensed Works (except for the IMSL
Routines) are original with Licensor and Collaborators; (ii) to the best of its
knowledge, the Licensed Works do not infringe upon any patent, copyright, trade
secret or other proprietary rights of others, except that such representation
and warranty does not apply to the IMSL Routines; (iii) to the best of its
knowledge, Licensor is the sole and exclusive owner of the Licensed Works,
(except for the IMSL Routines) all rights therein, and the rights granted herein
to Licensee; (iv) Licensor has not previously or otherwise granted any other
rights in the Licensed Works third party which conflict with the rights herein
granted to Licensee; and (v) Licensor has full power to grant the rights herein
granted to Licensee.
THE FOREGOING WARRANTY IS THE SOLE WARRANTY OF LICENSOR TO LICENSEE AND
IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
11.2 Power and Authority. Each of Licensor, Collaborators, and
Licensee represents and warrants to the other that it has full legal power and
authority to enter into this agreement and to carry out its obligations
contained herein.
11.3 Right of Set Off. In the event Licensee becomes subject
to any claim, demand, or suit resulting from a breach of any of the warranties
set forth above in Section 11.1, Licensee shall have the right to set off, as
incurred, (a) its attorneys' fees and expenses arising from such claim, demand,
or suit, (b) costs and damages awarded against it, in connection with any such
claim, demand or suit, by any court or arbitrator having jurisdiction, or (c)
the amount of any settlement concluded in connection with the same, against
royalties otherwise due Licensor subsequent to the date of notice to Licensor of
such claim, demand or suit. Licensor shall cooperate with Licensee by providing
all available assistance and information necessary to enable Licensee to carry
out its defense. Should the above costs exceed the royalties due in any
particular calendar year, Licensee may offset the excess against royalties due
in subsequent years.
In addition, Licensor shall be permitted, at its own option
and expense: to procure for Licensee the right to continue the use of the
Licensed Works subject to such
13.
<PAGE> 14
claim, demand or suit; or having failed to obtain such right, to replace or
modify such Licensed Works to make them non-infringing. If Licensor elects to
replace or modify any of the Licensed Works, such replacement or modification
shall substantially meet the performance and interface specifications of the
replaced or modified Licensed Works. In the event Licensor declines to replace
or modify the Licensed Works, Licensee may, upon written consent of Licensor,
replace or modify a portion of the Licensed Works to eliminate any infringement.
In the latter case, Licensee shall be entitled to set off against royalties
otherwise due Licensor subsequent to the date of notice to Licensor of such
claim, demand or suit, Licensee's actual costs incurred in connection with the
replacement or modification of the Licensed Works. If such costs exceed the
royalties due in any particular calendar year, Licensee may offset the excess
against royalties due in subsequent years.
11.4 Combinations. Licensor shall have no liability for any
claim of infringement based on Licensee's combination of the Licensed Works with
programs or data not supplied by Licensor hereunder, if such claim would have
been avoided by the use of the Licensed Works without such specific program or
data.
11.5 Survival. The warranties and indemnities stated in this
Section 11 shall survive the expiration or termination of this Agreement.
Section 11.3 above states Licensor's exclusive liability to Licensee for breach
of the warranties set forth in Section 11.1.
12. Term and Termination.
12.1 Term. This Agreement shall continue until terminated by
written mutual consent of the parties unless earlier terminated as provided
herein.
12.2 Termination for Non-Marketability. If Licensee determines
that due to changes in market conditions or for any other reason Licensee will
not, or will not continue to, market or distribute the Licensed Works, Licensee
may terminate this Agreement at any time upon thirty (30) days' written notice
to Licensor.
12.3 Termination for Breach; Bankruptcy. If either party
materially breaches or fails to perform any obligation under this Agreement and
fails to remedy such breach within thirty (30) days after receiving written
notice of the breach from the other party, or if either party makes any
assignment for the benefit of creditors, or
14.
<PAGE> 15
if any bankruptcy, reorganization, or other proceeding under any bankruptcy or
insolvency law is initiated by it, or is initiated against it and not dismissed
or stayed within thirty days, the other party may terminate this Agreement
effective upon notice.
13. Effect of Termination.
13.1 Termination of License. Upon termination of this
Agreement, all rights and licenses to the Licensed Works granted to Licensee
hereunder shall, subject to Section 6.4, automatically cease, except that for a
period not longer than [*], Licensee may continue to license pursuant
to the terms of this Agreement a number of copies of the Works in Licensee's
inventory at the time of termination which does not exceed [*]
and, except further, that Licensee may retain and use copies of any version of
the Works for the purpose of providing support to its then-existing customers.
13.2 Survival of Obligations. The provisions of Sections 1,
2.3, 6.4, 8.3, 9.2, 10, 11, 12, 13, and 14 (and, if provided by Section 6.4,
Sections 2.1 and 8.1) shall survive termination of this Agreement and shall
continue in full force and effect thereafter.
13.3 Survival of Customers' Rights. All rights and licenses
granted by Licensee to third parties prior to termination shall continue
indefinitely in full force and effect.
13.4 Option to Acquire Commercial Software Version. In the
event this Agreement is terminated by Licensee pursuant to Section 12.2 or there
is a final adjudication that this Agreement has been lawfully terminated by
Licensor pursuant to Section 12.3, Licensor may elect by notice in writing to
Licensee to transfer to itself and assume or to arrange for the transfer and
assumption of the responsibility for the marketing and support for the
Commercial Software Version, in which case Licensee shall grant to Licensor a
license to all Licensee Improvements included in the most recent Commercial
Software Version. Such license shall be in substance identical to that
originally granted to Licensee except that royalty obligations in favor of
Licensee shall be determined from the date of any such transfer as if Licensee
were Licensor hereunder, based upon the proportion that the Licensee
Improvements then bear to the whole of the Commercial Software Version.
15.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 16
14. General.
14.1 Notices. All notices, demands or consents required or
permitted hereunder shall be in writing and shall be delivered, sent by telegram
or telex, or mailed to the respective parties at the addresses set forth below
or at such other address as shall have been given to the other party in writing
for the purposes of this clause. Such notices and other communications shall be
deemed effective upon the earliest to occur of (i) actual delivery, (ii) five
days after mailing, addressed and postage prepaid, return receipt requested, or
(iii) one day after transmission by telex or telegram.
14.2 Waiver and Amendment. No waiver, amendment or
modification of any provision hereof shall be effective unless in writing and
signed by the party against whom such waiver, amendment or modification is
sought to be enforced. No failure or delay by either party in exercising any
right, power or remedy hereunder shall operate as a waiver of any such right,
power or remedy.
14.3 Assignment. Either party may assign this Agreement to an
entity which acquires, directly or indirectly, substantially all of its assets
or merges with it. Except as set forth herein, neither this Agreement nor any
rights hereunder, in whole or in part, shall be assignable or otherwise
transferable by either party without the express written consent of the other
party. Subject to the above, this Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the parties hereto.
14.4 Governing Law. This Agreement shall be governed by the
law of the Commonwealth of Massachusetts as such law is applied by Massachusetts
courts to contracts between Massachusetts residents entered into and to be
performed within the Commonwealth of Massachusetts.
14.5 Integration. This Agreement, including any attached
Exhibits, constitutes the final, complete and exclusive agreement of the parties
concerning the subject matter hereof, and supersedes any other communication
related thereto.
14.6 Severability. In the event that any provision of this
Agreement shall be unenforceable or illegal, such provision shall be deemed
modified or, if necessary, deleted so that the entire Agreement shall not fail,
but shall continue in force and effect.
16.
<PAGE> 17
14.7 Arbitration. With the exception of an action seeking
injunctive relief for breach of Section 10 hereof, any dispute, controversy or
claim arising out of or relating to this Agreement, the subject matter hereof,
or the breach hereof shall be settled by binding arbitration in Boston,
Massachusetts, in accordance with the Commercial Arbitration Rules then
prevailing of the American Arbitration Association. Judgment upon any award made
in such arbitration may be entered and enforced in any court of competent
jurisdiction.
14.8 Attorney's Fees. The prevailing party in any arbitration
or judicial action brought to enforce or interpret this Agreement or for relief
for its breach shall be entitled to recover its costs (including its share of
arbitration fees) and its reasonable attorney's fees therein incurred.
14.9 Export.
(a) Licensor is familiar with and agrees to comply with all
Export Administration Regulations of the United States Department of Commerce
(and other United States government regulations relating to the export of
technical data and equipment and product(s) produced therefrom) which are
applicable to Licensee with regard to any distribution under Section 3.2(a)
hereof by Licensor or any distribution under Section 3.2(b) hereof which is
directed by Licensor.
(b) Licensee is familiar with and agrees to comply with all
Export Administration Regulations of the United States Department of Commerce
(and other United States government regulations relating to the export of
technical data and equipment and product(s) produced therefrom) which are
applicable to Licensee with regard to any distribution of the Licensed Works.
(c) Licensor shall provide to Licensee all assistance
reasonably necessary to obtain any United States or foreign import or export
license relating to the Works.
14.10 Products Liability Indemnity. Licensee agrees to
indemnify, hold harmless and defend Licensor and Yale, their trustees, officers,
faculty, employees and agents against any and all claims arising out of this
Agreement in connection with any damages, losses or liabilities whatsoever with
respect to death or injury to person or damage to property from or out of the
possession, use or operation of the Licensed Works by the Licensee, or its
customers, in any manner whatsoever.
17.
<PAGE> 18
14.11 Rights and Remedies Cumulative. The rights and remedies
herein provided shall be cumulative and not exclusive of any other rights or
remedies provided by law or otherwise.
14.12 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
14.13 Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
AGREED:
THE PRESIDENT AND FELLOWS /s/ Axel T. Brunger
----------------------------
OF HARVARD UNIVERSITY Axel T. Brunger
Address: Yale University
/s/ Joyce Brinton 260 Whitney Avenue, P.O. Box 6666
- ----------------------------------- New Haven, CT 06511
Authorized Signature
Name : Joyce Brinton,
-----------------------------
Title: Director, Office for Patents
Copyrights and Licensing
Address: Harvard University /s/ Martin Karplus
- ----------------------------------- -------------------------------
Martin Karplus
Address: Harvard University
12 Oxford Street
Cambridge, MA 02138
POLYGEN CORPORATION
/s/ [signature illegible]
----------------------------------
Authorized Signature
Name: [name illegible]
Title: Chairman and C.E.O.
Address: 200 Fifth Avenue
Waltham, MA 02254
18.
<PAGE> 19
EXHIBIT A
DESCRIPTION OF DELIVERABLE DOCUMENTATION
X-PLOR Introduction and Tutorial
Crystallographic Refinement by Simulated Annealing
(Lecture Notes)
(Copy Attached)
<PAGE> 20
EXHIBIT B
SOFTWARE SPECIFICATIONS
1. The main source code of X-PLOR is contained in the computer files listed
inspection 2 below. The installation of X-PLOR requires the use of computer
files PREXPLOR.FLX, FLECS.FLX and associated command files for VAX/VMS, CRAY and
CONVEX computers, which should be considered part of X-PLOR.
2.: List of computer files comprising the main source code of X-PLOR:
ARRAY.FLX. CHUTIL.FLX, CONTRL.FLX, COORIO.FLX, CORMAN.FLX, CSTRAN.FLX,
DIAGQ.FLX, DYNAMC.FLX, DYNIO.FLX, DYNLNG.FLX, EHBOND.FLX, ENBOND.FLX,
ENEGRY.FLX, ENSOLV.FLX, ENST2.FLX, GENIC.FLX, GEOMTY.FLX, HBONDS.FLX,
HBUILD.FLX, INITIA.FLX, INTCOR.FLX, MRIGID.FLX, NBONDS.FLX, NOE.FLX, PARMIO.FLX,
PICK.FLX, POWELL.FLX, PSFIO.FLX, ROTLSQ.FLX, RTFIO.FLX, SBDENR.FLX, SCALAR.FLX,
SEGMNT.FLX, SELRPN.FLX, SHAKE.FLX, SORT.FLX, STRING.FLX, SURFAC.FLX, TESTCH.FLX,
UPDATE.FLX, USERSB.FLX, UTIL.FLX, XFFT.FLX, XMAP.FLX, XPACK.FLX, XPARSE.FLX,
XPLOR.FLX, XREFIN.FLX, XROPTI.FLX, VAXTIME.FLX, CONVEXTIME.FLX, CRAYTIME.FLX.
3.: The computer source code and comments comprise approximately 39,000 text
records ("lines").
<PAGE> 21
EXHIBIT C
LOANER COPY LICENSE AGREEMENT
POLYGEN STANDARD SOFTWARE LICENSE AGREEMENT (U.S.)
Rev. 85.1
Modified As Follows:
1. Paragraph 3.1 - Strike Appendices A, B, C, D, E, F, and G in their
entirety.
2. Paragraph 4.1 - It is agreed that the definition of "Equipment" shall
consist of a valid Digital Equipment Corporation VAX configuration.
3. Paragraph 5.2 - Strike Subparagraphs A, C, and D.
4. Paragraph 6.1(b) - Add the phrase " . . .and shall exert reasonable efforts
to obtain compliance by its employees. " to the first sentence.
5. Paragraph 6.1(g) - Strike in its entirety.
6. Paragraph 7.1 - Strike in its entirety.
7. Paragraphs 10.1, 10.2, and 10.3 - Strike in their entirety, and replace
with the following text:
"Customer agrees that the Software constitutes Polygen Proprietary
Information and shall exercise the same standard of care with respect to
protecting Polygen's ownership interest therein as Customer does with
respect to its own proprietary information. To this end, Customer agrees to
provide appropriate notice to all authorized persons who are permitted
access to the Software of Polygen's exclusive ownership rights therein.
Notwithstanding the foregoing, Polygen Proprietary Information does not
include information which:
(a) becomes available without fault of Customer and without the fault of
any person, firm, or corporation having apparent authority to act for
Customer;
<PAGE> 22
(b) is rightfully obtained by Customer from a third party without
restrictions as to disclosure;
(c) is shown by written record to have been developed by Customer,
independently of Polygen;
(d) is shown by written record to have been known or available to Customer
without restriction as to disclosure at the time of receipt from
Polygen; or
(e) is generally furnished to others by Polygen without restriction on
disclosure.
8. Paragraphs 11.1 and 11.2 - Strike in their entirety.
9. Paragraph 13.2 - Delete subsections (c), (d), and (e) in their entirety.
10. The "Customer" notice address shall be as follows:
11. Paragraph 22.1 - Strike in its entirety.
12. In the event of any conflict between this Agreement and that certain
Software License Agreement by and between Polygen, Harvard University, Dr.
Axel T. Brunger and Dr. Martin R. Karplus dated ______________, 1987 (the
"Harvard-Polygen Agreement"), it is agreed that the terms of the
Harvard-Polygen Agreement shall prevail.
2.
<PAGE> 23
POLYGEN DOMESTIC SOFTWARE
LICENSE AGREEMENT (U.S.) - REV. 85.1
LICENSE AGREEMENT (hereinafter referred to as "Agreement") made this
____ day of ______________ , 19 , between POLYGEN CORPORATION, a Delaware
corporation with its principal office located at 100 Fifth Avenue, Waltham,
Massachusetts (hereinafter referred to as "Polygen"), and
__________________________________________ , a _________________ corporation
with its principal office located at _____________________________ (hereinafter
referred to as "Customer").
WITNESSETH
1.1 WHEREAS, Polygen developed certain proprietary Software (as that term is
defined under this Agreement) which, when used with Equipment (as that term is
defined under this Agreement), functions as a system for the design and analysis
of chemical structures.
1.2 WHEREAS, Polygen is willing to license the use of such Software to Customer
solely upon the terms and conditions set forth in this Agreement, with the
understanding that Customer shall thereby enter into a confidential relationship
with Polygen with respect to the subject matter of the Software, and
1.3 WHEREAS, the respective parties hereto warrant that they have full authority
to enter into this Agreement,
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and promises contained herein, Polygen and Customer do hereby mutually
covenant and agree as follows:
TERM
2.1 This Agreement is made for an initial term of two (2) years commencing on
the earlier of the date first written above or execution of the attached
"Licensee Statement of Acceptance" (Appendix B), and shall be deemed renewed
from year to year thereafter unless terminated by either party upon at least
thirty (30) days written notice given by one party to the other prior to the end
of the initial or any renewal term hereof.
<PAGE> 24
CONTENTS OF THE AGREEMENT
3.1 This Agreement constitutes the entire agreement and understanding between
the parties in reference to the subject matter of this Agreement. Any and all
discussions, promises, representations or understandings related to the subject
matter of this Agreement, whether written or oral, shall be void and without
effect to the extent not expressly set forth herein. The following Appendices
are incorporated herein by reference and shall be considered an integral part of
this Agreement:
Appendix A: Acceptance Test Procedure
Appendix B: Licensee Statement of Acceptance
Appendix C: Licensee Statement of Return
Appendix D: Employee Statement of Return
Appendix E: Polygen License Quotation
Appendix F: Polygen Training Policy
Appendix G: Required Minimum Equipment Configuration
Appendix H: Polygen Software Price Schedule
Appendix I: CPU Identification Schedule
3.2 This Agreement, as hereinabove defined, shall be known and designated as the
"Polygen Standard Software License Agreement (U.S.) - Rev. 85.1."
EQUIPMENT DEFINITION
4.1 The required configuration of computer hardware and associated peripheral
devices with respect to which (a) the Software is licensed for use by Customer
hereunder and (b) upon or in which Polygen is obliged to install the Software
shall be as set forth in the attached "Required Minimum Equipment Configuration"
(Appendix G) which shall hereinafter be defined and referred to as "Equipment".
Customer agrees to make available for the installation of the Software
at Customer's Design Site or Sites identified in the attached "CPU
Identification Schedule" (Appendix I) within sixty (60) days following execution
of this Agreement, or, if different, the installation date specified in the
attached "Polygen License Quotation" (Appendix E), either (a) solely those items
of Equipment described in the attached "Required Minimum Equipment
Configuration" (Appendix G) or (b) solely those items of Equipment described in
any different or alternative equipment configuration which shall have been
agreed to in writing by the parties by way of a modification made to Appendix G
of this Agreement in accordance with the procedures set forth in paragraph 17.1
hereof no later than fifteen (15) days following execution of this Agreement, or
ten (10) days prior to any installation date scheduled pursuant to paragraph
12.1 hereof, whichever date occurs first.
2.
<PAGE> 25
Customer agrees to place the Equipment under Polygen or applicable
manufacturers' authorized on-site maintenance arrangements at its own expense
effective no later than the date on which Customer gives Polygen written notice
of installation site readiness pursuant to the provisions of paragraph 12.1
hereof.
SOFTWARE DEFINITION
5.1 Those software programs identified immediately below in the form described
by the applicable Program Reference Guides identified at paragraph 5.2 below,
are being licensed for use by Customer solely under the terms of and subject to
the conditions of this Agreement, and shall be collectively referred to and
defined hereunder as "Software:"
A. The CHEMX(TM) Program
B. The CHARMM(TM) Program
C. The HYDRA(TM) Program
5.2 The Program Reference Guides referred to in paragraph 5.1 above
are as follows:
LICENSE
6.1 Polygen grants to Customer a non-exclusive, non-transferable license to use
the Software as herein defined (including any and all enhancements to or
revisions thereof released generally by Polygen to Software licensees during the
term of this Agreement) in connection with the Equipment as herein defined for
the purpose of analyzing, designing, and documenting electronics packaging
applications in the manner set forth in the applicable Program Reference Guides,
subject to the following conditions and limitations:
(a) Customer shall use the Software only in connection with the Central
Processing Unit(s) whose serial number(s) is (are) identified in the
attached "CPU Identification Schedule" (Appendix I) (hereinafter referred
to as "CPU"). With respect to all CPUs upon which Software is installed,
Customer shall provide Polygen with thirty (30) days advance written notice
of Customer's transfer of the use of such Software and CPU(s) to a
different Design Site and the specific location thereof.
3.
<PAGE> 26
(b) Customer shall not copy, reproduce, or duplicate the Software or any
documentation relating thereto by any means whatsoever except for archive
or emergency restart purposes, without having first obtained Polygen's
written consent. Notwithstanding the foregoing, any such otherwise
authorized copy, reproduction, or duplication of the Software or any
documentation relating thereto shall be deemed unauthorized and shall
constitute a breach of this Agreement, unless all Polygen copyright,
trademark, and proprietary notices contained upon or within the original
Software or documentation are incorporated therein.
(c) Customer shall not permit or suffer the use of the Software by any
person, firm, or corporation, other than a corporation more than 50% of
whose voting stock is owned by Customer (hereinafter referred to as
"Affiliated Company"), or any otherwise Polygen-licensed user of the
Software, in which case Customer may provide such Affiliated Company or
Polygen-licensed user with time-sharing or batch-service use of the
Software only.
(d) Customer shall not modify or suffer the modification of the Software by
any person, firm, or corporation, whether or not an Affiliated Company,
parent, or subsidiary of Customer, nor shall Customer otherwise disclose
the contents of the Software to any person, firm, or corporation other than
employees of Customer who are on Customer's premises for purposes
specifically related to Customer's otherwise authorized use of the
Software.
(e) Customer shall not use the Software in connection with the operation of
what is known in the trade as a "commercial service bureau."
(f) Customer shall not add to, expand, alter, or modify the Equipment with
respect to which the Software was originally installed without Polygen's
prior written consent.
(g) Customer agrees that use of the Software shall be subject to the terms
of the "Polygen Software Price Schedule" (Appendix H) regarding Customer's
liability for payment of Initial and Monthly License Fees and that Customer
shall acquire no right to use the Software upon or in connection with any
CPU, except in accordance with this Agreement and in particular, but not by
way of limitation, upon Customer's timely payment to Polygen of those
Initial and Monthly License Fees then applicable to the use of the Software
upon or in connection with each such CPU.
4.
<PAGE> 27
TRAINING
7.1 Polygen shall provide training to Customer in the use of the Software
licensed under this Agreement in accordance with the terms of the attached
"Polygen Training Policy" (Appendix F).
WARRANTY
8.1 Polygen warrants (a) that it has the right to enter into this Agreement; (b)
that the Software and all improvements thereto, including but not limited to
Software enhancements and revisions, will operate in accordance with the
applicable Program Reference Guides, as the same may be revised from time to
time; (c) that Customer's use of the Software solely in accordance with the
terms of this Agreement will not in and of itself infringe or violate any third
party's rights under any patent, copyright, trademark, or trade secret; and (d)
that the Software shall be capable of performing the then current "Acceptance
Test Procedure" applicable to the Software which is in effect for purposes of
initial acceptance under the then current form of standard Polygen Software
license agreement, provided such Software is installed upon and used in
connection with Equipment which is operating in accordance with equipment
manufacturers' specifications.
8.2 In the event it is determined that the Software contains a "bug," Polygen
shall devote its best and continuous effort to providing Customer, at the
earliest practicable date, with a "workaround" procedure that will allow the
Software to operate in such a manner as will permit the achievement of results
which are substantially similar in functional content to those described in the
applicable Software specification identified in paragraph 5.2 hereof,
notwithstanding the existence of the "bug." Polygen shall follow a general
policy of correcting or disabling identified Software "bugs" (to the end that
any such "workaround" procedures are no longer required) in the context of
succeeding standard Software releases, but notwithstanding the foregoing, the
content and/or frequency of any such Software release(s) shall be at all times
committed to the sole and absolute discretion of Polygen
8.3 EXCEPT FOR THE FOREGOING EXPRESS WARRANTY, POLYGEN DISCLAIMS ALL WARRANTIES,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE SOFTWARE, INCLUDING BUT NOT
LIMITED TO ANY WARRANTIES AS TO MERCHANTABILITY OF THE SOFTWARE OR THE FITNESS
OF THE SOFTWARE FOR A PARTICULAR USE. POLYGEN SHALL NOT BE LIABLE FOR ANY
SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF SOFTWARE
BY THE CUSTOMER UNDER ANY CIRCUMSTANCES WHATSOEVER. CUSTOMER'S SOLE AND
EXCLUSIVE REMEDY FOR ANY BREACH OF THE WARRANTIES SET FORTH IN PARAGRAPHS 8.1
AND 8.2 ABOVE SHALL CONSIST OF CUSTOMER'S RIGHT TO TERMINATE THIS AGREEMENT
PROSPECTIVELY ON THIRTY (30) DAYS WRITTEN NOTICE TO POLYGEN WHEREUPON THE
PROVISIONS OF PARAGRAPH 13.2 OF THIS AGREEMENT SHALL THEN APPLY.
5.
<PAGE> 28
8.4 In the event that any party commences an action, claim, or proceeding
(hereinafter referred to as "claim") against Customer and/or Polygen alleging
that the Software or Customer's use thereof in accordance with this Agreement
directly infringes any patent, copyright, or trademark, or violates the trade
secret rights of a third party, Customer may, at its option, cease all payment
of any license fees hereunder upon condition that Customer also ceases all use
of the Software until such time as Polygen satisfactorily resolves any such
claim to the end that Customer's use of the Software in accordance with this
Agreement is thereafter unencumbered and free of any such claim. Polygen shall
have the affirmative obligation to defend, or at Polygen's option, to settle,
any such claim adversely affecting Customer's use of the Software at Polygen's
expense, provided such use is in accordance with the terms and conditions of
this Agreement. During the pendency of any such claim referred to above, Polygen
may, at its sole option, substitute fully equivalent non-infringing or
non-violative Software, modify the Software so that it no longer infringes or
violates but remains equivalent, or obtain for Customer, at the expense of
Polygen, the right to continue use of the Software in accordance with the terms
of this Agreement. Customer and Polygen shall give prompt written notice to the
other of the institution of any such claim, and Customer shall cooperate fully
with Polygen in the defense or settlement thereof. The provisions of this
paragraph 8.4 state the entire liability of Polygen and Customer's exclusive
remedy for any such infringement or violations.
8.5 Customer acknowledges that is has either (a) inspected the Software on
Polygen premises during the course of a "benchmark demonstration" thereof or (b)
declined in writing to obtain such an inspection, and agrees that it is
licensing the Software hereunder subject to any and all defects therein that
were apparent (or would have been apparent in the event (b) applies) as a result
of such an inspection.
OWNERSHIP
9.1 Notwithstanding any other provision of this Agreement to the contrary, it is
hereby agreed that this Agreement constitutes only a license for the use of the
Software by Customer and that nothing contained herein shall operate to convey
to Customer any title to or ownership interest of any kind or nature whatsoever
in the Software or any Polygen Proprietary Information, including, but not
limited to, Program Reference Guides. All materials which would disclose all or
any portion of the content of the Software or any Polygen Proprietary
Information shall be returned to Polygen by Customer upon termination of this
Agreement. Notwithstanding anything to the contrary contained herein, Polygen
expressly reserves to itself any and all copyright and/or industrial property
rights in and to the licensed Software arising under the laws of the United
States or any foreign jurisdiction,
6.
<PAGE> 29
except that nothing herein is intended or shall be construed as constituting or
permitting a publication or disclosure of the licensed Software under the
copyright and/or industrial property laws of the United States or any foreign
jurisdiction.
NO OFFICER, EMPLOYEE, OR AGENT OF POLYGEN IS CAPABLE OF TRANSFERRING OR
AUTHORIZING THE TRANSFER OF ANY OWNERSHIP INTEREST IN OR TO THE SOFTWARE OR
POLYGEN PROPRIETARY INFORMATION OR ANY PORTION THEREOF, TO ANY PERSON, FIRM,
CORPORATION, OR GOVERNMENTAL AUTHORITY WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF POLYGEN'S BOARD OF DIRECTORS.
9.2 Any modifications, improvements, and/or enhancements to the Software which
are developed by Polygen shall be considered the sole property of Polygen,
regardless of whether any such modification, improvement, and/or enhancement to
the Software is developed at the request of a Customer, and regardless of
whether or not special fees have been paid to Polygen by Customer in order to
induce Polygen to initiate any such development.
9.3 Any software or program developed by Customer at its own expense which
constitutes a "Pre-Processor" or "Post-Processor" shall be the property of
Customer. A "Pre-Processor" shall mean software which produces data which is
suitable in content and format for use as standard input to the licensed Polygen
Software, and does not require any modification to the licensed Polygen Software
in order to operate. A "Post-Processor" shall mean software which accepts as
input the standard data output of the licensed Polygen Software, and does not
require any modification to the licensed Polygen Software in order to operate.
9.4 Customer shall not subject or suffer the subjection of the Software or any
Polygen Proprietary Information to any form of attachment, sequestration, claim,
lien, or encumbrance of whatsoever kind or nature other than those imposed
thereon by Polygen. Any voluntary or involuntary act of Customer purporting to
create any such attachment, sequestration, claim, lien, or encumbrance shall be
void and without effect.
CONFIDENTIALITY
10.1 This Agreement has been entered into by Polygen in express reliance upon
Customer's representation to Polygen that Customer shall, and by these presents
Customer hereby does, agree to treat the Software and any written material or
electronic storage media, including, but not limited to, magnetic tapes or
disks, Program Reference Guides, training materials, or other materials which
describe the nature, operation, or use of the Software, including the contents
thereof, which are received by Customer from Polygen pursuant
7.
<PAGE> 30
to or in connection with this Agreement and which have been physically marked or
otherwise designated by Polygen as "Proprietary" and/or "Confidential"
(collectively referred to in this Agreement as "Polygen Proprietary
Information") as strictly confidential and as a Polygen trade secret.
Without limiting the generality of the foregoing or any other provision
of this Agreement relating to Customer's confidentiality obligations, Customer
shall, upon the receipt of any such Polygen Proprietary Information, and during
and subsequent to the term of this Agreement, prevent the disclosure of any
Polygen Proprietary Information to any person, firm, or corporation (other than
employees of Customer while on Customer's premises for purposes specifically
related to Customer's authorized use of the Software); Customer shall not permit
any Polygen Proprietary Information to be copied, reproduced, or duplicated by
any means or under any circumstances whatsoever, including, but not by way of
limitation, any transfer of the Software to any form of electronic storage media
other than that upon or in which the Software was first installed by Polygen at
Customer's Design Site or Sites identified in the attached "CPU Identification
Schedule" (Appendix I), except to the extent otherwise expressly provided under
paragraph 6.1 of this Agreement; Customer shall not discharge its duties under
this Agreement at any time with any less care than that employed by Customer in
protecting the confidentiality of Customer's own trade secrets or proprietary
information; Customer shall take appropriate action, by instructions, agreement,
or otherwise, with any persons permitted access to Polygen Proprietary
Information so as to enable the Customer to satisfy Customer's confidentiality
obligations under this Agreement.
10.2 Notwithstanding the foregoing, Customer's confidentiality obligations
hereunder with respect to Polygen Proprietary Information do not extend to
information which:
(a) becomes publicly available without fault of Customer and without the
fault of any person, firm, or corporation having apparent authority to act
for Customer,
(b) is rightfully obtained by Customer from a third party without
restrictions as to disclosure,
(c) is shown by written record to be developed by Customer, independently
of Polygen,
(d) is shown by written record to have been known or available to Customer
without restriction as to disclosure at the time of receipt from Polygen,
or
(e) is generally furnished to others by Polygen without restriction on
disclosure.
8.
<PAGE> 31
10.3 Customer acknowledges that Polgyen shall be entitled to preliminary
injunctive relief in order to enforce the provisions of this Agreement relating
to the confidentiality of Polygen Proprietary Information in addition to and not
by way of limitation upon any other legal or equitable remedies available to
Polygen under the circumstances.
SOFTWARE LICENSE FEES
11.1 So long as this Agreement remains in effect, and subject to the provisions
of paragraph 11.2 hereof, Customer shall pay to Polygen on the first day of each
month a Monthly License Fee in the amount specified in the attached "Polygen
License Quotation" (Appendix E) with respect to each of the applicable Software
components described at subparagraphs A., B., and C. of paragraph 5.1 licensed
by Customer, the first such payment to become due and payable in United States
dollars on the first day of the month which is the same as or first follows the
date on which Customer has or is deemed to have accepted the Software pursuant
to the provisions of paragraph 12.2 of this Agreement. Customer shall be liable
for a pro rata Monthly License Fee with respect to the period of time that
elapses between Customer acceptance and the first day of the month following
such acceptance, which amount shall become due and payable at the time
Customer's first full Monthly License Fee becomes due and payable hereunder. In
addition, Customer shall pay to Polygen the Initial License Fee(s) in the amount
specified in the attached "Polygen License Quotation" (Appendix E) with respect
to each of the applicable Software components described at subparagraphs A. and
B. of paragraph 5.1 licensed by Customer, which payment(s) shall become due and
payable in United States dollars as of the date on which Customer has or is
deemed to have accepted the Software pursuant to the provisions of paragraph
12.2 of this Agreement.
11.2 The Monthly and Initial Licensee Fees described in paragraph 11.1 above
shall remain in effect for a period of twelve (12) calendar months following the
date of execution of the attached "Licensee Statement of Acceptance" (Appendix
B), whereupon Polygen shall thereafter have the unilateral right to increase the
license fees on an annual basis, provided that any such increase shall be
applied in a uniform manner to all Polygen licensees. Polygen shall provide
Customer with three (3) months advance written notice of any increase in the
amount of the Monthly or Initial License Fees hereunder, which increase shall
take effect with respect to the Monthly Licensee Fees due on the first day of
the month which is three (3) months following the date on which the Customer is
furnished with the notice referred to above.
9.
<PAGE> 32
SOFTWARE INSTALLATION AND ACCEPTANCE
12.1 Following execution of this Agreement and Polygen's receipt of written
notification from Customer that the Equipment is available for installation,
Polygen installation personnel will install the Software upon or within the
CPU(s). Installation shall be scheduled during normal working hours (8:00 am to
6:00 pm) on normal working days (Monday through Friday), excepting Polygen or
Customer observed holidays. Customer shall pay to Polygen an installation fee in
the amount specified in the attached "Polygen License Quotation" (Appendix E).
Customer agrees to permit complete shut-down of the computer system
component of the Equipment and dedication to Polygen Software installation for
all periods of time during which actual installation activities occur. Customer
shall allow Polygen full and free access to the installation site during
installation. Waiver of liability or other restrictions shall not be imposed by
Customer as a site access requirement. Customer will allow Polygen to use
necessary machines, communication facilities and other equipment (except as
normally supplied by Polygen) at no charge. Customer shall provide Polygen
installation technicians with reasonable working facilities including, but not
limited to, secure storage space, a designated work area with adequate heat and
light, and access to a telephone line, upon request of and at no charge to
Polygen Customer agrees to provide at no charge to Polygen suitable storage and
scratch media (including spare tapes and disk pack as required) necessary for
installation services.
12.2 Polygen installation personnel will subject the Software, as installed upon
or within the CPU(s) physically located at Customer's Design Site or Sites
identified in the attached "CPU Identification Schedule" (Appendix I), to the
attached "Acceptance Test Procedure" (Appendix A). Successful execution of the
Acceptance Test Procedure by the Software, or Customer's use of Software for
design activities other than user training or testing purposes, shall be
conclusively deemed to constitute acceptance of the Software by Customer, and
Customer agrees that a duly authorized representative of Customer shall
thereupon confirm such acceptance to Polygen in writing as to each CPU on which
the Software is installed by execution and delivery of the attached "Licensee
Statement of Acceptance" (Appendix B).
12.3 No modification or alteration of or to the Software acceptance criteria of
whatsoever kind or nature shall be effective unless and until any such
modification shall be agreed to in writing by Polygen and Customer and set forth
in full as part of the "Acceptance Test Procedure" (Appendix A).
10.
<PAGE> 33
TERMINATION AND DEFAULT
13.1 Customer's failure to pay to Polygen any license fees when due hereunder,
or Customer's failure to adhere to any of the terms and conditions of this
Agreement, or Customer's failure to perform any of its obligations hereunder
shall constitute a breach of this Agreement and an event of default hereunder
which shall give Polygen the right (in addition to, and not by way of limitation
upon Polygen's rights to obtain any other legal or equitable relief available to
Polygen under the circumstances) to terminate this Agreement in the event any
such default remains uncured for more than thirty (30) days following receipt of
written notice thereof from Polygen. Receipt of any such notice shall be deemed
to occur on the next day following the wiring of any such notice, or on the
fifth (5th) business day following the mailing of any such notice, to Customer's
address set forth in paragraph 19.1 of this Agreement.
13.2 Upon termination of this Agreement, the license granted to Customer under
this Agreement shall terminate and Customer shall immediately pay to Polygen any
then outstanding license fees or other amounts owed to Polygen, and Customer
shall (a) return to Polygen management control by physical delivery each and
every item of Polygen Proprietary Information furnished to Customer pursuant to,
arising out of, or in connection with this Agreement, (b) delete by total
erasure or destruction any Polygen Proprietary Information embodied on or in any
disk or other form of electronic storage media located upon Customer's premises
or under the supervision, control, or custody of Customer, (c) warrant to
Polygen that no Polygen Proprietary Information has been retained by Customer in
any form whatsoever, (d) execute and deliver to Polygen a "Licensee Statement of
Return" (Appendix C), and (e) take appropriate action by instructions,
agreement, or otherwise to ensure that every employee of Customer who shall have
had access to Polygen Proprietary Information during the course of his or her
employment with Customer complies with the substance of the provisions contained
in the "Employee Statement of Return" (Appendix D).
13.3 In the event that Customer is otherwise entitled to use the Software
pursuant to more than one valid and subsisting license agreements with Polygen,
and any one or more of such agreements shall remain in effect following the
termination of this Agreement with respect to Software running on a CPU
identified in the "CPU Identification Schedule" (Appendix I) or any successor
Design Site otherwise permitted under the provisions of paragraph 6.1(a) of this
Agreement, then the provisions of paragraph 13.2 above shall only apply and
relate to Polygen Proprietary Information furnished to Customer in connection
with this Agreement.
11.
<PAGE> 34
BUSINESS TERMINATION
14.1 In the event that either party shall cease conducting business in the
normal course, become insolvent, make a general assignment for the benefit of
creditors, suffer or permit the appointment of a receiver for its business or
assets, or shall avail itself of, or become subject to, any proceeding under the
Bankruptcy Reform Act (other than a proceeding under Chapter 11 of Title I of
such Act) or any other statute of any governing authority relating to insolvency
or the protection of rights of creditors, then at the option of the other party,
this Agreement shall be deemed to have terminated and the provisions of
paragraphs 13.1, 13.2, and 13.3 of this Agreement, as applicable, shall then
apply. This paragraph 14.1 will not be construed to modify any part of all or
paragraphs 20.1 and 20.2 of this Agreement.
SUCCESSORS IN INTEREST
15.1 All covenants, stipulations, and promises in this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors in interest, assignees, and legal representatives. Neither party
shall have the right to assign or otherwise transfer its rights or obligations
under this Agreement without the prior written consent of the other party;
provided, however, that a successor in interest to a party by merger, by
operation of law, or by assignment; purchase, or otherwise, of the entire
business of either party, shall acquire all the rights and be subject to all the
obligations of such party hereunder, without the necessity of obtaining such
prior written consent; provided, however, that nothing herein shall prevent
Polygen from assigning this Agreement to a wholly-owned subsidiary of Polygen or
from assigning the license fees payable to Polygen under this Agreement. On
receiving written notice of any such assignment from Polygen, Customer shall
make payment of such license fees as Polygen shall direct in writing. Any such
payment by Customer to Polygen's assignee in accordance with Polygen directions
shall be treated as payment to Polygen for all purposes of this Agreement.
CONSTRUCTION
16.1 Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or be invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
of the remaining provisions of this Agreement. The singular and plural forms of
words used
12.
<PAGE> 35
in this Agreement may be used interchangeably to conform to the factual
situation described. Headings used in this Agreement are included solely for
purposes of reference, and are to be ignored in the construction thereof.
MODIFICATIONS, AMENDMENTS, AND WAIVERS
17.1 No modifications, amendments, or waivers of any of the
provisions or terms of this Agreement shall be effective unless the
same shall be made in a writing and manually signed by an officer of
Polygen and a duly authorized representative of Customer which shall
be conspicuously marked as follows: "MODIFICATION to Polygen Standard
Software License Agreement (U.S.) - Rev. 85.1."
NON-WAIVER
18.1 No delay of failure of either party in exercising any right hereunder, and
no partial or single exercise thereof, shall be deemed to constitute a waiver of
such right or any other rights hereunder. Any consent by either party to, or
waiver of, a breach by the other, whether express or implied, shall not
constitute a consent to, waiver of, or excuse for any other different or
subsequent breach.
NOTICES
19.1 All notices, requests, and demands given to or made upon either party shall
be in writing and be delivered or mailed to the other party at its address as
specified below:
-------------------------------
-------------------------------
-------------------------------
Polygen Corporation
100 Fifth Avenue
Waltham, Massachusetts 02154
Either party may designate a changed address by giving appropriate written
notice to the other party.
13.
<PAGE> 36
SOFTWARE DOCUMENTATION
20.1 Polygen agrees to maintain the Software source code in both human readable
and machine readable form, and all releases, updates, revisions, improvements,
add-ons, enhancements, and other changes thereto (hereinafter collectively
referred to as "Software Documentation") in a secure off-site storage location
and in the event that Polygen dissolves, ceases to do business in the normal
course, becomes insolvent, makes an assignment for the benefit of creditors, or
becomes a party voluntarily or involuntarily to any proceeding under the
Bankruptcy Reform Act (excepting any proceeding under Chapter 11 of Title I of
such Act), Polygen shall be obligated, on Customer's written demand, to transfer
to Customer such Software Documentation for the sole purpose of enabling
Customer to continue to use the Software without interruption, in accordance
with this Agreement and for no other purpose whatsoever.
20.2 In the event of a transfer to Customer of the Software Documentation under
the circumstances described above, the Customer shall continue to be bound by
all of the terms and conditions of this Agreement, including, without
limitation, the provisions of paragraphs 10.1, 10.2, and 10.3 hereof relating to
the confidentiality of Polygen Proprietary Information.
TAXES
21.1 Unless otherwise specifically stated on any invoices, the license fees
payable to Polygen under the terms of this Agreement are net of and shall not be
reduced by any use tax, sales tax, property tax imposed upon or with respect to
this license, import tax, duty, export fee, withholding tax, gross receipts tax,
turn-over tax, value-added tax, or other tax or charge of a like or similar
nature, other than a tax upon Polygen's net business income, to which such
license fee, Polygen or Customer shall be subject to under the laws or
administrative practice of any governmental jurisdiction. Customer agrees to
report and pay any such tax or charge imposed upon Customer or upon the license
fees due Polygen hereunder to the appropriate governmental jurisdiction and to
indemnify and hold Polygen harmless therefrom. Customer agrees to pay Polygen
for any such tax or charge referred to above to which Polygen may become subject
upon presentation of Polygen's invoice with respect thereto.
ENFORCEMENT
22.1 The parties hereby agree that any and every controversy arising out of or
relating to this Agreement, or any breach thereof, shall be subject to the
exclusive jurisdiction of the United States District Court for the Eastern
District of Massachusetts if such District Court
14.
<PAGE> 37
shall have subject matter jurisdiction thereof, otherwise exclusive jurisdiction
thereof shall lie in the Commonwealth of Massachusetts, City of ___________
County of ________ . Any and all objections or defenses as to proper forum or
venue are hereby waived.
GOVERNING LAW
23.1 This Agreement shall be governed, construed, and enforced in accordance
with the laws of the Commonwealth of Massachusetts of the United States of
America.
SURVIVAL BEYOND COMPLETION
24.1 The parties' respective obligations, representations, and warranties under
this Agreement shall survive the installation of the Software and the payment of
license fees hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their undersigned duly authorized representatives.
POLYGEN CORPORATION _____________________________
BY____________________________ By___________________________
TITLE________________________ TITLE________________________
DATE_________________________ DATE_________________________
15.
<PAGE> 38
EXHIBIT D
ACADEMIC SOFTWARE VERSION LICENSE AGREEMENT
EXAMPLE: X-PLOR
Dear Professor:
In consideration of $250.00 to be paid with a check made payable to Yale
University (hereinafter referred to as the "LICENSOR") and sent to The Office
for Cooperative Research, Yale University, and upon receipt of a copy of this
license duly signed by your institution (hereafter referred to as the
"LICENSEE"), one copy of the Academic Software Version of X-PLOR Version 0.9
(Copyright 1987 by the President and Fellows of Harvard College, hereafter
referred to as "HARVARD"), a system of computer programs for macromolecular
refinement using crystallographic diffraction data or nuclear magnetic resonance
interproton or other internuclear distance data, will be delivered to you. The
computer programs, files, and the magnetic tape on which the programs are
delivered, as well as any modifications or derivative works made by the
LICENSEE, are hereinafter referred to collectively as the SOFTWARE. Axel T.
Brunger and Martin Karplus are hereinafter referred to as ATB and MK,
respectively.
TERMS
1. A non-exclusive nontransferable license is granted to the LICENSEE to
install and use the SOFTWARE on an appropriate computer system located at
LICENSEE's institution to which the LICENSEE has authorized access. Use of
the SOFTWARE is restricted to the LICENSEE and collaborators at his/her
institution who have agreed to accept the terms of this license.
2. The LICENSOR and HARVARD retain ownership of all materials (including
SOFTWARE and documentation) delivered to the LICENSEE. Any modifications
or derivative works based on the software are considered part of the
SOFTWARE and ownership thereof is retained by the LICENSOR and HARVARD.
Reports of such modifications or derivative works are to be made to the
LICENSOR, ATB and MK, and are to be made available to them on request.
3. The LICENSEE shall not use the SOFTWARE for any purpose (research or
otherwise) that is supported by a "for profit" organization without prior
written authorization from the LICENSOR .
4. The LICENSEE shall not disclose in any form either the delivered SOFTWARE
or any modifications or derivative works based on the SOFTWARE to third
parties without prior written authorization from the LICENSOR
<PAGE> 39
-2-
5. The LICENSEE may make a reasonable number of copies of the SOFTWARE for
the purposes of backup, maintenance of the SOFTWARE or the development of
derivative works based on the SOFTWARE. These additional copies will carry
the copyright notice and will be controlled by this license, and will be
destroyed by the LICENSEE upon termination of the license.
6. If the LICENSEE receives a request to furnish all or any portion of the
SOFTWARE to any third party, he will not fulfill such a request and will
refer it in writing to the LICENSOR.
7. Documented written requests from LICENSEE for the source code on which the
delivered SOFTWARE is based can be made to the LICENSOR, ATB or MK; such
source code will be subject to and controlled by the terms of this
license; any such request will be honored at the discretion of the
LICENSOR, ATB or MK.
8. THE LICENSEE AGREES THAT THE SOFTWARE IS FURNISHED ON AN "AS IS" BASIS AND
THAT THE LICENSOR IN NO WAY WARRANTS THE SOFTWARE OR ANY OF ITS RESULTS
AND IS IN NO WAY LIABLE FOR ANY USE LICENSEE MAKES OF THE SOFTWARE.
9. LICENSEE agrees that any reports or publication of results obtained with
the SOFTWARE will acknowledge its use by an appropriate citation. Until
further notice this would refer to the X-PLOR program developed at Harvard
University by ATB, in collaboration with MK.
10. The term of this license shall not be limited in time.
To evidence your acceptance of the terms and conditions set forth above,
please sign in the indicated space and return this letter and your check to the
Office for Cooperative Research, Yale University, 260 Whitney Avenue, New Haven,
CT, 06511.
Sincerely yours,
Axel T. Brunger Robert Bickerton
Department of Molecular Director, Office of Cooperative Research
Biophysics and Biochemistry Yale University
Yale University
READ AND APPROVED
____________________________________ Licensee Organization
____________________________________ Name and Signature
____________________________________ Title
____________________________________ Date
<PAGE> 40
EXHIBIT F
ROYALTY RATE
Initial: ____/____
<PAGE> 41
1. Royalty Rate.
A "Workstation Configuration" shall be defined as a central
processing unit which has access to a single copy of the Licensed Works at any
one time and is intended to provide computing capabilities to a single user,
which incorporates an interactive graphics display, and is of a type upon which
the Licensee's interactive molecular graphics software can be installed and
operate in accordance with its specifications. For purposes of this definition,
the Digital VaxStation Series; Sun Microsystems 3/5O and 3/160; and IBM PC and
AT computers shall each be considered a Workstation Configuration.
A "Mainframe Configuration" shall be defined as a central processing
unit which is intended to provide general purpose computing capabilities to
multiple batch or interactive users through the medium of alphanumeric
terminals. For purposes of this definition, the VAX 11/780, 11/785 and 8600; IBM
43XX and 3XXX; Cray; Convex and CDC Cyber computers shall each be considered a
Mainframe Configuration.
The parties agree to cooperate in determining the proper
classification of any central processing unit, other than those mentioned above,
upon which Licensee may choose to commercially distribute the Licensed Works,
based upon the general criteria described above.
The Royalty Rate shall be determined by application of the following
table:
<TABLE>
<CAPTION>
[*] [*] [*]
<S> <C> <C>
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
</TABLE>
Notwithstanding the foregoing, there shall be a Minimum Royalty due under this
Agreement in the sum of [*], which shall be payable thirty (30) days following
the end of the first and subsequent anniversaries of the Effective Date hereof.
The Minimum Royalty shall be fully credited against any royalties otherwise
payable hereunder.
* CONFIDENTIAL TREATMENT REQUESTED
2.
Initial: ____/____
<PAGE> 42
2. License Fees.
License Fees include all initial and ongoing fees for the right of
use of the Commercial Software Versions, on the assumption that Licensee's
pricing policy is based on a single license fee inclusive of the provision of
right of use, software maintenance, application support and software
enhancements and upgrades. In the event that Licensee's pricing policy were to
exclude or make optional the provisions of software maintenance, application
support and/or software enhancements or upgrades (for or in exchange for which
additional or separate sums were to be charged by Licensee), then the License
Fees received for copies of the Commercial Software Versions installed upon
Workstation or Mainframe Configurations would be treated as being [*] of the
License Fees as otherwise calculated.
3. Maximum Royalty.
The Maximum Royalty shall be [*].
4. Royalty Rate on the Documentation.
The Royalty Rate on the materials listed on Exhibit A and all
Derivative Works derived from such materials shall be [*].
* CONFIDENTIAL TREATMENT REQUESTED
3.
Initial: ____/____
<PAGE> 43
EXHIBIT G
TECHHNICAL DEVELOPMENT GOALS
"X-PLOR Introduction and Tutorial"
and
"Crystallographic Refinement by
Simulated Annealing"
(copies attached)
<PAGE> 44
EXHIBIT H
FUNCTIONAL DESCRIPTION OF THE WORKS
"X-PLOR Introduction and Tutorial"
and
"Crystallographic Refinement by
Simulated Annealing"
(copies attached)
<PAGE> 45
X-PLOR INTRODUCTION AND TUTORIAL
by
Axel T. Brunger
Department of Chemistry, Harvard University,
and
* The Howard Hughes Medical Institute and Department of Molecular Biophysics
and Biochemistry, Yale University, 260 Whitney Avenue, P.O. Box 6666, New
Haven, CT, 06511.
* correspondence address
<PAGE> 46
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X-PLOR stands for exploration of conformational space of macromolecule confined
to regions allowed by experimental data and error estimates.
But it also stands for exploration of modern concepts of structured programming
in macromolecular simulation.
"As long as there were no machines, programming was no problem at
all; when we had a few weak computers, programming became a mild
problem and now that we have gigantic computers, programming has
become an equally gigantic problem. In this sense the electronic
industry has not solved a single problem, it has only created them -
it has created the problem of using its product."
E. W. Dijkstra, Turing Award Lecture, 1972.
Acknowledgement:
I am grateful to C.L. Brooks III, R.L. Campbell, G.M. Clore, F. Colonna,
A.M. Gronenborn, M. Karplus, J. Kuriyan, D. Perahia, G.A. Petsko, J.W.
Pflugrath, H. Treutlein for useful suggestions during X-PLOR
development.
<PAGE> 47
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<TABLE>
<CAPTION>
Table of contents
- -----------------
<S> <C> <C>
1. Introduction 4
2. Command Parsing 7
3. Important X-PLOR Input/Output Files 10
4. Crystallographic Procedures 12
</TABLE>
<PAGE> 48
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1. Introduction
X-PLOR is a general-purpose macromolecular refinement program that uses
crystallographic diffraction data or nuclear magnetic resonance interproton or
other internuclear distance data in combination with energy minimization or
molecular dynamics. The program allows to use simulated annealing to overcome
local energy minima. It was developed by Axel T. Brunger, working in
collaboration with Martin Karplus at Harvard University. The program has evolved
from the CHARMM program and has many data structures in common with CHARMM
although the command language is different. Development of X-PLOR will continue
at Yale University.
1.1. X-PLOR was designed to provide:
- a comprehensive refinement package
- user-friendly input
- machine-independence and portability
- highly efficient algorithms for the most CPU-time-consuming tasks
on vector/parallel as well as conventional scalar machines
1.2. The following is a list of the features of X-PLOR:
Crystallographic refinement
- individual atomic B-factors, variable occupancies
- space group general
- 4-gaussian atomic form factor approximation
- least-squares structure factor amplitude refinement
- phase difference refinement; individual figure of merit determines
allowed phase difference
- reduction of calculation for fixed/free atom systems, structure
factor of fixed part is computed only once
- direct summation method or fast Fourier Transform (FFT) method for
computation of structure factors and derivatives
- in core memory handling for FFT method by 3-dimensional factorization
- input/output and manipulations of observed/computed structure factors
- R factor search (translation or rotation of segments)
- computation of electron density maps for FRODO
- non-crystallographic symmetry restraints (*)
NMR structure determination and refinement
- incorporates interproton distances as bi-harmonic or square-well
potentials
- treat unresolvable protons by R(-6) average or geometric average
- analysis of observed/computed interproton distances
Empirical energy potential
- internal: bond energy, bond angle energy, dihedral angle energy,
improper torsion energy
- intra-molecular: electrostatic and van der Waals interactions
- inter-molecular: electrostatic and van der Waals interactions
(takes account of crystal symmetry, intermolecular packing)
- ST2 and TIP3P water models
<PAGE> 49
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Constraints
- fixing of atoms
- harmonic constraints on atomic positions
- dihedral angle constraints
- fixing of bonds, angles by SHAKE
Molecular dynamics
- Verlet integration method
- variable step-size integration (*)
- simulated annealing by hot temperature dynamics and cooling
Energy minimization
- conjugent gradient minimization of atomic positions
- rigid body minimization
- restrained B-factor refinement
Analysis
- analysis of stereochemistry
- rms deviations between structures
Molecule generation
- reads CHARMM force-field and parameters
- generation of macromolecular topology (linking and patching of residues)
- generation of unknown hydrogen coordinates
- cartesian coordinate manipulation
- internal coordinate manipulation
- reads/writes PDB (Brookhaven Protein Data Bank) coordinate files
Graphics
- A basic PS300/PS340/PS390 interface that allows direct displaying
of structures and dynamics trajectories from within X-PLOR
Command language
- free-field parsing
- on-line help facility
- structured loop and conditional statements, variable substitution
- streaming of procedure files for repeating tasks
- powerful atom selection parser
Optimization
- optimized version for VAX/VMS systems
- fully vectorized version for CRAY computers, interface to efficient
parallel FFT routines on CRAY
Compilation
- preprocessor converts original source code into standard FORTRAN 77 code
and adjusts dimensioning
- single or double-precision pre-processing
- well-structured and commented source code
- quasi-dynamic memory management
(*) in preparation
<PAGE> 50
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1.3. Implementation
The program has been implemented on a VAX/VMS, CRAY-1, CRAY-XMP, CRAY-2
(both COS and UNICOS operating systems), and a CONVEX-XP (UNIX operating
system). Automated installation procedures exist for these machines and
operating systems.
1.4. Physical and Mathematical Background
Please check the following references:
Brunger,A.T.,Kuriyan,J., and Karplus, M. (1987). "Crystallographic R Factor
Refinement by Molecular Dynamics", Science 235, 458-460.
Brunger, A.T. . "Crystallographic Refinement by Simulated Annealing", Lecture
notes for the international school of crystallographic computing, Adelhaide,
1987 (Isaacs, N., Ed).
Brunger, A.T. . "A Memory-efficient FFT Algorithm for Crystallographic
Refinement. Implementation on Vector and Scalar machines", in preparation,
probably J.Appl.Cryst.
More papers will follow soon.
<PAGE> 51
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2. Command Parsing
X-PLOR has a powerful command parser, that allows free-field input and
structured control statements.
2.1. General Syntax
<statement> :== repeat [ <command> | <control-statement> ]
<command> :== <keyword> repeat[<qualifier>] repeat[<assignment>] END
<assignment> :== <keyword> repeat[<qualifier>] - repeat[<value>]
<value> :== <integer>I <real>I <logical>|<vector>|<word>|<selection>|<special>
where <command>, <keyword>, <qualifier> are defined as <word>s. A <word> is
defined as
1. the one-character strings ')', '(', ':', '@';
2. a sequence of characters which contains no one-character strings and
which is enclosed by spaces or one-character strings;
3. a quoted string, i.e. a sequence of any characters enclosed in double
quotes '"' (a double quote itself can be produced by """").
Characters between comment braces ( ) or after an '!' on the same line are
always ignored. The carriage return is treated as a space.
<control-statement> :==
IF <condition) THEN <statement>
repeat [ELSEIF <condition> THEN <statement> ]
[ELSE <statement> ]
END IF
WHILE <condition> <basic-loop>
FOR <symbol> IN ( repeat [ <word> ] ) <basic-loop>
FOR (symbol> IN ID <selection> <basic-loop>
<condition> :== ( <word> <EQ|NE|GT|LT|GE|LE> <word> )
<basic-loop> :== LOOP <label> <statement>
[EXIT <label> <statement]
END LOOP <label>
X-PLOR has an atom selection parser that allows to select atoms without
reference to the internal index. The syntax allows to construct arbitrary
logical expressions of selected atoms.
<PAGE> 52
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<selection> :== ( <selection-expression> )
<selection-expression> :== <term>|<term> ( OR <term) ]
<term> ::= <factor>|<factor> ( AND <factor> ]|
<factor>::=NOT<factor>|( <selection expression> )|
BYRes <factor> | BYGRoup <factor>
<factor> AROund <real> | <token>
<token> :==
SEGId <segid>W| SEGId <segid1> : <segid2>|
RESId <resid>W| RESId <resid1> : <resid2>|
RESName <resname>W|RESName <resn1> : <resn2>|
NAME [TYPE]W|NAME <typel> : <type2>|
CHEMical <chem>W|CHEM <chem1> : <chem2>|
ATOM <segid>W <resid>W [NAME]W|
ATTRibute [ABS]<prop>< "<"|"="|"#"|">" > <real>|
POINt=<vector-syntax> [CUT <rmax>]|RECA11<store number>|
KNOWn|LONE|HYDRogen|USER|ALL|PREVious
ID <int>|ID <intl>:<int2>|
<PROP> :== X |Y|Z|B|Q|XCOMp|YCOMp|ZCOMp|BCOMp|QCOMp|
XREF|YREF|ZREF|CONS|MASS|CHARge|FBETa|
DX|DY|DZ|
"W" allows wildcard specifications: * = (any string)
% = (single char.), # = (any number), + = (any digit)
Ranges (lexigraphical/numerical order) are indicated by ":"
2.2. Sub-Parser
Many statements can invoke a sub-parser that is terminated by an "END" state-
ment, e.g.,
X-PLOR> XREFin
XREFIN> UPDAte-fcalc
XREFIN> PRINt R-FActor
XREFIN> END
X-PLOR>
All sub-parsers support a set of "auxilary" statements, such as the structured
control statements in section 2.1, the stream switching statement (see section
2.5), and statements to modify various parameters.
2.3. Symbols
Symbols are words with a '$' as the first character. They are replaced by the
actual value during parsing:
$1,.. . , $9 - symbols which can be assigned to an arbitrary value
$ENER, $BOND, $ANGL, $DIHE, $IMPR, $ELEC, $VDW, $XREF, $CONS. $NOE, . . .
- partial energy terms
$RESULT - last result of various statements, such as "scalar . . . show",
"print r-factor" , "coor rms end".
<PAGE> 53
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$PI, $KBOLTZ, $TIMFAC - physical constants and conversion factors
$TIME, $DATE, $NAME, $SYSTEM - system information
2.4. Abbreviations
In most cases keywords and qualifiers can be abbreviated to 4 characters.
2.5. Stream Switching to a Procedure
Initially, the parser reads from system input. The stream can be switched to
another file by "@<filename>". At the end-of-file parsing resumes on the
previous stream file. The "@@<filename>" has the same effect as the
"@<filename>" except when the stream file is invoked within a structured loop
statement; the "@<filename>" statement inserts the contents of file <filename>
into the loop and removes the statement in subsequent loop cycles, the
"@@<filename>" statement reads from <filename> each time the loop hits the
statement. It should be noted that <filename> can be a symbol, thus allowing to
loop through a set of different filenames.
2.6. Journal File
The program allows to specify a journal file during an interactive session that
contains all statements that were executed. The syntax is: SET
JOURNAL=<filename> END.
2.7. On-line HELP and Inquery
The main parser and all sub-parsers include the "HELP" statement which provides
information about the syntax and important remarks. Most parsers also support
the "?" statement which provides information about the current status of
parameters within the particular sub-parser.
<PAGE> 54
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3. Important X-PLOR Input/Output Files
For the sake of portability, all X-PLOR files are ASCII files. This may
take somewhat longer to read and may use somewhat more disk space. The user will
appreciate this feature when he has to work on several different machine
simultaneously (workstation, VAX, CRAY,...).
3.1. Coordinate Files
Coordinate files are standard PDB (Brookhaven Protein Data Bank) files.
Only "REMARK" and "ATOM" records are supported. X-PLOR may use the characters in
columns 77-80 for a segment identifier; this segment identifier is by default
blank. The protein, substrate, water, co-factors, etc, have to be separated into
several files. This will simplify the structure generation with X-PLOR (see
section 4.1.).
3.2. Parameter and Topology Files
Topology files describe the connectivity of certain structural units (such
as amino acid residues). Parameter files provide information about the
parameters of the empirical potential energy function which comprises bond, bond
angle, dihedral angle, improper angle, and nonbonded interaction energies. This
information was taken from appropriate files of CHARMM 19/20/21 and modified as
described in the Adelhaide lecture notes. The syntax for parameter and topology
files is different in CHARMM and X-PLOR, but the conversion is straightforward.
3.3. Crystallographic Reflection Files
The free-field input allows to specify for each reflection h,k,l the
observed FOBS, observed phases, observed figure of merit, an individual weight
factor, previously calculated structure factors, previously calculated structure
factors of a partial structure. Only the available Information has to be
specified.
3.4. Structure Files
The so-called structure file is generated by X-PLOR and is compatible with
the formatted version of the so-called PSF file of CHARMM. An example that shows
how to generate a structure files is given in section 4.1. The structure file is
strictly formatted, so the user should not mess with it. If the user wants to
change atomic properties, he should use the "scalar", "patch", or "delete"
statements in X-PLOR.
3.5. Electron Density Map File
This file is generated by X-PLOR (see section 4.11.) and contains
information about the unitcell, indexing of the map, and the actual electron
density map. It can be read by a modified version of MAPPAGE to provide a "DSN6"
file for FRODO.
<PAGE> 55
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4. Crystallographic Procedures
This section contains tested and well-commented procedures for several
types of crystallographic refinement. The user should modify them for his
specific application. The files are provided as part of the X-PLOR package and
are located in the "TUTORIAL" subdirectory.
This is an overview of the procedures:
4.1. Generation of X-PLOR Structure File and Coordinates
4.2. Preparation of Crystallographic Refinement
4.3. Check of Data, Initial Structure, and Determination of Weights
4.4. Conventional Positional Refinement
4.5. Simulated Annealing Refinement - Preparation Stage
4.6. Simulated Annealing Refinement - Heating Stage
4.7. Simulated Annealing Refinement - Cooling Stage
4.8. Simulated Annealing Refinement - Final Stage
4.9. Restrained B-factor Refinement
4.10. Partial FCALC Computation During Refinement
4.11. Computation of Elecron Density Naps
4.12. Rigid Body Refinement
4.13. R-factor Search
Note: The are a few statements which should be left out in a future version of
X-PLOR (marked by (** to be removed...).
<PAGE> 56
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4.1. Generation of X-PLOR Structure File and Coordinates remarks file GENERATE.
INP remarks generate structure file and hydrogens for test case topology
@toph19.pro end (* read topology file *)
parameter
@param19x . pro (* read empirical potential *)
(* parameter file CHARMMl9 *)
(* with modifications *)
nbonds (* this statement specifies *)
atom cdie shift eps=l.0 e14fac=0.4 (* the nonbonded interaction *)
cutnb=7.5 ctonnb=6.0 ctofnb=6.5 (* energy options. Note the *)
nbxmod=5 vswitch (* reduced nonbonding cutoff *)
end (* to save some CPU time *)
end
segment (* generate protein *)
name=" " (* blank segment name *)
chain
@toph19.pep (* read peptide bond file *)
coordinates @test.pdb (* interpret coordinate file to obtain sequence *)
end
end
!scalar name set 0 ( name ot1 ) (* sometimes different *)
!scalar name set ot ( name ot2 ) (* atom names are used, *)
!scalar name set cd1 ( name cd and resname ile ) (* this shows how to *)
(* rename them *)
coordinates @test.pdb (* here we actually read the coordinates *)
(* the generation of co-factors, waters,... would *)
(* follow here. Note, that one has to split the *)
(* coordinate file into separate files containing *)
(* the protein, co-factors, substrate, water,... *)
hbuild (* this statement builds missing hydrogens *)
selection=( hydrogen ) (* which are needed for the force field *)
nbonds end (**to be removed in future version**)
end
(* in the case that the coordinate file does not contain temperature factors *)
(* we can set and/or manipulate them with the SCALar statements. *)
scalar b set 12.0 ( name ca or name c or name n ) (* backbone *)
scalar b set 16.0 ( not ( name ca or name c or name n )) (* side chain *)
write coordinates output=generate.pdb end (* write out coordinates *)
write structure output=generate.psf end (* this writes the structure file *)
stop
<PAGE> 57
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4.2. Preparation of Crystallographic Refinement
remarks file XPREPARE.INP
remarks preparation of various data
(* this file doesn't do much but it is repeatedly used in many procedures *)
structure @generate.psf end (* read structure file *)
parameter
@param19x . pro (* read empirical potential *)
(* parameter file *)
nbonds (* this statement specifies *)
atom cdie shift eps=1.0 e14fac=0.4 (* the nonbonded interaction *)
cutnb=7.5 ctonnb=6.O ctofnb=6.5 (* energy options. Note the * )
nbxmod=5 vswitch (* reduced nonbonding cutoff *)
end (* to save some CPU time *)
end
flags (* in addition to the empirical potential *)
include pele pvdw xref (* energy terms which are turned on initially. *)
? (* This statement turns on the crystallographic *)
(* residual term and packing term. *)
end
xrefine (* this invokes the crystallographic data parser *)
a=14.0 b=14.0 c=7.0 alpha=90.0 beta=l00.0 gamma=90.0 (* unitcell *)
symmetry=(x,y,z) (* symetry operators for space group P21 *)
symmetry=(-x,y+1/2,-z) (* notation is as in Int. Tables *)
(* the following contains the atomic form factors. A 4-Gaussian *)
(* approximation is used. Atoms are selected based on their *)
(* chemical atom type. Note the use of wildcards in the selection *)
SCATter ( chemical C* )
2.31000 20.8439 1.02000 10.2075 1.58860 .568700 .865000 51.6512 .215600
SCATter ( chemical N* )
12.2126 .005100 3.13220 9.89330 2.01250 28.9975 1.16630 .582600-11.529
SCATter ( chemical O* )
3.04850 13.2771 2.28660 5.70110 1.54630 .323900 .867000 32.9089 .250800
SCATter ( chemical S* )
6.90530 1.46790 5.20340 22.2151 1.43790 .253600 1.58630 56.1720 .866900
SCATter ( chemical P* )
6.43450 1.90670 4.17910 27.1570 1.78000 0.52600 1.49080 68.1645 1.11490
@test.fob (* here we read in the diffraction data, *)
(* a typical line in the file may look like this: *)
<PAGE> 58
- 14 -
(* FOBS= -3 2 1 5.958 WEIG= 1.0 PHASe=46. FOM=0.4 *)
(* everything is free-field, if you don't specify something *)
(* it'll be set to a reasonable default value *)
method=FFT- (* use the FFT method instead of direct summation *]
fft
memory=l000000 (* this tells the FFT routine how much physical memory *)
end (* is available, the number refers to DOUBLE COMPLEX *)
(* words *)
? (* this prints the current status *)
end (* this terminates the diffraction data parser *)
<PAGE> 59
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4.3. Check of Data, Initial Structure and Determination of Weights
remarks file CHECK. INP
remarks compute ideal weights for diffraction energy terms
@xprepare.inp (* prepare various data structures *)
coordinates @generate.pdb (* read coordinate file (PDB); remember, *)
(* there is already an END statement in *)
(* the PDB file *)
xrefin
resolution-limits=8.O 2.0
update-fcalc (* this statements computes the initial R-factor *)
end
flags (* TURN OFF diffraction terms *)
exclude xref (* but KEEP packing term and *)
end (* empirical potential energy *)
update nbonds end end (** to be removed in a future version *)
minimize powell (* invoke the powell minimizer *)
nstep=40 (* do 100 cycles *)
step=10.0 (* this is the expected initial drop in energy *)
(* this value is not critical, 10.0 should be *)
(* reasonable in most cases *)
end (* minimization will be executed *)
dynamics verlet (* invoke verlet integration *)
timestep=0 .001 (* timestep in picoseconds *)
nstep=200 (* number of integration steps *)
iasvel=maxwell firsttemperature=300 (* initial velocities from Maxwell *)
(* distribution at 300 K *)
ieqfrq=25 finaltemperature=300 (* scale the velocities every 25 steps *)
inbfrq=10 ihbfrq=0 (* to be removed in a future version *)
nprint=50 iprfrq=l00 (* output control *)
nsavc=0 (* don't write a trajectory file *)
end (* integration will be executed *)
xrefine
resolution 8.0 3.0 gradient (* this computes the ideal weights at *)
resolution 8.0 2.0 gradient (* specified resolutions by comparing *)
end (* gradients. *)
stop
<PAGE> 60
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(* NOTE: if you run into to trouble here, e.g. the minimizer blows *)
(* up, most likely your structure has some severe bad contacts *)
(* in the unit cell. Please check your molecule and symmetry *)
(* related molecules at the graphics. The output of X-PLOR will *)
(* provide a listing of bad contacts. *)
<PAGE> 61
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4.4. Crystallographic Positional Refinement
remarks file POSITIONAL. INP
remarks conventional positional refinement
@xprepare.inp {* read various data structures *}
coordinates @generate.pdb {* read coordinates *}
xrefin
resolution-limits=8.0 2.5 {* these resolution limits will be used *}
{* during refinement *}
tolerance=0.0 {* turn off the linear approximation. This is required *}
{* for minimization *}
wa=1300 {* this is the weight from job "CHECK.INP" *}
wp=0.0 {* we don't want to use phase restraints *}
end {* this terminates the diffraction data parser *}
update nbonds end end {** to be removed in a future version *}
minimize powell {* invoke the powell minimizer *}
nstep=40 {* do 40 cycles *}
drop=10.0 {* this is the expected initial drop in energy *}
{* this value is not critical, 10.0 should be *}
{* reasonable in most cases *}
end {* minimization will be executed *}
xrefin
update-fcalc {* update the FCALC's *}
print R-factor {* print R-factor as function of resolution *}
end
{* the following statements will provide the *}
{* deviation of bonds and angles from ideality *}
constraints
interaction=( not hydrogen )=( not hydrogen) {* only done for heavy atoms*}
end
update end {** to be removed in a future version **}
set display=verbose.dump end {* this will dump the verbose output to a file *}
print bonds {* print delta{bonds} *}
print angles {* print delta{angles} *}
write coordinates output=positional.pdb end {* write final coordinates *}
stop
<PAGE> 62
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4.5. Simulated Annealing Refinement - Preparation Stage
remarks file PREPSTAGE.INP
remarks prepare structure for simulated annealing
@xprepare.inp {* read various data structures *}
coordinates @generate.pdb {* read coordinates *}
xrefine
resolution-limits=8.0 2.5
tolerance=0.0 {* turn off linear approximation for minimization *}
wa=1300 {* this is the weight from job "CHECK.INP" *}
end
{* we're very conservative here and constrain the atomic positions of the *}
{* ca-backbone to their initial positions *}
constraints harmonic
reference=main {* the structures is restrained to the *}
end {* "main" coordinate set {generate.pdb} *}
scalar constraints set 0.0 ( all ) {* set the harmonic force constant *}
scalar constraints set 20.0 ( name ca ) {* to 20.0 Kcal{mole A**2} for ca *}
update nbonds end end {** to be removed in a future version *}
minimize powell {*invoke the powell minimizer *}
nstep=40 {* if the initial energy of the structure is large *}
{* one should do at least 160 cycles *}
drop=10.0 {* this is the expected initial drop in energy *}
{* this value is not critical, 10.0 should be *}
{* reasonable in most cases *}
end {* minimization will be executed *}
write coordinates output=prepstage.pdb end {* write coordinates *}
stop
{* NOTE: sometimes, it can happen that the minimizer exits with *}
{* "line search abandoned". In this case, try to restart the minimization *}
<PAGE> 63
- 19 -
4.6. Simulated Annealing Refinement - Heating Stage
remarks file HEATSTAGE.INP
remarks heat the system
@xprepare.inp {* read various data structures *}
coordinates @prepstage.pdb {* read coordinates *}
xrefine
resolution-limits=8.0 2.5
tolerance=0.2 {* use linear approximation until any atom has *}
{* moved by more than 0.2 A *}
wa=1300 {* this is the weight from job "CHECK.INP" *}
wp=0.0 {* don't restrain phases *}
end
set seed=432324368 end {* set the initial random seed for the v-assignment*}
dynamics verlet {* invoke verlet integration *}
timestep=0.0005 {* small timestep since the temperature is high *}
nstep=1000 {* number of integration steps *}
iasvel=maxvell firsttemperature=3000 {* initial velocities from Maxwell *}
{* distribution at 3000 K *}
ieqfrq=250 finaltemperature=3000 {* rescale the velocities every 250 steps*}
inbfrq=20 ihbfrq=0 {* to be removed in a future version *}
nprint=100 iprfrq=200 {* output control *}
nsavc=0 {* don't write a trajectory file *}
end {* integration will be executed *}
write coordinates output=heatstage.pdb end {* write coordinates *}
stop
{* NOTE: sometimes, the temperature of the system gets to high and the *}
{* system blows up. In that case, reduce the time step or decrease the *}
{* temperature. I'm working on a variable step-size integration that *}
{* will fix the problem. *}
<PAGE> 64
- 20 -
4.7. Simulated Annealing Refinement - Cooling Stage
remarks file COOLSTAGE. INP
remarks cool the system
@xprepare. inp (* read various data structures *)
coordinates @heatstage.pdb (* read coordinates *)
xrefine
resolution-limits=8.0 2.5
tolerance=0.2 (* use linear approximation until any atom has *)
(* moved by more than 0.2 A *)
wa=1300 (* this is the weight from job "CHECK.INP" *)
wp=0.0 (* don't restrain phases *)
end
parameter
nbonds soft=2.5 end (* we use a "soft" VdW potential during cooling *)
end
dynamics verlet (* invoke verlet integration *)
timestep=0.0005 (* small timestep since the temperature is high *)
nstep=500 (* number of integration steps *)
iasvel-maxwell first temperature=300 (* initial velocities from Maxwell *)
(* distribution at 3000 K *)
ieqfrq=50 final temperature=300 (* rescale the velocities every 50 steps*)
inbfrq=20 ihbfrq=0 (* to be removed in a future version *)
nprint=10O iprfrq=200 (* output control *)
nsavc=0 (* don't write a trajectory file *)
end (* integration will be executed *)
write coordinates output=coolstage.pdb end (* write coordinates *)
stop
(* NOTE: this job has to be followed by conventional refinement as shown *)
(* in POSITIONAL.INP *)
<PAGE> 65
- 21 -
4.8. Simulated Annealing Refinement - Final Stage
remarks file FINALSTAGE.INP
remarks simulated annealing - final stage
remarks this file is similar to file POSITIONAL.INP (conventional
remarks positional refinement)
@xprepare. inp
coordinates @coolstage.pdb
xrefin
resolution-limits=8.0 2.5
tolerance=0.0 (* turn off the linear approximation. This is required *)
(* for minimization *)
wa=1300
wp=0.0 (* we don't want to use phase restraints *)
end
update nbonds end end (** to be removed in a future version *)
minimize powell (* invoke the powell minimizer *)
nstep=40 (* do 40 or more cycles *)
drop=10.0
end
write coordinates output=finalstage.pdb end (* write final coordinates *)
stop
<PAGE> 66
Crystallographic Refinement by Simulated Annealing
Lecture notes for the international school of crystallographic computing,
Adelaide, August 22-29, 1987.
by
Axel T. Brunger
Department of Molecular Biophysics and Biochemistry, and the Howard Hughes
Medical Institute, Yale University, 260 Whitney Avenue, P.O. Box 6666, New
Haven, CT 06511.
<PAGE> 67
1
Crystallographic Refinement by Simulated Annealing
Axel T. Brunger
1. Introduction
Conventional refinement of biological macromolecules involves a series of
steps, each of which consists of a few cycles of least-squares refinement with
stereochemical and internal packing constraints or restraints (Sussman et al.,
1977; Jack and Levitt, 1978; Konnert and Hendrickson, 1980; Moss and Morffew,
1982; Hendrickson, 1985), that are followed by rebuilding the model structure
with interactive computer graphics (Jones, 1982). During the final stages of
refinement solvent molecules are usually included and alternative conformations
for some atoms or residues in the protein may be introduced.
The aim of least-squares refinement is to minimize the difference
between the observed ??? and calculated ??? structure factor amplitudes, which
is usually expressed as a weighted sum of the residuals
(1)
[EQUATION 1]
where hkl are the reciprocal lattice points of the crystal. An indicator for
the progress of the refinement is the R factor
(2)
[EQUATION 2]
<PAGE> 68
2
Refinement by Simulated Annealing
The least-squares refinement process is easily trapped in a local minimum
and it does not correct residues that are misplaced by more than about 1
(angstrom unit) so that human intervention becomes necessary. Least-squares
refinement can be understood as a nonlinear optimization problem with the aim of
finding a minimum close to the global minimum of a target function containing
the residual sum (Eq. 1), and stereochemical and other interactions of the
macromolecule. In the past few years progress has been reported in nonlinear
optimization of a function of many parameters by the introduction of simulated
annealing (Kirkpatrick et al., 1983). Simulated annealing is now in widespread
use in areas such as electronic circuit design and pattern recognition. The
method consists of simulating the many-parameter system by a Monte Carlo
algorithm (Metropolis et al., 1953); initially, the temperature is kept very
high and then the system is "annealed" by reducing the temperature slowly. A
physical analogy is provided by a glass (high energy state) and a crystal (low
energy state) of the same substance. In order to get from the glassy state to
the crystalline state, the substance has to be melted and then cooled slowly. In
other words, the temperature of the substance has to be increased temporarily in
order to search for the lower energy state.
A first attempt to introduce simulated annealing into crystallographic
refinement has been reported (Brunger et al., 1987). A major difference from the
optimization problems discussed in Kirkpatrick et al. (1983) is that one is
optimizing a single covalently-connected structure representing a macromolecule
rather than a fluid-like system consisting of many identical subunits. A direct
application of the Metropolis algorithm to macromolecules turns out to be
inefficient if all degrees of freedom are included, as the covalent bonds of the
system will lead to rejection of most steps taken by the algorithm. Instead,
molecular dynamics (Karplus and McCammon, 1983) can be used to explore the
conformational space of the molecule. The conformational space searched is
confined to regions allowed by the diffraction data through introduction of an
effective potential energy which includes the crystallographic residual. This
effective potential energy is
<PAGE> 69
3
REFINEMENT BY SIMULATED ANNEALING
an extension of the function used in the refinement by energy minimization
(Jack and Levitt, 1978). Refinement by molecular dynamics will be referred to
as MD-refinement. It proceeds essentially in two stages, a heating stage and a
cooling stage in analogy to the simulated annealing technique.
In (Brunger et al., 1987) it was shown that MD-refinement has a radius
of convergence that is much larger than that of conventional least-squares
restrained refinement and that the method can reduce the need for manual
corrections. In this lecture a representative application to the structure of a
mutant of aspartate aminotransferase (MAAT) (Smith, et al., 1986) solved by
multiple isomorphous replacement (MIR) is discussed. In this case MD-refinement
yields an improved R factor, a small decrease in the average difference between
MIR phases and calculated phases, and slightly improved stereochemistry.
2. Molecular Dynamics
Molecular dynamics simulations involve the simultaneous solution of the
classical equations of motion for all atoms of a macromolecule with an
empirical potential energy (Ei) describing internal stereochemical interactions
(bond, bond angle, dihedral torsion angle, improper torsion angle) as well as
nonbonded (Van der Waals and electrostatic) interactions (Karplus and McCammon,
1983). The empirical potential energy is given by
(3)
[EQUATION 3]
with parameters inferred from experimental as well as theoretical
investigations (Brooks et al., 1983). The solution of the classical equations
of motion is carried out numerically by the Verlet algorithm (Verlet, 1967).
<PAGE> 70
4
Refinement by Simulated Annealing
In MD-refinement the empirical potential energy (Ei) is augmented by an
effective potential energy (Ex) containing information about the diffraction
data. The total potential energy (Etotal) is then given by
(4)
[EQUATION 4]
At the present state of empirical potential energy parameterization a molecular
dynamics simulation without the effective potential energy (Ex) cannot reproduce
the crystal structure to sufficient accuracy. It is the combination of the
empirical potential energy and the effective potential energy describing the
crystallographic residual that makes it possible to use molecular dynamics in
refinement.
3. Effective Potential Energy
The effective potential energy (Ex) consists of three terms describing the
structure factor amplitude difference, structure factor phase difference, and
crystal symmetry nonbonding interactions.
(5)
[EQUATION 5]
The difference between observed and calculated structure factor amplitudes is
described by
(6)
[EQUATION 6]
where k is a scale factor, (w hkl) are individual weights for each reflection
hkl, (WA) is an overall weight factor which relates (ExA) to the empirical
potential energy (Ei), and (NA) is a factor given by [UNSCANNABLE EQUATION]. The
normalization factor (NA) ensures that the choice of the overall weight factor
(WA) is approximately independent of the resolution range employed
<PAGE> 71
5
Refinement by Simulated Annealing
during refinement. The scale factor k is set to the value which makes the
derivative of ExA respect to k zero,
(7)
[EQUATION 7]
which is a necessary condition to make ExA. The effective potential
energy ExA the same as the function used in Jack and Levitt (1978),
except for the treatment of the scale factor k. In Jack and Levitt k is treated
as an independently minimized parameter whereas in this work k is eliminated by
inserting Eq. (7) into Eq. (6). Therefore, the functional dependence of k on
Fcalc(hkl) is included implicitly in the computation of the derivatives of
ExA respect to the atomic model parameters.
In cases where some phase information about the diffraction data is
available (e.g., through MIR) and one wants to include this information in the
refinement, the difference between observed phase information and the
calculated phases is described by
(8)
[EQUATION 7]
where Wp is an overall weight factor, (NP) is a normalization factor set
equal to the number of phase specifications occurring in the sum, [UNSCANNABLE
EQUATION] is the most probable phase obtained from MIR, [UNSCANNABLE EQUATION]
is the phase of the calculated structure factors, FOM(hkl) is the individual
figure of merit for each measured phase, and SQ{x,y} is a square-well function
with harmonic "walls" given by
<PAGE> 72
6
Refinement by Simulated Annealing
(9)
[EQUATION 9]
This form of the effective potential energy (ExP) ensures that the calculated
phases are restrained only within the experimental error limits approximated
by the individual figure of merit for each reflection, i.e. as long as a
calculated phase [UNSCANNABLE EQUATION] is within the range of [UNSCANNABLE
EQUATION] no restraint is applied to that particular phase.
Experience has shown that the influence of crystal packing interactions
can be important in crystallographic refinement. In the absence of crystal
packing information backbone or sidechain atoms of a molecule in the asymmetric
unit can penetrate symmetry-related molecules. This can occur in contact
regions between molecules where the electron density does not clearly define
the molecular boundaries. A potential energy which describes nonbonding
interactions between the molecule(s) located in the asymmetric unit and all
symmetry related molecules surrounding the asymmetric unit is given by
(10)
[EQUATION 10]
where the first sum extends over all symmetry operators S of the crystal, the
second sum extends over all pairs of atoms (i,j) with i greater than or equal
to j for which the minimum image distance
(11)
[EQUATION 11]
is less than a specified cutoff r(cut), a, b, c are vectors that define the
unit cell of the crystal, and (x,y,z) are fractional
<PAGE> 73
7
Refinement by Simulated Annealing
coordinates. For the application of the minimum image expression (Eq. 11) one
has to make the reasonable assumption that the cutoff r(cut) is small compared
to the physical dimension of the unit cell for macromolecules. NB{r} has the
form of a nonbonding interaction potential, i.e. it is a sum of Van der Waals
and electrostatic interactions
(12)
[EQUATION 12]
where a,b,c are appropriate constants and switching or shifting functions
(Brooks et al, 1983). Eq. (10) includes only intermolecular interactions between
different molecules since the nonbonding interaction energy for atoms in the
asymmetric unit is already included in the empirical potential energy (see Eq.
(3)). As no weighting or normalization has been applied to E(x)(N) the
nonbonding interaction energy between two atoms is independent of whether it
is an intermolecular or an intramolecular interaction.
4. FFT Calculation of Structure Factors and Derivatives
The most central processor unit (CPU) time-consuming step in crystallographic
refinement is the evaluation of the structure factors of the atomic model in
Eqs. (6-8) and the first derivatives with respect to the atomic coordinates of
the system. This also applies to MD-refinement since the CPU time needed to
compute the structure factors through the direct summation method exceeds the
CPU time for a single empirical potential energy calculation E(i) (Eq. 3) by one
to two orders of magnitude; e.g. in the case of MAAT the direct summation
takes 102 secs whereas the evaluation of E(i) takes only 2.8 secs on a CRAY-2.
Evaluation of the atomic electron density on a finite grid followed by
fast-Fourier transformation (FFT) provides a way to greatly speed up the
calculation (Cooley and Tukey, 1965; Ten Eyck, 1973; Agarwal, 1978; Isaacs,
1984). The expression for the first derivatives of an arbitrary function of
structure
<PAGE> 74
8
Refinement by Simulated Annealing
factor amplitudes and phases such as given in Eqs. (6-8) can be derived by using
a multidimensional version of the chain rule in complex space as was pointed out
by Lunin and Urzhumtsev (1985). It is not necessary to compute second
derivatives for MD-refinement as only first derivatives enter the classical
equations of motion. The conjugent gradient minimization used in this work for
conventional least-squares refinement also requires only the energy and its
first derivatives (Fletcher and Reeves, 1964; Powell, 1977).
The FFT algorithms and programs that are presently being used in
crystallographic refinement were completely reformulated in order to achieve
vectorization on supercomputers that increases the speed by a factor of 10 in
the case of MMT; a detailed description will be published elsewhere. The two
main differences with earlier FFT implementations (Ten Eyck, 1973; Agarwal,
1978; Isaacs, 1984) concern the organization of the finite grid and the
application of symmetry operators after the FFT has been carried out. In cases
where the finite electron density grid is too large to fit into the physical
memory of the computer the FFT is carried out on subgrids and the results are
then accumulated. This was accomplished in analogy to the factorization of a
one-dimensional Fourier transformation which is the basis for the FFT technique
(Ten Eyck, 1973).
It was already pointed out (Isaacs, 1984) that the modelling of the
electron density on the finite grid is the most expensive part of the
computation. This applies to a much larger degree to vector machines where very
efficient, multidimensional FFT routines are available (CRAY Research Inc.,
personal communication); e.g., for MAAT the electron density calculation takes
2.0 secs and the FFT takes 0.75 secs on a CRAY-2 Therefore, little would be
gained at present by introducing space-group specific Fourier transformations.
This has the additional advantage that the method is space-group general. To
reduce the time spent in the calculation of the atomic electron density, it is
computed only over the asymmetric unit of the crystal. However, the FFT is
carried out over the complete unit cell, and the transposed symmetry
<PAGE> 75
9
Refinement by Simulated Annealing
operators of the crystal space group are then applied to the computed structure
factors. This yields the identical result as if the electron density would have
been computed over the complete unit cell followed by the FFT.
During MD-refinement the first derivatives are kept constant until any
atom has moved by more than 0.2 (angstrom units) relative to the position at
which the derivatives were last computed; at that point all derivatives are
updated. Tests have shown that this does not affect the convergence properties
and it speeds up the computation by almost an order of magnitude.
5. Annealing Schedule
A typical protocol for MD-refinement is described in this section. The example
protein MAAT contains 396 amino acids and a pyridoximine phosphate co-factor;
8786 reflections from 10 to 2.8 (angstrom units) were available; the
space-group is C222(1). The initial model was obtained from MIR to 3 (angstrom
units) resolution; the MIR phase information was included in the refinement.
Table I shows the protocol that was used for MAAT; the refinement
proceeded in four stages. During the first stage conjugent gradient minimization
was employed to relieve any bad inter- or intramolecular contacts in the
structure that could pose a problem when starting the molecular dynamics
calculation. During that stage C(right ascension)-backbone atoms are
harmonically restrained to their initial positions. This avoids a large drift
of the structure, if any bad nonbonded contacts have to be relieved.
During the second stage, molecular dynamics was carried at 3000 K, for 0.5
ps; the initial velocities were assigned from a Maxwellian distribution at 3000
K. In the third stage, the system was cooled to temperatures near 300 K. The
fourth stage consists of conjugent gradient minimization which further optimizes
the R factor and stereochemistry of the system. This annealing schedule was
developed by trial and error. It differs from the one described in (Kirkpatrick
et al., 1983) in the way the temperature is controlled during annealing; i.e. in
<PAGE> 76
10
Refinement by Simulated Annealing
Kirkpatrick the cooling rate is slowed down if the system is near a critical
point whereas here the system is cooled at a constant rate. It is likely that
the protocol in Table I could be improved. This will be subject of future
investigations.
Table I: Protocol for MD-refinement of MAAT
<TABLE>
<CAPTION>
stage description
- ----- -----------
<S> <C>
1 conjugent gradient minimization, 160 steps, [UNSCANNABLE CHARACTERS]
20 Kcal/(mole [UNSCANNABLE CHARACTERS], resolution 8.0-2.8 [UNSCANNABLE
CHARACTERS] W(A)=100,000 Kcal/mole, W(P)=70,000 Kcal/(mole degrees), B=12
2 molecular dynamics, 0.5 ps, T=3000 K, timestep=0.5 fs, velocities rescaled
every 250 steps, structure factor gradient updated if any atom moved by
more than 0.2 [UNSCANNABLE CHARACTERS], resolution 8.0-2.8 [UNSCANNABLE
CHARACTERS] W(A)=100,000 Kcal/mole, W(P)=30,000 Kcal/(mole degrees), B=12
3 molecular dynamics, 0.25 ps, T=300 K, timestep=0.5 fs, velocities rescaled
every 50 steps, structure factor gradient updated if any atom moved by
more than 0.2 [UNSCANNABLE CHARACTERS], resolution 8.0-2.8 [UNSCANNABLE
CHARACTERS] W(A)=100,000 Kcal/mole, W(P)=30,000 Kcal/(mole degrees), B=12
4 conjugent gradient minimization, 80 steps, resolution 8.0-2.8
[UNSCANNABLE CHARACTERS], W(A)=100,000 Kcal/mole, W(P)=0 Kcal/(mole
degrees), B=12
</TABLE>
The major difference between MD-refinement and conventional least-squares
refinement consists of the heating stage 2 and the annealing stage 3. If these
stages were bypassed the protocol would be similar to the Jack-Levitt refinement
(Jack and Levitt, 1978).
6. Choice of Parameters
<PAGE> 77
11
Refinement by Simulated Annealing
Stereochemical and nonbonded parameters for the empirical potential energy (Eq.
3) were taken from the explicit polar hydrogen parameter set PARAMI9 and TOPHI9
of CHARMM (Brooks et al.) with two modifications. The two-fold dihedral angle
term for peptide bonds was replaced by a one-fold term (force constant set to
100 Kcal/(mole degrees (2)) allowing only transpeptide bonds. With the original
two-fold term transitions of peptide bonds from trans to cis can occur at the
high temperature during stage 2. In the case of proline peptide bonds, the
two-fold term was retained with a reduced force constant of 5 Kcal/(mole
degrees(2)) to allow transitions between cis and trans prolines. The force
constant of the improper torsion angle which specifies the tetrahedral geometry
of (C) carbon atoms was increased to 500 Kcal/(mole degrees (2)). This was done
in order to avoid transitions from L- to D-amino acids during the high
temperature stage 2.
The weight factor W(A) in Eq. (6) was chosen such that the gradient of
E(x)(A) was comparable in magnitude to the gradient of the empirical potential
energy E(i) for the structure of MAAT obtained after a 0.5 psec molecular
dynamics simulation with W(A) and W(P) set to zero, starting with the initial
x-ray structure. It is necessary to use a molecular dynamics structure rather
than the initial x-ray structure to compute the gradients as the initial
structure could be strained and thus would artificially increase the gradient.
Experience has shown that this procedure is relatively insensitive to the choice
of resolution and initial structure. The comparison of the gradients suggested a
factor W(A) of approximately 100,000. W(A) was kept constant throughout the
refinement. Experience has shown that the exact choice of W(A) is not critical
for MD-refinement.
The same procedure was applied to choose W(P) in Eq. (8), i.e., the
gradient of E(x)(P) for the initial structure was made comparable in magnitude
to the gradient of E(i). This suggested W(P) to be approximately 15,000.
However, the actual choice of W(P) was larger than this estimate during stages
1, 2 and 3. W(P) was set to zero during stage 4 in order to check whether the
average phase difference decrease could be maintained even
<PAGE> 78
12
Refinement by Simulated Annealing
without the E(x)(P) energy term. Again, the exact choice of W(P) does not seem
to be critical.
The high temperature during stage 2 ensures that the system can overcome
certain energy barriers provided by the potential energy (Eq. (4)). Tests have
shown that the exact choice of the temperature is not critical. However, it
appears to be necessary that the R factor during the high temperature stage
stays well below 0.59, which would correspond to a random structure (Jensen,
1985). R factors between 0.30 and 0.50 during stage 2 seem to work equally well.
Due to the increase in temperature, the R factor can actually increase during
the first steps of this stage.
It has been found already that in a time period as short as 0.5 ps
MD-refinement performs better than minimization. Longer simulations could be
used to obtain an ensemble of structures by cooling the system at various
intervals. In this way one could obtain alternative structures that match the
diffraction data equally well.
The resolution range (8.0-2.8 A) was kept constant throughout the
refinement. Alternatively, one could have subdivided stage 2, starting at low
resolution and then increasing the resolution (Brunger et al., 1987). This is
useful in cases where high-resolution diffraction data are available. However,
contrary to conventional least-squares refinement it appears that the radius of
convergence of MD-refinement is insensitive to the choice of resolution ; e.g.,
the MD-refinement of crambin described in (Brunger et al., 1987) was
accomplished at a constant 8.0-1.5 A resolution range throughout the refinement.
Temperature factors were kept constant during all stages and were set
equal for all atoms. Combined B-factor and positional refinement could proceed
after stage four. The individual weights w(h)(k)(l) in Eqs. (6), (8) were set to
one. However, the MD-refinement provides no restrictions on the choice of a
different weighting scheme.
<PAGE> 79
13
Refinement by Simulated Annealing
7. Results of the MAAT refinement
Table II shows the results of the MAAT refinement. Listed are the R
factor, average phase difference [UNSCANNABLE CHARACTER(S)] between observed
(i.e., most probable MIR) and computed phases, deviations of bonds and angles
from ideality [UNSCANNABLE CHARACTER(S)] bond and [UNSCANNABLE CHARACTER(S)]
angle )[UNSCANNABLE CHARACTER(S)], rms deviations from the initial structure
for backbone and all atoms, and the CPU times on a CRAY-2; the information is
provided for the initial structure, and the structures after each stage of the
MD-refinement.
Table II: Course of MAAT refinement
<TABLE>
<CAPTION>
stage R factor ?? ? bond ? angle rms CPU
back all
[deg.] [A] [deg.] [A] [A] [s]
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
initial 0.42 59.3 0.037 4.8 -- -- --
1 0.35 49.3 0.033 6.1 0.36 0.55 1327
2 0.35 56.6 0.12 13.0 1.01 1.61 3704
3 0.27 50.1 0.042 6.0 1.01 1.52 1250
4 0.25 55.7 0.020 4.6 1.01 1.52 650
control( 1+4)
0.28 57.9 0.023 4.8 0.64 0.90 2000
- --------------------------------------------------------------------------------
</TABLE>
The ideal values of bond lengths and angles correspond to those used in version
19 of CHARMM (Brooks et al., 1983). As a control the result of a pure
minimization protocol that bypasses stages 2 and 3 is also shown. This control
calculation is equivalent to conventional least-squares restrained refinement
without model building. The minimization method (Powell, 1977) that was employed
in this work performed slightly better than the method used in PROLSQ (Konnert
and Hendrickson, 1980). '
<PAGE> 80
14
Refinement by Simulated Annealing
In comparison with the least-squares method, MD-refinement improved the R
factor by 0.03, slightly reduced the average phase difference (55.7 vs 57.9)
and decreased the bond and angle deviations from ideality. This improvement in
the structure was accomplished during the heating and annealing stages 2 and 3
when 46 backbone atoms moved by more than 2 A and 17 atoms moved by more than 5
A, vhereas in the control calculation only one atom moved by more than 2 A. The
rms difference between the MD-refined structure and the control structure is
0.73 A and 1.29 A for backbone and all atoms, respectively. Other protein
crystal structures where the starting model was worse than in the MAAT case
(e.g., R > 0.47) showed a much greater difference between MD and conventional
refinements (Brunger et al., 1987). Restrained least-squares refinement would
hang up at about 35%, requiring extensive rebuilding. The MD-refinement
proceeded automatically to R-factors in the middle 20s.
The R factor is large and the stereochemistry relatively bad during the
heating stage 2. This can be explained by the fact that the kinetic energy of
the atoms is large and consequently the atoms are not at their equilibrium
positions. The large kinetic energy allows the system to overcome local energy
minima. After cooling the system it has reached a lower R factor than was
accomplished by minimization.
8. Computational Requirements
The CPU times in Table II show that the increase in computational time of
MD-refinement compared to conventional refinement (as approximated by the
control calculation) is 3.5 in the case of MAAT. The required CPU time on the
CRAY-2 supercomputer is quite modest and suggests that the MD-refinement can be
carried out on standard computers such as a VAX 11/780 or 8600.
All calculations in this work were carried out with the program X-PLOR
that was specifically designed for crystallographic refinement. X-PLOR includes
MD-refinement and conventional refinement with both the direct summation
<PAGE> 81
15
Refinement by Simulated Annealing
technique as well as the FFT technique. An optimized VAX/VMS version and a
vectorized CRAY version will be made available for distribution.
9. Conclusion and Outlook
Simulated annealing has been successfully applied to crystallographic
refinement by molecular dynamics. The application to MAAT has shown that
MD-refinement can be carried out on large systems at a quite modest
supercomputing expense.
With the increased availability of fast diffraction data collection
devices and the success of crystallizing larger and larger macromolecular
complexes, refinement clearly becomes a bottleneck for structure determination
and the need for improving the efficiency of the refinement process arises. It
is my hope that MD-refinement is a stepping stone towards fully automated
crystallographic refinement.
Acknowledgement
I am grateful to M. Karplus, J. Kuriyan, G.A. Petsko, D. Ringe,
and D.L. Smith for useful discussions and D.L. Smith for
providing x-ray diffraction data of MAAT.
References
Agarwal, R.C. (1978). Actar Crystallogr. A43, 791-809.
Brooks,B.R., Bruccoleri,R.E., Olafson,B.D., States,D.J.,
Swaminathan,S., and Karplus,M (1983). J. Comput. Chem. 4,
187-217.
Brunger,A.T.,Kuriyan,J., and Karplus,M. (1987). Science 235,
458-460.
Cooley,J.W. and Tukey,J.W., (1965). Math. Comput. 19, 297-301.
Fletcher,R. and Reeves,C.M. (1964). Comp. J. 7, 149-154.
Hendrickson,W.A. (1985). Methods Enzymol., 115, 252-270.
<PAGE> 82
16
Refinement by Simulated Annealing
Isaacs,N (1984). In Methods and applications in
crystallographic computing (Hall,S.R. and Ashida,T., eds), pp.
193-205. Clarendon; Oxford.
Jack,A. and Levitt,M. (1978). Acta Crystallogr. sect A, 34,
931-935.
Jensen,L.H. (1985). Meth. Enzymol. 115, 227-234.
Jones,T.A. (1982). In Computational Crystallography (Sayre, D.,
ed.), pp. 3033-3317. Clarendon, Oxford.
Karplus,M. and McCammon,J.A. (1983). Annu. Rev. Biochem. 52,
263-300.
Kirkpartrick,S., Gelatt,C.D.,Jr., and Vecchi,M.P. (1983).
Science 220, 671-680.
Konnert,J.H. and Hendrickson,W.A. (1980). Acta Crystallogr.
sect. A, 36, 344-349.
Lunin,V.Y. and Urzhumtsev,A.G. (1985). Acta Crystallogr. A41,
327-333.
Metropolis,N., Rosenbluth,M., Rosenbluth,A., Teller,A.,
Teller,E., (1953). J. Chem. Phys. 21, 1087-1092.
Moss,D.S. and Morffew,A.J. (1982). Comput. Chem., 6, 1-3.
Powell,M.J.D. (1977). Mathematical Programming 12, 241-254.
Smith,D.L., Ringe,D., Finlayson W.L., and Kirsch,J.F. (1986)..
J. Mol. Biol. 191, 301-302.
Sussman,J.L., Holbrook.S.R., Church,G.M., and Kim,S.H. (1977).
Acta Crystallogr. sect. A., 33, 800-804.
Ten Eyck,L.F. (1973). Acta Crystallogr. A29, 183-191.
Verlet, L. (1967). Phys. Rev. 159, 98-105.
<PAGE> 83
- 22 -
4.9. Restrained B-factor Refinement
remarks file REFINEMENT.INP
remarks restrained B-factor refinement
@xprepare.inp {* read various data structures *)
coordinates @positional.pdb (* read coordinates *)
xrefin
resolution-limits=8.0 2.5 {* these resolution limits will be used *)
{* during refinement *}
wa=1000.0 {* this is arbitrary *)
wp=0.0 {* turn off phase restraints *}
optimize-bfactors (* invoke B-factor optimizer *}
nstep=20 {* do 20 steps of conjugate gradient *}
drop=10.0 (* expected initial drop in energy *}
rweight=-1.0 {* this will automatically determine the relative *}
(* weight between restraints and crystallographic *}
{* residual*}
bond-restraint=1.5 {* target sigma for 1-2 B-factor pairs *}
angle-restraint=2.0 {* target sigma for 1-3 (angle) B-factor pairs *}
end {* refinement will be executed *}
end {* this terminates the diffraction data parser *}
write coordinates output=brefinement.pdb end (* write final coordinates *}
(* and B-factors *}
stop
<PAGE> 84
- 23 -
4.10. Partial FCALC Computation During Refinement
remarks file PARTIAL.INP
{* Suppose, you want to freeze a major portion of your structure during *}
{* refinement. Under certain conditions one can save CPU time by *}
{* computing the FCALC of the frozen part of the molecule once and *}
{* adding it to the FCALC of the free part of the molecule. *}
{* This example file has two parts, in the first, we compute the FCALC *}
{* of the frozen part of the molecule, and in the second we show how *}
{* one can use this information during refinement. *}
@xprepare.inp {* read various data structures *}
coordinates @generate.pdb {* read coordinates *}
xrefin
resolution-limits=8.O 2.5 {* these resolution limits will be used *}
{* during refinement *)
selection=( resid 1:2 ) {* residues 1 through 2 are frozen *}
update-fcalc (* compute FCALC of frozen part *}
set display=frozen.data end {* these two statements will write the *}
print reflections {* FOBS, FCALCS, ... to file frozen.data*}
end {* this terminates the diffraction data parser *}
stop
{* Now you would have to modify file XPREPARE.INP *}
{* replace the @test.fob statement by the following: *}
@frozen.data
do (FPARTIAL=FCALC)
selection=( resid 3 )
{* In addition you should fix the frozen atoms during*}
{* minimization and refinement by including the *}
{* statement *}
constraints fix selection=( resid 1:2 ) end
{* anywhere after the "structure" statement *}
{* then you can run any type of positional or *}
{* B-factor refinement. *}
{* You might want to try "method=direct" instead of *}
{* "method=FFT" if the frozen part contains more than*)
{* 80% of the molecule. *}
<PAGE> 85
- 24 -
4.11. Computation of Electron Density Maps
remarks file MAP.INP
remarks compute electron density maps
@xprepare. inp {* read various data structures *)
coordinates @generate.pdb {* read coordinates *}
{* first, we compute a 2fo-fc map *}
xrefin
resolution-limits=8.0 2.5 (* these resolution limits will be used *}
{* to compute the maps *}
update-fcalc {* compute FCALCS *}
do (scale FCALC = FOBS ) (* FCALCS will be scaled *}
do (amplitude FCALC = 2 FOBS - FCALC) {* this is for a 2fo-fc map *}
map {* invoke map parser *}
(* the data in FCALC+FPARTIAL will be used *}
{* FPARTIAL is normally zero *}
extend=molecule (* computed map will cover the molecules*}
cushion=2.0 (* in the asymetric unit with a 2.0 A *}
(* cushion *)
output=map.2fofc {* output file *)
end {* map is being computed and written to file *}
end
(* next, compute a fo-fc (delete) difference map *}
xrefin
resolution-limits=8.0 2.5
selection=( not ( resid 2 ) ) (* Select atoms that should be INCLUDED *}
{* here it means that residue 2 will be *}
{* EXCLUDED from the calculation. *}
update-fcalc {* compute FCALCS *)
do (scale FCALC = FOBS ) {* FCALCS will be scaled *)
do (amplitude FCALC = FOBS - FCALC) (* this is for a fo-fc map *}
map
extend=molecule
cushion=2.0
output=delmap.fofc {* output file *}
end {* map is being computed and written to file *}
end
stop
{* both map.2fofc and delmap.fofc will be formatted files that can be *}
{*converted to a FRODO DSN6 file through a special version of MAPPAGE *)
<PAGE> 86
- 25 -
{* this program is stored in . . .XPLOR.SUPPORT.FRODOMAP *}
{* just run the program with unit 11 assigned to map.2fofc (delmap.fofc) *}
{* and unit 12 assigned to the DSN6 file. No additional information is *}
{* needed. *}
{* XPLOR scales the maps in such a way that 1 sigma = 1.0. *}
<PAGE> 87
- 26 -
4.12. Rigid Body Refinement
remarks file RIGID.INP
remarks rigid-body refinement
@xprepare.inp (* read various data structures *}
coordinates @generate.pdb {*read coordinates *}
coordinates copy end {* copy into comparison set *}
flags {* only include crystallographic residual in *}
exclude all include xref {* energy == target function *}
end
xrefin
resolution-limits=8.0 2.5 (* these resolution limits will be used *}
(* during refinement *}
wa=1300.0
wp=0.0 {* turn off phase restraints *}
end
minimize rigid {* invoke rigid body minimizer *}
nstep=40 {* do 40 steps rigid body minimization *}
drop=10.0 {* expected initial drop in energy *}
end {* refinement will be executed *}
write coordinates output=rigid.pdb end (* write final coordinates *}
coordinates rms end {* this will print the rms difference to the inital *}
{* coordinates *}
stop
<PAGE> 88
- 27 -
4.13. R-factor Search
remarks file SEARCH.INP
remarks R-factor search
@xprepare.inp {* read various data structures *}
coordinates @generate.pdb {* read coordinates *}
xrefin
resolution-limits=8.0 2.5 {* these resolution limits will be used *}
{* during search *)
end
coor copy end
{* translational search in 3-d, x=0,6,12, y=0,6,12, z=0,6,12 *}
set display=transl.rf end {* the results will be stored in file transl.rf *}
{* this looks more complicated than it is. *}
set symbol $1 = 0. end
while ( $1 < 13.0 ) loop lx
set symbol $2 = 0. end
while ( $2 < 13.0 ) loop ly
set symbol $3 = 0. end
while ( $3 < 13.0 ) loop lz
coor swap end
coor copy end
coor translate vector=( $1 $2 $3 ) selection=( all ) end
xrefin
update-fcalc
print r-factor
end
display $1 $2 $3 $result
increment $3 by 6.0
end loop lz
increment $2 by 6.0
end loop ly
increment $1 by 6.0 end loop lx
stop
{* for a rotational search one would replace the "coor transl..." *}
{* statement by the following *}
coordinate rotate
euler=( $1 $2 $3 ) center=( head=( all ) ) sele=( all )
end
{* This will rotate the molecule around its center of mass by the *}
{* specified Eulerian angles (Rossman convention). *}
<PAGE> 1
EXHIBIT 10.24
SOFTWARE DEVELOPMENT AGREEMENT
BETWEEN
TEIJIN LIMITED
AND MOLECULAR SIMULATIONS INCORPORATED
THIS AGREEMENT is made as of September 6, 1993 by and between Teijin
Limited, a corporation organized and existing under the laws of the country of
Japan with its principal offices at 6-7, Minamihonmachi 1-chome, Chuo-ku, Osaka
541, Japan (hereinafter "Teijin") and Molecular Simulations Incorporated, a
corporation organized and existing under the laws of the State of Delaware, with
its principal place of business at 16 New England Executive Park, Burlington, MA
01803-5297 (hereinafter "MSI").
WITNESSETH
WHEREAS, MSI and Teijin have entered into the following agreements:
Joint Venture Agreement, Common Stock Purchase Agreement and Corporate License
Agreement, all dated February 14, 1992, and Research and Development Agreement
dated February 23, 1993;
WHEREAS, pursuant to the Joint Venture Agreement, MSI and Teijin
Molecular Simulations Incorporated ("TMSI") have entered into a Distributorship
Agreement relating to the exclusive distribution of MSI's software products in
Japan; and
WHEREAS, MSI and Teijin wish to cooperate further, including Teijin's
funding of the development of MSI's computer software products;
NOW THEREFORE, in consideration of the foregoing, MSI and Teijin do
hereby mutually covenant and agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings specified below:
1.1 NET SOFTWARE MARGIN. The proceeds that MSI actually recognizes when
MSI grants end-users the right to use MSI's Software Products or grants
distributors the right to sublicense MSI's Software Products, after deducting:
(a) amounts payable by MSI to its licensors and other parties with respect to
licenses of the Software Products; (b) trade or quantity discounts allowed and
taken, including advertising allowances and marketing fees or commissions paid
to third parties; (c) actual credits or refunds on account of any returns of the
Software Products; (d) any insurance, shipping or other out-of-pocket expense
that may be incurred in connection with delivery, to the extent such charges are
separately stated on contracts, invoices or other licensing documents; (e) any
excise, sales, value-added, property, use and foreign withholding taxes (but not
MSI's income taxes); and (f) import and export duties, taxes and surcharges. For
purposes of this Agreement, "Net Software Margin" expressly excludes proceeds
from: maintenance and support of Software Products; the provision of training,
contract research and consulting services; porting or other development of
Software Products; joint marketing activities; and other computer hardware or
software vendors for serving as an OEM or finder. For purposes of this
definition, the above calculations shall be determined on a consolidated basis
according to generally accepted accounting principles, consistently applied,
including for this purpose MSI
1
<PAGE> 2
and its subsidiaries which are at least majority-owned by MSI (for example, TMSI
would not be included).
1.2 NEW PRODUCTS. The following new computational chemistry and
molecular graphics software programs (including related user documentation) that
are being developed by MSI: Chemistry Backplane (including the Unified Materials
Product), and programs that will perform various applications in conjunction
with or as part of the Chemistry Backplane.
1.3 SOFTWARE PRODUCTS. All of the computational chemistry and molecular
graphics software programs (including related user documentation) that MSI
markets and distributes commercially, including the New Products after they are
commercially released. Software Products do not include computer hardware and
related software and peripherals (for example, operating system software and
compilers) sold by MSI.
2. SOFTWARE DEVELOPMENT
2.1 MSI's current product development plans, including plans for the
New Products, are described in the attached Appendix A. MSI agrees to use its
best efforts to develop the New Products in accordance with the plans set forth
in Appendix A. The staffing for the development of the New Products, including
the selection and use of MSI employees and third-party consultants, will be as
deemed commercially appropriate by MSI.
3. FUNDING OF DEVELOPMENT
3.1 Teijin agrees to fund MSI's development of the New Products in the
amount of three million U.S. Dollars ($3,000,000), to be paid as follows:
(a) Two million U.S. Dollars ($2,000,000) on the Effective Date (as
defined in Section 8.1) of this Agreement; and
(b) One million U.S. Dollars ($1,000,000) within three (3) weeks after
receipt by TMSI of MSI's first customer shipment of MSI's Unified
Materials Product. MSI estimates that its first customer shipment of
the Unified Materials Product will occur on or about December 31, 1993.
These amounts (hereinafter referred to as the "Development Funds") shall be paid
to MSI by wire transfer to an account designated by MSI. The Development Funds
will be expended by MSI as it deems appropriate to achieve substantially the
development objectives set forth in Appendix A.
4. REPAYMENT
4.1 RATE. MSI agrees to repay Teijin at the rate of four percent (4%)
of MSI's Net Software Margin (the "Repayment"). MSI's obligation to pay the
Repayment will continue to accrue until the first to occur of: (a) December 31,
1998, or (b) the date on which aggregate Repayments payable by MSI to Teijin
under this Agreement are sufficient to repay the Development Funds and provide
an internal rate of return (IRR) to Teijin equal to ten percent (10%) (i.e., the
discounted value of the Repayments equals the discounted value of the
Development Funds using a discount rate of 10%).
2
<PAGE> 3
4.2 MINIMUM PAYMENTS. Until MSI has paid Teijin aggregate Repayments
under this Agreement equal to at least the amount of Development Funds paid by
Teijin to MSI pursuant to Section 3.1 above, MSI agrees to pay Teijin cumulative
minimum Repayments as set forth below:
3
<PAGE> 4
<TABLE>
<CAPTION>
Calendar Year Cumulative Minimum Repayments
------------- -----------------------------
<S> <C>
1994 $ 400,000
1995 $1,000,000
1996 $1,600,000
1997 $2,300,000
1998 $3,000,000
</TABLE>
4.3 PAYMENT. The obligation to pay the Repayments will accrue with
respect to Net Software Margin recognized by MSI beginning on January 1, 1994.
MSI will pay the accrued Repayments to Teijin in annual installments within
ninety (90) days after the end of MSI's fiscal year during which the Repayments
were earned. The Repayments shall be made by wire transfer to an account
designated by Teijin and shall be paid in U.S Dollars. If paid and earned
Repayments through a given calendar year do not equal or exceed the minimum
required by Section 4.2, MSI shall include with its payment for such year the
balance of such minimum amount required. From and after the date of any default
of any payment due hereunder, until such default is cured, interest shall accrue
at the rate of 0.833% per month on such unpaid amounts.
4.4 TAXES. All taxes imposed upon or with respect to the Repayments
shall be the responsibility of Teijin. United States income tax may be withheld
by MSI from the Repayments if required by United States law. MSI shall promptly
provide Teijin with copies of tax receipts or other documents evidencing that
withheld taxes have been paid to the United States tax authorities.
4.5 REDUCTION OF REPAYMENTS. In the event MSI does not receive from
Teijin the amount set forth in Section 3.1(b), the 4% Repayment rate specified
in Section 4.1 and the minimum annual Repayment amounts specified in Section 4.2
shall automatically be reduced by multiplying such rate and all such amounts by
sixty-six and two-thirds percent (66-2/3%).
5. OWNERSHIP OF PROPRIETARY RIGHTS
5.1 MSI OWNERSHIP OF SOFTWARE PRODUCTS. As between Teijin and MSI, MSI
shall have and retain all rights, title, and interest in and to and ownership of
all copyrights, trademarks, trade secrets, patent rights, mask works and all
other industrial and intellectual property relating to the Software Products and
the New Products, including any improvements, updates, enhancements or
modifications to the Software Products or New Products, and including any and
all documentation, data and technical information created by or for MSI that
relates to the Software Products or New Products.
5.2 FURTHER ASSURANCES. Upon the request of MSI, Teijin agrees to
execute all documents and instruments reasonably required by MSI to give effect
to Section 5.1 above.
6. RECORDS; REPORTING
6.1 SOFTWARE DEVELOPMENT. MSI will keep adequate written records of its
development activities with respect to the New Products. Such records will be
available for inspection by Teijin at MSI's offices during normal business
hours, provided Teijin gives MSI reasonable advance notice of inspection. In
addition, MSI will provide Teijin with a monthly written report
4
<PAGE> 5
of MSI's development activities, which will make appropriate reference to
Appendix A, including MSI's progress in achieving its development objectives and
any modifications to the development plans made in MSI's reasonable commercial
judgment. MSI agrees to notify Teijin promptly of any material changes to MSI's
development plans.
6.2 REPAYMENTS. With each Repayment, MSI will submit to Teijin written
statements that are sufficient to determine the basis on which the Repayment
amount was calculated. In addition, within sixty (60) days after each of MSI's
first three fiscal quarters during each year in which Repayments are earned, MSI
will provide Teijin with a written statement that is sufficient to determine the
amount of Repayments earned for such fiscal quarter. All books of account and
records of MSI shall be kept available for at least three (3) years after the
applicable reporting period. Teijin shall have the right, at Teijin's expense,
to have an independent certified public accountant, selected by Teijin and
reasonably acceptable to MSI, examine such books and records for the purpose of
verifying the Repayments required under this Agreement; provided that any such
examination is made upon reasonable advance notice, during normal business hours
and not more than once per year. Such accountant shall enter into a
confidentiality agreement with MSI. If the examination of MSI's records
indicates an underpayment of five percent (5 %) or more of the amount that
should have been paid for any twelve month period examined, MSI shall pay Teijin
auditing fees and expenses for said audit in addition to any other payment due.
7. SOURCE CODE ESCROW
7.1 Escrow Agreement. Within thirty (30) days after the execution of
this Agreement, MSI and Teijin shall enter into a Source Code Escrow Agreement,
substantially in the form of Appendix B (the "Escrow Agreement"), with Data
Securities International, Inc. or other mutually acceptable escrow agent.
7.2 Restriction on Use of Source Materials by Teijin; Title to Source
Materials. All right, title and interest in and ownership of the Source
Materials (as defined in the Escrow Agreement) shall remain with MSI. Teijin
agrees to protect and maintain the Source Materials in the strictest confidence
and will not distribute, disclose or otherwise make available the Source
Materials directly or indirectly to any third party, and will not use the Source
Materials, except as permitted by this Agreement. MSI hereby grants to Teijin,
upon release of a copy of the Source Materials to Teijin in accordance with the
terms of the Escrow Agreement, the non-exclusive, non-transferable right to use
the Source Materials solely for purposes of (a) completing development of the
New Products, and (b) permitting Teijin to exercise the same marketing and
distribution rights with respect to the New Products as TMSI has pursuant to the
terms of that certain Distributorship Agreement dated April 1, 1992 between MSI
and TMSI, as such Distributorship Agreement is then in effect. Teijin and MSI
agree that such exercise of marketing and distribution rights by Teijin with
respect to the New Products will be subject to: (i) the written consent of TMSI
to assignment of its rights under the Distributorship Agreement in the
circumstances described in the Escrow Agreement, which consent Teijin and MSI
agree to use their respective best efforts to obtain as soon as possible after
execution of the Escrow Agreement, and (ii) Teijin being bound by and fulfilling
the same obligations as TMSI under the Distributorship Agreement. The parties
acknowledge and agree that the rights granted hereunder constitute a license of
intellectual property within the meaning of 11 United States Code Section
365(n).
5
<PAGE> 6
8. EFFECTIVE DATE; TERM AND TERMINATION
8.1 EFFECTIVE DATE. This Agreement shall become effective on the later
to occur of: (i) the date of execution of this Agreement by the parties, or (ii)
the date on which Japanese governmental clearance (whether in the form of an
approval, notification or otherwise) is obtained with respect to Japanese
foreign exchange and trade control regulations (the "Effective Date"). Teijin
will use its best efforts to obtain any required Japanese governmental clearance
and will provide MSI with prompt written notice of the receipt thereof.
8.2 TERM. This Agreement shall commence on the Effective Date and shall
remain in full force and effect until the date of completion of repayment
required by Section 4 of this Agreement.
8.3 TERMINATION OF AGREEMENT. Either party may, in addition and without
prejudice to any other rights or remedies, terminate this Agreement immediately
upon written notice to the other party if the other party commits any material
breach of any of the terms of this Agreement which, in the case of a breach
capable of remedy, shall not have been remedied within sixty (60) days of the
receipt by the party in default of notice specifying the breach and requiring
its remedy.
8.4 EFFECT OF TERMINATION. Except as provided in this Section 8.4 or in
Section 10.7 below, upon termination or expiration of this Agreement all
obligations of the parties shall cease. Termination or expiration of this
Agreement shall not affect any other rights or obligations of either party that
may have accrued up to the date of such termination or expiration, including
MSI's obligation to Teijin to make Repayments that have accrued through the date
of such termination or expiration.
9. WARRANTY; LIMITATIONS
9.1 MSI represents that it will use its best efforts to develop the New
Products in accordance with its development plans. MSI makes no representations
or warranties, express or implied, as to whether MSI will be successful in
completing development of the New Products according to its plans. In no event
shall MSI be liable for any special, incidental, or consequential damages,
including, but not limited to, lost profits, loss of goodwill, or business
disruption.
10. GENERAL TERMS
10.1 PROVISIONS INCORPORATED BY REFERENCE. MSI and Teijin hereby
incorporate by reference into this Agreement the provisions of Section 7.1
(Nondisclosure and Non-Use), 7.2 (Governing Law; Official Language) and 7.3
(Dispute Resolution) of the Corporate License Agreement dated February 14, 1992
between MSI and Teijin, with the intent that such provisions shall apply in and
to this Agreement (a) with the same effect that they apply in and to such
Corporate License Agreement, and (b) regardless of whether such Corporate
License Agreement terminates prior to this Agreement.
10.2 NOTICE. All notices concerning this Agreement shall be written in
the English language and shall be deemed to have been received (a) ten (10) days
after being properly airmailed, postage prepaid, (b) three (3) business days
after being properly sent by commercial
6
<PAGE> 7
overnight courier, or (c) two (2) business days after being transmitted by
confirmed telecopy, in each case addressed to the parties at the addresses set
forth below (or at such other address for a party as shall be specified by like
notice):
if to MSI, to: if to Teijin, to:
Molecular Simulations Incorporated Teijin Limited
16 New England Executive Park Information Systems Development
Burlington, MA 01803-5297 Department
U.S.A. Iino Building
Attention: Michael J. Savage 1-1, Uchisaiwai-cho, 2-chome
Chiyoda-ku, Tokyo 100
Japan
Attention: Takehisa Tokunaga
10.3 SEVERABILITY AND WAIVER. In the event any provision of this
Agreement is held to be invalid or unenforceable, the valid or enforceable
portion thereof and the remaining provisions of this Agreement will remain in
full force and effect. Any waiver (express or implied) by either party of any
default or breach of this Agreement shall not constitute a waiver of any other
or subsequent default or breach.
10.4 ENTIRE AGREEMENT. This Agreement, together with the Appendices
attached hereto and the provisions of the Corporate License Agreement
incorporated by reference herein, constitutes the entire, final, complete and
exclusive agreement between the parties hereto and supersedes all previous
agreements or representations, written or oral, with respect to the subject
matter of this Agreement. This Agreement may not be modified or amended except
in a writing signed by a duly authorized representative of each party hereto.
10.5 NONASSIGNABILITY AND BINDING EFFECT. Except (a) as expressly
permitted in this Agreement, and (b) in connection with the sale of all or
substantially all of MSI's assets, or its business (by merger or otherwise), or
any similar transfer by MSI, any attempted assignment of the rights or
delegation of the obligations of either party under this Agreement shall be void
without the prior written consent of the non-assigning or non-delegating party.
In the case of any permitted assignment or transfer of or under this Agreement,
this Agreement or the relevant provisions shall be binding upon, and inure to
the benefit of, the successors, executors, heirs, representatives,
administrators and assigns of each of the parties hereto.
10.6 FORCE MAJEURE. Neither party shall be liable to the other for its
failure to perform any of its obligations under this Agreement or any Appendix,
except for payment obligations, during any period in which such performance is
delayed because rendered impracticable or impossible due to circumstances beyond
its reasonable control, including but not limited to fire, flood, earthquake,
acts of God, labor or materials trouble or shortage, riots, war, acts or
requirements of the government in any state or applicable jurisdiction, provided
that the party experiencing the delay promptly notifies the other of the delay.
10.7 SURVIVAL. The provisions of Sections 5, 6.2 and 10.1 shall survive
the termination of this Agreement. In the event this Agreement is terminated by
Teijin because of MSI's material breach as provided in Section 8.3, Section 7.2
shall survive such termination.
7
<PAGE> 8
10.8 COUNTERPARTS. This Agreement may be executed in counterparts with
the same force and effect as if each of the signatories had executed the same
instrument.
10.9 AUTHORITY TO ENTER INTO AND EXECUTE AGREEMENT. Both parties
represent and warrant to each other that they have the right and lawful
authority to enter into this Agreement for the purposes herein; that they have
taken all corporate action necessary to authorize the execution, delivery and
performance of this Agreement; and that this Agreement does not conflict with
any agreement, instrument or other obligation by which they are bound.
8
<PAGE> 9
10.10 INDEPENDENT CONTRACTOR STATUS. For purposes of this Agreement,
MSI shall be deemed to be an independent contractor and not Teijin's agent or
employee. No employer-employee or agency relationship shall be created between
Teijin and any individual associated with MSI by reason of this Agreement.
Neither party shall have any authority to make any statements, representations
or commitments of any kind, or to take any action, that shall be binding on the
other party, except as otherwise mutually agreed in writing by authorized
representatives of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date and year first
set forth above.
TEIJIN LIMITED MOLECULAR SIMULATIONS INC.
By: /s/ [signature illegible] By: /s/ Michael J. Savage
---------------------------------- -------------------------------
Title: Managing Director Title: President and CEO
------------------------------- ----------------------------
9
<PAGE> 10
APPENDIX A
MOLECULAR SIMULATIONS R&D PLANS
<PAGE> 11
APPENDIX B
SOURCE CODE ESCROW AGREEMENT
This Source Code Escrow Agreement is effective this _____ day of __________
1993, by and among Data Securities International, Inc. ("DSII"), a Delaware
corporation, Molecular Simulations Incorporated ("MSI"), a Delaware corporation,
and Teijin Limited ("Teijin"), a corporation organized under the laws of Japan.
WHEREAS, MSI has deposited or will deposit with DSII certain proprietary data of
MSI for retention and controlled access under the conditions specified in this
Agreement;
WHEREAS, this Agreement is being entered into pursuant to a Software Development
Agreement dated September ___, 1993 between MSI and Teijin (the "Software
Development Agreement"), and MSI and Teijin desire this Agreement to be
supplementary to the licensed rights under Section 7.2 of the Software
Development Agreement pursuant to 11 United States Code Section 365(n);
NOW THEREFORE, in consideration of the foregoing, the parties agree as follows:
1. Deposit Account. Promptly after the execution and delivery of this Agreement
and the payment of the first year escrow fee to DSII by MSI, DSII shall open a
deposit account ("Deposit Account") for the benefit of MSI and Teijin, and MSI
shall make an initial deposit of Source Materials to DSII for retention and
administration in the Deposit Account. From time to time as development work
proceeds under the Software Development Agreement, MSI shall deposit additional
Source Materials with DSII. With each deposit of Source Materials, MSI will
submit a completed, signed document to DSII and Teijin describing the Source
Materials being deposited.
2. DSII Obligations of Confidentiality. DSII agrees to establish a locked
receptacle in which it shall place the Source Materials and shall put the
receptacle under the administration of one or more of its officers, selected by
DSII, whose identity shall be available to MSI at all times. DSII shall exercise
a professional level of care in carrying out the terms of this Agreement. DSII
acknowledges MSI's assertion that the Source Materials shall contain proprietary
data and that DSII has an obligation to preserve and protect the confidentiality
of the Source Materials. Except as provided for in the Agreement, DSII agrees
that DSII shall not divulge, disclose, make available to third parties, or make
any use whatsoever of the Source Materials.
3. Filing for Release of Source Materials by Teijin. Upon written notice to DSII
by Teijin of the occurrence of any Release Condition (as defined in Section 5)
and payment of the release request fee, DSII shall notify MSI by certified mail
or commercial express mail service with a copy of the notice from Teijin. If MSI
provides DSII with a Contrary Instruction (as defined below) within thirty (30)
days, DSII shall not deliver a copy of the Source Materials to Teijin.
"Contrary Instruction" is a notice to DSII stating that MSI disputes the
occurrence of a Release Condition. DSII shall send a copy of any Contrary
Instruction to Teijin by certified mail or commercial express mail service, and
DSII shall notify both MSI and Teijin that there is a
<PAGE> 12
dispute to be resolved. Any dispute between MSI and Teijin will be resolved as
provided in Section 7.3 (Dispute Resolution) of the Corporate License Agreement
dated February 14, 1992 between MSI and Teijin.
<PAGE> 13
4. Release of Deposit Copy Upon No Contrary Instruction. In the event DSII does
not receive a Contrary Instruction within the thirty (30) day period described
in Section 3 above, DSII shall deliver one copy of the Source Materials to
Teijin, provided that Teijin has submitted to DSII all of the following: (a)
written demand that one copy of the Source Materials be released and delivered
to Teijin; (b) written undertaking that the copy of the Source Materials being
released to Teijin will be used only as permitted under the Software Development
Agreement; and (c) specific delivery instructions along with payment for
required copying and delivery charges.
5. Release Conditions. The Release Conditions are (i) that Teijin has terminated
the Software Development Agreement because of MSI's material breach as provided
in Section 8.3 of the Software Development Agreement; or (ii) that MSI has
ceased operation of its business, as evidenced by one or more of the following:
(a) the filing by MSI of a petition under Chapter VII of the United States
Bankruptcy Code; (b) the filing of an involuntary petition under Chapter VII of
the United States Bankruptcy Code against MSI, which petition is not dismissed
within sixty (60) days after filing; (c) the making of an assignment for the
benefit of MSI's creditors; or (d) the liquidation or dissolution of MSI;
provided, however, that a merger or consolidation of MSI with or into another
entity, or the sale of all or any part of MSI's assets, shall not be deemed to
be a liquidation or dissolution of MSI if such other entity or the purchaser of
MSI's assets agrees to assume and fully perform all of MSI's obligations under
the Software Development Agreement and this Agreement. MSI agrees to provide
Teijin with prompt notice of any occurrence of the events described in this
Section 5(ii).
6. Source Materials. As used in this Agreement, "Source Materials" means all
human- readable source code and support documentation owned by MSI, including
programmer's notes, flow charts, diagrams, instructional manuals, program
listings and engineering data, which are necessary or useful for understanding,
operation and reproduction of the New Products (as defined in the Software
Development Agreement).
7. Title to Source Materials. All right, title and interest in and ownership of
the Source Materials shall remain with MSI.
8. Disposition of Source Materials after Termination of Agreement. Upon
termination of this Agreement, if MSI requests the return of the Source
Materials, DSII shall return the Source Materials to MSI after all outstanding
invoices and any applicable return fees are paid. If the fees are not received
by the expiration date of this Agreement, DSII may destroy the Source Materials.
9. Term of Agreement. Subject to DSII's termination rights under Section 13
below, this Agreement will remain in effect until MSI has made Repayments to
Teijin under Section 4 of the Software Development Agreement. This Agreement
will also automatically terminate upon a proper release of a copy of the Source
Materials pursuant to Section 4 above or upon termination of the Software
Development Agreement by MSI because of Teijin's material breach as provided in
Section 8.3 of the Software Development Agreement. This Agreement may also be
terminated by delivery to DSII of written notice of termination signed by MSI
and Teijin.
10. Notices of Deposits to Teijin. DSII shall notify Teijin in writing of DSII's
receipt of MSI's initial deposit of Source Materials and any subsequent deposit
of Source Materials.
<PAGE> 14
11. Account History. DSII agrees to keep records of the activities undertaken
pursuant to this Agreement. DSII shall issue an account history to MSI or Teijin
upon such party's written request, but not more than once per year.
12. Indemnification. MSI and Teijin agree to defend and indemnify DSII and hold
DSII harmless from and against any and all claims, actions and suits, whether in
contract or in tort, and from and against any and all liabilities, losses,
damages, costs, charges, penalties, reasonable attorneys' fees, and other
expenses of any nature (including, without limitation, settlement costs)
incurred by DSII as a result of performance of this Agreement, except in the
event of a judgment which specifies that DSII acted with gross negligence or
willful misconduct.
13. Fees. MSI shall pay all fees required by DSII pursuant to this Agreement as
set forth in the attached fee schedule. In the event such fees are not paid
within thirty (30) days after written notice from DSII to MSI that such payments
are due, DSII shall provide written notice of MSI's non-payment to Teijin, who
may pay such fees on MSI's behalf. If invoiced fees are not paid by MSI or
Teijin within sixty (60) days of the date of invoice, DSII may terminate this
Agreement.
14. Notices and Communications. Notices and invoices (if appropriate) shall be
sent to the parties at the address set forth below:
<TABLE>
<CAPTION>
if to MSI, to: if to Teijin, to: if to DSII, to:
<S> <C> <C>
Molecular Simulations Incorporated Teijin Limited Data Securities International, Inc.
16 New England Executive Park Information Systems 49 Stevenson Street, Suite 550
Burlington, MA 01803-5297 Development Department San Francisco, CA 94105
Attention: Michael J. Savage Iino Building Attention:__________________________
1-1, Uchisaiwai-cho, 2-chome
Chiyoda-ku, Tokyo 100
Japan
Attention: Takehisa Tokunaga
</TABLE>
15. Nonassignability and Binding Effect. Except in connection with the sale of
all or substantially all of MSI's assets, or its business (by merger or
otherwise), or any similar transfer by MSI, any attempted assignment of the
rights or delegation of the obligations of the parties under this Agreement
shall be void without the prior written consent of the non-assigning or
non-delegating parties. In the case of any permitted assignment or transfer of
or under this Agreement, this Agreement or the relevant provisions shall be
binding upon, and inure to the benefit of, the successors, executors, heirs,
representatives, administrators and assigns of each of the parties hereto.
16. General. DSII may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee giving any
written notice, request, advice or instruction in connection with or relating to
this Agreement has apparent authority and has been duly authorized to do so.
DSII is not responsible for failure to fulfill its obligations under this
Agreement due to causes beyond DSII's reasonable control. This Agreement is to
be governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts. This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes all previous
communications, representations, understandings, and
<PAGE> 15
agreements, either oral or written, between the parties. If any provision of
this Agreement is held by any court to be invalid or unenforceable, that
provision will be severed from this Agreement and any remaining provisions will
continue in full force.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date and year first set forth
above.
MOLECULAR SIMULATIONS INC. TEIJIN LIMITED
By:__________________________________ By:_________________________________
Name:________________________________ Name:_______________________________
Title:_______________________________ Title:______________________________
DATA SECURITIES INTERNATIONAL, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
<PAGE> 1
EXHIBIT 10.25
AGREEMENT AND PLAN OF MERGER
BETWEEN CORNING INCORPORATED,
BIOSYM TECHNOLOGIES, INC.,
MOLECULAR SIMULATIONS INC.
AND
MSI ACQUISITION INC.
August 15, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I.
THE PLAN OF MERGER
1.1 Adoption of Plan of Merger
1.2 Terms of Merger; Conversion of Securities
1.3 Certificates Representing MSI Common Stock
and MSI Convertible Stock
1.4 Fractional Shares
ARTICLE II.
CLOSING
ARTICLE III.
CORNING AND BIOSYM'S REPRESENTATIONS AND WARRANTIES
3.1 Organization and Existence; Capitalization
3.2 Subsidiaries' Organization and Existence;
Capitalization
3.3 Authority to Execute and Perform Agreement
3.4 Financial Statements
3.5 Absence of Certain Changes or Events
(a) Employee Relations
(b) Stock Options, Dividends, etc.
(c) Sale or Pledge of Assets; Incurring
of Indebtedness
(d) Employee Benefit Plans and Certain
Salaried Employees
(e) Change in Accounting Practice or Inventory
(f) Adverse Determinations
(g) Product Changes
(h) Agreements Concerning (a)-(g)
3.6 Tax Matters
(a) Filing of Returns
(b) Adjustments to Reported Tax
(c) Withholding
(d) No DISC, FSC or Possessions Corporation
(e) Tax Payments and Returns
(f) Tax Sharing Agreements
(g) Tax-Exempt Property
(h) Non-Deductible Compensation
(i) Liens
</TABLE>
<PAGE> 3
- 2 -
<TABLE>
<S> <C>
(j) Accounting Adjustments
(k) U.S. Real Property Holding Company
(l) Foreign Person
(m) Foreign Subsidiaries
(n) Tax Elections
3.7 Buildings and Equipment
3.8 Products
3.9 Contracts and Commitments
3.10 Employees; Employee Benefits
3.11 Permits, Licenses and Compliance with Laws
3.12 Government Investigations and Claims
3.13 Litigation and Claims
3.14 Environmental and Other Matters
3.15 Corporate Documents and Minute Books;
Officers and Directors
3.16 Bank Accounts, Loans
3.17 Brokers
3.18 Adverse Change
3.19 Disclosure
3.20 Proprietary Rights
3.21 Non-Assignable Rights
3.22 Notes and Accounts Receivable
3.23 Investment Purposes
ARTICLE IV.
MSI'S REPRESENTATIONS AND WARRANTIES
4.1 Organization and Existence; Capitalization
4.2 Subsidiaries' Organization and Existence;
Capitalization
4.3 Authority to Execute and Perform Agreement
4.4 Financial Statements
4.5 Absence of Certain Changes or Events
(a) Employee Relations
(b) Stock Options, Dividends, etc.
(c) Sale or Pledge of Assets; Incurring
of Indebtedness
(d) Employee Benefit Plans and Certain
Salaried Employees
(e) Change in Accounting Practice or
Inventory
(f) Adverse Determinations
(g) Product Changes
(h) Agreements Concerning (a)-(g)
4.6 Tax Matters
</TABLE>
<PAGE> 4
- 3 -
<TABLE>
<S> <C>
(a) Filing of Returns
(b) Adjustments to Reported Tax
(c) Withholding
(d) No DISC, FSC or Possession Corporation
(e) Tax Payments and Returns
(f) Tax Sharing Agreements
(g) Tax-Exempt Property
(h) Non-Deductible Compensation
(i) Liens
(j) Accounting Adjustments
(k) U.S. Real Property Holding Company
(l) Foreign Person
(m) Foreign Subsidiaries
(n) Tax Elections
4.7 Equipment
4.8 Products
4.9 Contracts and Commitments
4.10 Employees; Employee Benefits
4.11 Permits, Licenses and Compliance with Laws
4.12 Government Investigations and Claims
4.13 Litigation and Claims
4.14 Environmental and Other Matters
4.15 Corporate Documents and Minute Books;
Officers and Directors
4.16 Bank Accounts, Loans
4.17 Brokers
4.18 Adverse Change
4.19 Disclosure
4.20 Proprietary Rights
4.21 Non-Assignable Rights
4.22 Notes and Accounts Receivable
4.23 Continuity of Business
4.24 Investment Purposes
ARTICLE V.
CERTAIN AGREEMENTS
5.1 Investigations and Operations of
Business of Biosym and Subsidiaries
(a) Access to Financial Records
(b) Preservation of Business
(c) Operations in the Ordinary Course
5.2 Notifications of Breach
5.3 Third Party Consents
5.4 Maintenance of Assets
</TABLE>
<PAGE> 5
- 4 -
<TABLE>
<S> <C>
5.5 Payment of Certain Expenses
5.6 Cooperation; Satisfaction of Conditions
5.7 Certain Federal Income Tax Reporting
5.8 Contribution to Biosym Capital
5.9 Adjustment for Net Working Capital
5.10 Tax Indemnity
5.11 ERISA Indemnity
5.12 Post Closing Audit
5.13 Further Assurances
ARTICLE VI.
CONDITIONS OF MERGER
6.1 Conditions of Obligations of MSI
(a) Representations and Warranties of
Corning and Biosym to be True;
Performance by Corning and Biosym
(b) No Legal Proceedings
(c) Statutory Requirements and Biosym
Shareholder Approval
(d) Third Party Consents
(e) Opinion of Counsel for Biosym
(f) Resignations of Biosym Directors
(g) Share Certificates
(h) Shareholders Agreement
(i) Credit Facility
(j) Contribution of Debt
(k) Tax Opinion
(l) Certified Resolutions
6.2 Conditions of Obligations of Biosym
(a) Representations and Warranties of
MSI and MSI Acquisition to be True;
Performance by MSI and MSI Acquisition
(b) No Legal Proceedings
(c) Statutory Requirements and MSI
Shareholder Approval
(d) Third Party Consents
(e) Opinion of Counsel for MSI
(f) Tax Opinion
(g) Shareholders Agreement
(h) Share Certificates
(i) Certified Resolutions
(j) Restated Certificate of Incorporation
</TABLE>
<PAGE> 6
- 5 -
<TABLE>
<S> <C>
ARTICLE VII.
TERMINATION OF OBLIGATIONS AND WAIVERS
OF CONDITIONS; PAYMENT OF EXPENSES
7.1 Termination of Agreement and Abandonment
of Merger
(a) Mutual Consent
(b) Expiration Date
(c) Unilateral
7.2 Effect of Termination
7.3 Payment of Expenses
ARTICLE VIII.
MISCELLANEOUS
8.1 Amendments
8.2 Further Instruments and Actions
8.3 Survival and Limitation of Representations
and Warranties
8.4 Arbitration
8.5 Publicity
8.6 Governing Law
8.7 Notices
8.8 No Assignment
8.9 Headings
8.10 Counterparts
8.11 Waiver
8.12 Severability
8.13 Entire Agreement, Modification
and Interpretation
</TABLE>
SCHEDULE III
BIOSYM DISCLOSURE SCHEDULE
SCHEDULE IV
MSI DISCLOSURE SCHEDULE
EXHIBIT A
CERTIFICATE OF MERGER
EXHIBIT B
RESTATED CERTIFICATE OF INCORPORATION OF MSI AND BYLAWS
<PAGE> 7
- 6 -
EXHIBIT C
MSI COMMON STOCK
[Intentionally Omitted]
EXHIBIT D
NET WORKING CAPITAL
EXHIBIT E
LETTER AGREEMENT
EXHIBIT F
BIOSYM OPINION OF COUNSEL
EXHIBIT G
SHAREHOLDERS AGREEMENT
EXHIBIT H
REVOLVING LINE OF CREDIT
EXHIBIT I
OPINION OF MSI COUNSEL
<PAGE> 8
AGREEMENT AND PLAN OF MERGER
THIS IS AN AGREEMENT AND PLAN OF MERGER ("Agreement") made as of this
15th day of August, 1995, by and between Corning Incorporated, a New York
corporation ("Corning"), its wholly owned subsidiary, Biosym Technologies,
Inc., a California corporation ("Biosym"), Molecular Simulations Inc., a
Delaware corporation ("MSI") and its wholly-owned subsidiary, MSI Acquisition
Inc. ("MSI Acquisition").
RECITALS:
WHEREAS, MSI desires to acquire all of the outstanding shares of
capital stock of Biosym, in exchange for shares of common stock of MSI, par
value $.001 per share and shares of non-voting convertible common stock of MSI
more fully described below, pursuant to a plan of merger carried out in
accordance with Section 368 of the Internal Revenue Code of 1986 upon the terms
and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual and independent promises, and subject to the various terms and
conditions hereinafter set forth, Corning, Biosym, MSI and MSI Acquisition
agree as follows:
ARTICLE I. The Plan of Merger
1.1 Adoption of Plan of Merger. MSI has taken all requisite
corporate action to organize MSI Acquisition as a wholly-owned subsidiary prior
to the Closing for the purpose of merging with Biosym. MSI shall take all
requisite corporate action, including obtaining all required shareholder
consents, if any, to cause MSI Acquisition to adopt and approve this Agreement
as the Plan of Merger between MSI Acquisition and Biosym pursuant to the
General Corporation Law of the State of Delaware ("Delaware Law"). Biosym
shall take all requisite corporate action prior to the Closing Date as may be
necessary to adopt and approve this Agreement as its Plan of Merger in
accordance with the General Corporation Law of the State of California
("California Law"). On the Closing Date and subject to the satisfaction or
waiver of the conditions of this Agreement, MSI Acquisition and Biosym shall
cause a Certificate of Merger in the form set forth in Exhibit A ("Certificate
of Merger") hereto pursuant to this Agreement and Delaware Law to be filed with
the Secretary of the State of Delaware and an executed counterpart of such
Certificate of Merger in the form set forth in Exhibit A hereto pursuant to
this Agreement and California Law to be filed with the Secretary of the State
of California. In accordance with California Law and Delaware Law, the Merger
shall become effective upon the date and time stamped by the Secretary of State
of the State of Delaware upon the Certificate of Merger.
<PAGE> 9
- 2 -
1.2 Terms of Merger; Conversion of Securities.
(a) Pursuant to the merger (the "Merger") to be consummated as
provided in this Agreement and the Certificate of Merger, Biosym shall be
merged with and into MSI Acquisition at and as of the filing (as required by
law) of the Certificate of Merger on the Closing Date (as defined below) and
Biosym's separate existence shall thereupon cease and MSI Acquisition shall be
the surviving corporation. At the Closing (as defined below), the effect of
the Merger shall be as provided in the applicable provisions of California and
Delaware Law and without limiting the generality of the foregoing and subject
thereto, at the Closing, MSI Acquisition, as the surviving corporation in the
Merger shall, as a consequence of the Merger, succeed to all of the property,
rights, privileges, powers and franchised assets of Biosym and all debts,
liabilities, obligations, restrictions, disabilities and duties of Biosym shall
become the debts, liabilities, obligations, restrictions and disabilities and
duties of MSI Acquisition, except as otherwise may be expressly provided in
this Agreement.
(b) As of the Closing, the Certificate of Incorporation and Bylaws
of MSI shall be amended and restated as set forth in Exhibit B hereto.
(c) Upon consummation of the Merger, all of the outstanding shares
of Biosym common stock (1,000 shares) shall be canceled and converted into the
right to receive 5,776,558 shares of common stock of MSI ("MSI Common Stock")
together with 1,467,825 shares of non-voting convertible common stock, Class B,
of MSI on which no cash dividend is payable ("MSI Convertible Stock") more
fully described in the Certificate of Incorporation set forth in Exhibit B.
(d) The Merger is intended to be a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and to be accounted for as a purchase, not a pooling of interests.
1.3 Certificates Representing MSI Common Stock and MSI Convertible
Stock.
(a) MSI shall deliver at the Closing (as defined herein)
certificates representing the shares of MSI Common Stock and MSI Convertible
Stock for which all of the outstanding shares of Biosym Common Stock are to be
exchanged pursuant to this Agreement.
<PAGE> 10
- 3 -
(b) The MSI Common Stock and MSI Convertible Stock delivered to
Biosym's sole shareholder, Corning, at the Closing will be issued as a private
placement pursuant to Section 4.2 of the Securities Act of 1933, as amended
(the "1933 Act"), and are therefore exempt from registration under the 1933 Act
and the certificates representing such shares of stock delivered at the Closing
will bear legends set forth below, reflecting that such shares are not issued
in a transaction registered under the 1933 Act, and cannot be resold in the
absence of registration under said Act or pursuant to an exemption thereto and
such other legends as may be required pursuant to that certain Shareholders
Agreement described in Section 6.1(h) below.
The securities represented by this certificate have not been
registered under the 1993 Act, as amended and may not be sold or transferred in
the absence of registration or an exemption therefrom under said Act.
1.4 Fractional Shares. No certificates representing fractional
shares will be issued by MSI on account of the Merger.
ARTICLE II. Closing
Subject to the terms and conditions of this Agreement and in
particular of Article VI hereof, the closing of the transactions provided for
in Article I hereof (the "Closing") shall take place at the offices of Testa,
Hurwitz & Thibeault, Exchange Place, 53 State Street, Boston, Massachusetts
02109-2809 on August 15, 1995, or on such other date and at such other time and
at such other place as shall be mutually agreed upon by Biosym and MSI (the
time and date of the Closing are referred to herein as the "Closing Date").
ARTICLE III. Corning and Biosym's Representations and Warranties
Except as disclosed in a document referring specifically to the
representations and warranties in this Agreement which is delivered by Biosym
to MSI prior to the execution of this Agreement (the "Biosym Disclosure
Schedule") Corning and Biosym each severally hereby represents and warrants to
MSI as follows:
3.1 Organization and Existence; Capitalization.
(a) Biosym is a corporation duly organized and validly existing
under the laws of the State of California and has the full corporate power to
carry on its business as it is now being conducted. Copies of the Restated
Articles of Incorporation and the Amended and Restated Bylaws of Biosym have
been delivered to MSI and as delivered are complete and correct as of the date
hereof. Biosym is qualified to do business in each jurisdiction where the
nature of such business or its assets or properties requires it to do so except
where the failure to so qualify would not have a material adverse effect on its
business, assets or properties taken as a whole.
(b) The authorized capital stock and the number of shares issued
and outstanding of all capital stock of Biosym as of the date hereof, is set
forth on the Biosym Disclosure Schedule hereto and is held of record and
beneficially by Corning free and clear of all liens, charges,
<PAGE> 11
- 4 -
restrictions, claims and encumbrances. All of the outstanding shares of
capital stock of Biosym are validly issued, fully paid and non-assessable.
There are no outstanding options, warrants, agreements, contracts, calls,
commitments or demands of any character to which Biosym is a party relating to
the capital stock of Biosym.
3.2 Subsidiaries' Organization and Existence; Capitalization. A
"Subsidiary" shall mean any corporation, partnership or other entity (expressly
excluding however any consortia organized by Biosym in the ordinary course of
its business), wherever and however organized, in which Biosym owns directly or
indirectly more than fifty percent (50%) of any of the voting stock, equity or
beneficial interest, is a partner of, or otherwise controls the management of,
by having the right or ability to designate a majority of the directors or
members of the governing body thereof, whether by agreement or otherwise.
(a) All Subsidiaries of Biosym are identified on the Biosym
Disclosure Schedule and each is a corporation duly organized and validly
existing under the laws of the country or state of its organization and has the
full power to carry on its business as it is now being conducted. Copies of
the Certificate or Articles of Incorporation and the Bylaws of each such
Subsidiary, have been delivered to MSI and as delivered are complete and
correct as of the date hereof. Each Subsidiary is qualified to do business in
each jurisdiction where the nature of such business or its assets or properties
requires it to do so, except where the failure to so qualify would not have a
material adverse effect on Biosym's business, assets or properties taken as a
whole.
(b) All of the outstanding shares of capital stock of each
Subsidiary are validly issued, fully paid and non-assessable and there are no
outstanding options, agreements, warrants, contracts, calls, commitments or
demands of any character relating to the capital stock of such Subsidiary.
(c) Except in connection with the Subsidiaries identified on the
Biosym Disclosure Schedule, neither Biosym nor its Subsidiaries own directly or
indirectly any voting stock, equity or beneficial interest in any third party
and do not have the right or ability to designate directors or members of the
governing body of any third party.
3.3 Authority to Execute and Perform Agreement. Biosym and Corning
each have the full legal right, power and authority to enter into, execute and
deliver this Agreement and in the case of Corning the Shareholders Agreement
described in Section 6.1(h) hereof and to perform fully their respective
obligations hereunder and thereunder. This Agreement has been duly executed
and delivered by Corning and Biosym and is the valid and binding obligation of
each of them enforceable against Corning and Biosym in accordance with its
terms assuming that this Agreement constitutes a valid and binding agreement of
MSI, except as enforcement may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies is subject to the discretion
of the court before which any proceeding therefor may be brought. The Board of
Directors of Corning and Biosym have approved this Agreement and the
consummation of the transactions contemplated hereby and no other corporate
proceedings are necessary to authorize this Agreement and the Shareholders
Agreement or the transactions contemplated hereby. The
<PAGE> 12
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execution and delivery of this Agreement and the consummation by Corning and
Biosym of the transactions contemplated hereby at the Closing will not:
(a) conflict with or result in a breach or default of or
constitute or result in a default under any of the terms, conditions or
provisions of the Restated Articles of Incorporation, Amended and Restated
Bylaws or any governing instruments of Corning or Biosym or of any Subsidiary;
(b) require the further approval or consent of any federal, state,
county, local court or other governmental or regulatory body or the approval or
consent of any other person, and such other approvals or consents of any
federal, state, county, local court or other governmental or regulatory body,
the failure of which to make or obtain would materially adversely affect the
ability of Corning or Biosym to consummate the Merger; or
(c) conflict with or result in any breach or violation of any of
the terms and conditions of, or constitute a default (or an event which with
notice or lapse of time or both constitute a default) under or a violation of,
any statute, regulation, order, judgment or decree applicable to Corning,
Biosym or any Subsidiary, or any material instrument, material contract or
other material agreement to which Corning, Biosym or any Subsidiary is a party
or to which Corning, Biosym or any Subsidiary is bound or subject.
3.4 Financial Statements.
(a) Biosym has delivered to MSI copies of the unaudited
consolidated financial statements of Biosym and its Subsidiaries for the fiscal
years ending December 31, 1993 and December 31, 1994, and for the period from
January 1, 1995 to June 30, 1995, which statements include balance sheets and
statements of income and cash flows (collectively the "Biosym Financial
Statements"). The Biosym Financial Statements fairly present the financial
position of Biosym and its Subsidiaries, the results of their operations and
cash flows, in all material respects, all in conformity with U.S. generally
accepted accounting principles ("GAAP"), consistently applied for the periods
indicated thereon (except as may be indicated in the notes thereto) except that
the balance sheet and statements of income and cash flow dated June 30, 1995 do
not contain notes or year-end adjustments required by GAAP.
(b) Biosym and its Subsidiaries had as of the date of the Biosym
Financial Statements, no liabilities or obligations, secured or unsecured,
including tax liabilities due or to become due, not disclosed in the Biosym
Financial Statements or in the Biosym Disclosure Schedule attached hereto that
would in accordance with GAAP be required to be disclosed in such Biosym
Financial Statements.
(c) As of the date of this Agreement, Biosym and its Subsidiaries
have no actual or contingent liabilities or obligations secured or unsecured,
including tax liabilities, and not disclosed to MSI in the Biosym Financial
Statements, or in the Biosym Disclosure Schedule, except those liabilities
incurred in the ordinary course of business consistent with past practices
since June 30, 1995 or those which do not exceed $100,000 in the aggregate.
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3.5 Absence of Certain Changes or Events. Except as set forth on
the Biosym Disclosure Schedule, since December 31, 1994, Biosym and its
Subsidiaries have in all material respects conducted its business only in the
ordinary course consistent with past business practices and there have not been
any:
(a) Employee Relations. Employee relations disputes, including
without limitation threatened or actual employee claims;
(b) Stock Options, Dividends, etc. (i) Changes in the authorized
or issued capital stock of Biosym or any of its Subsidiaries, (ii) grant of any
stock option or right to purchase shares of the authorized or issued capital
stock of Biosym or any of its Subsidiaries, (iii) issuance of any security
convertible into the capital stock of Biosym or any of its Subsidiaries, (iv)
agreement by Biosym or any of its Subsidiaries to do any of the foregoing, or
(v) declaration or payment or promise to make payment of any dividend or other
distribution with respect to the capital stock of Biosym or any of its
Subsidiaries;
(c) Sale or Pledge of Assets; Incurring of Indebtedness. (i)
Sale, lease or transfer to third parties of any material assets reflected in
the Biosym Financial Statements (other than the customer software licenses or
sales of computer equipment to customers) having an original cost in excess of
$10,000 for any single item and $50,000 in the aggregate, (ii) mortgage or
pledge of any material properties or assets of Biosym or any of its
Subsidiaries, (iii) indebtedness incurred, assumed or guaranteed by Biosym or
any of its Subsidiaries that matures more than one year from the date such
indebtedness was incurred or which obligates Biosym to more than $50,000 in the
aggregate, (iv) notice of termination or termination by a third party or notice
of termination or termination by Biosym or any of its Subsidiaries of any lease
or contract, involving the payment or receipt by Biosym or any of its
Subsidiaries of an amount in excess of $25,000 in any one instance or $50,000
in the aggregate, except notice of termination or termination of customer
software licenses and software maintenance agreements in the ordinary course of
business, or (v) entering into by Biosym or any of its Subsidiaries of a lease
or other contract, other than customer agreements entered into in the ordinary
course of business, which cannot be terminated unilaterally by Biosym without
cost to Biosym or any of its Subsidiaries in excess of $25,000 in any one
instance or $50,000 in the aggregate;
(d) Employee Benefit Plans and Certain Salaried Employees. A
material change in any employment contract, bonus, stock option,
profit-sharing, pension, retirement, incentive or other similar arrangement of
Biosym or any of its Subsidiaries as in effect on June 30, 1995 or any increase
outside the ordinary course of business in the compensation payable or to
become payable by Biosym or any of its Subsidiaries to any of its officers,
employees or agents;
(e) Change in Accounting Practice or Inventory. Material change
in any accounting practice, capitalization of software development expenses or
writedown or revaluation of any asset including computer software;
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(f) Adverse Determinations. Materially adverse determination in
any litigation, action or proceeding before any court or governmental body
(domestic or foreign) relating to Biosym or its Subsidiaries and their
respective businesses, assets or properties;
(g) Product Changes. Material changes in the type, nature,
composition or quality of its products except in the ordinary course of
business and consistent with prior practice or customary business practices
prevailing in the industry generally; acceptance of orders in material amounts
from any customer under conditions relating to price, terms of payment, time of
delivery or like matters differing from the conditions regularly and usually
specified in the ordinary course of business; or change in its selling,
pricing, advertising or personnel practices, except in the ordinary course of
business, consistent with prior practice or customary business practices
prevailing in the industry generally;
(h) Agreements Concerning (a)-(g). Any binding or enforceable
agreement or obligation of Biosym or its Subsidiaries to make any of the
changes or cause any events described in paragraphs (a) through (g) above.
3.6 Tax Matters.
(a) Filing of Returns. (i) All federal, state, local and foreign
tax returns and tax reports required to be filed for Biosym and its
Subsidiaries have been filed with the appropriate taxing authorities on a
timely basis, subject to any extension of such due date, and all such returns
and reports are true, correct and complete in all material respects relating to
Biosym or its Subsidiaries, (ii) all federal, state, local and foreign taxes
(including interest and penalties) that are currently due from or relating to
Biosym, and any rebate due to Biosym or its Subsidiaries (including deferred
taxes) in respect of all periods ending on or before the date hereof have been
fully paid or are adequately provided for on the books and Biosym Financial
Statements or are being contested in good faith by Biosym, (iii) Biosym and its
Subsidiaries have not received any notice of any audit by the Internal Revenue
Service or other taxing authority or notice that any issues have been raised by
or are currently pending before the Internal Revenue Service or any other
taxing authority whether or not in connection with any of the returns and
reports referred to in clause (i) above, and (iv) Biosym and its Subsidiaries
have not given nor been requested to give waivers or extensions of any statute
of limitations relating to the payment of any taxes referred to in this
paragraph;
(b) Adjustments to Reported Tax. There are no material
adjustments to the federal, state and local and foreign tax returns and tax
reports applicable to Biosym or its Subsidiaries or any resulting deficiencies
or penalties proposed with respect thereto by the Internal Revenue Service or
any other taxing authority, and all deficiencies or penalties proposed by such
taxing authorities applicable to Biosym and its Subsidiaries have been paid,
reserved against as shown on the Biosym Financial Statements, or settled;
(c) Withholding. All federal, state, local or foreign taxes and
other charges, that Biosym or its Subsidiaries are or were required by law to
withhold or to collect, have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority;
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(d) No DISC, FSC or Possessions Corporation. Biosym has no
domestic international sales corporation within the meaning of Section 992 of
the Internal Revenue Code of 1986 as amended (the "IRC") nor any Foreign Sales
Corporation within the meaning of Section 922 of the IRC and is not an electing
corporation within the meaning of Section 936 of the IRC (relating to the
possessions tax credit);
(e) Tax Payments and Returns. Biosym made available to MSI or its
accountants, for years subsequent to December 31, 1992, true and complete
copies of all Biosym's pro forma federal income and state and local (including
the State of California) income tax work papers used to prepare Corning's
consolidated tax returns, and all foreign, federal and state and local income
tax returns filed separately by any Subsidiary;
(f) Tax Sharing Agreements. There are no tax sharing agreements
with respect to Biosym or its Subsidiaries concerning the payment of taxes;
(g) Tax-Exempt Property. Neither Biosym nor its Subsidiaries has
made an election for federal income tax purposes to treat any of their
respective assets as tax-exempt bond financed property or tax-exempt use
property within the meaning of the IRC or is contractually obligated to a third
party to so treat the assets owned by that third party;
(h) Non-Deductible Compensation. There is no contract, plan or
agreement covering any employee or former employee of Biosym or its
Subsidiaries that individually or in the aggregate would require Biosym or its
Subsidiaries to make any payment that would not be deductible pursuant to the
terms of Section 280G of the IRC;
(i) Liens. There are no liens for taxes (other than for taxes not
yet due and payable) upon the assets of Biosym or any of its Subsidiaries;
(j) Accounting Adjustments. Neither Biosym nor any of its
Subsidiaries has agreed to make, nor are they required to make, any adjustments
to their accounting methods that would have a tax impact on Biosym or any of
its Subsidiaries under Section 481 of the IRC or any similar state, local or
foreign tax provisions.
(k) U.S. Real Property Holding Company. Biosym is not, and has
not been, a "United States real property holding company" within the meaning of
Section 897 of the IRC;
(l) Foreign Person. Corning is not a "foreign person" as defined
in Section 1445(f)(3) of the IRC;
(m) Foreign Subsidiaries. None of Biosym's foreign Subsidiaries:
(i) is engaged in a United States trade or business for federal income tax
purposes; (ii) is a passive foreign investment company within the meaning of
the IRC; or (iii) has made an election, or is required, to treat any asset as
owned by another person for tax purposes. None of the Biosym foreign
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Subsidiaries has an investment in United States property within the meaning of
Section 956 of the IRC;
(n) Tax Elections. Neither Biosym nor any of its Subsidiaries has
filed a consent under Section 341(f) of the IRC (or any corresponding provision
of state, local or foreign tax law) or agreed to have Section 341(f)(2) of the
IRC (or any corresponding provision of state, local or foreign tax law) apply
to it. Neither Corning, Biosym nor any of its Subsidiaries has made and will
not make a deemed dividend election under Treasury Regulations Section
1.1502-32 or a consent dividend under Section 565 of the IRC. Corning has not
made, and will not make, the election provided in Treasury Regulations Section
1.1502-20(g) with respect to Biosym.
Notwithstanding any of the foregoing, no representation or warranty is
made by Biosym or Corning with respect to the tax consequences that may result
from the transactions contemplated by this Agreement.
3.7 Buildings and Equipment. All of the material computer and
other equipment owned or used by Biosym and its Subsidiaries are in usable
operating condition, are, in view of their age and excluding normal wear and
tear, not in need of maintenance other than normal scheduled maintenance, and
are free from any known defects except such defects as do not substantially
interfere with the continued use thereof in the conduct of Biosym's normal
business operations. Neither Biosym nor any Subsidiary owns or has ever owned
any buildings or other real property. All of the material leases for office
space of Biosym or any Subsidiary are valid and in full force and effect.
3.8 Products. The Biosym Disclosure Schedule sets forth a
description of all computer software programs owned or licensed by Biosym or
its Subsidiaries and licensed or intended to be licensed or sold to their
customers.
3.9 Contracts and Commitments. Set forth on the Biosym Disclosure
Schedule hereto are complete and accurate lists as of the date hereof of the
following:
(a) Distribution, dealer or sales representation agreements;
(b) Supplier agreements or requirement contracts of Biosym or any
Subsidiary not terminable without penalty on 30 days' notice which individually
are in excess of $50,000;
(c) Written consortia proposals (exclusive of consortia programs
existing as of the date of this agreement and identified in the Biosym
Disclosure Schedule) of Biosym or any Subsidiary which individually are in
excess of $150,000 and any grant request or proposal for a research and
development contract (including without limitation contracts for customized
software development or research services) in excess of $100,000 each;
(d) Purchase orders and purchase commitments of Biosym or any
Subsidiary which individually are either (i) in excess of $50,000 or (ii) for
which the total obligation is in excess of
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$20,000 and which cannot be terminated without penalty by Biosym or its
Subsidiaries on 90 days' notice;
(e) Personal property leases and other rental, use or service
arrangements of Biosym and its Subsidiaries which either (i) cannot be
terminated without penalty by Biosym or its Subsidiaries on 30 days' notice, or
(ii) individually requires payment by Biosym or its Subsidiaries over its
remaining life of more than $50,000 in the aggregate;
(f) Real property leases and similar contracts and arrangements
pursuant to which Biosym or any Subsidiary leases or rents any land, building,
facility, service center or other interest in realty which either (i) cannot be
terminated without penalty by Biosym or such Subsidiary on 30 days' notice or
(ii) individually requires payment by Biosym or its Subsidiaries over its
remaining life of more than $50,000 in the aggregate;
(g) All indemnity or guaranty arrangements, business acquisition
agreements entered into after January 1, 1994, licensing agreements except as
described in subsections (j) or (m) below, non-compete agreements (other than
with existing or former employees), joint venture agreements, commission
agreements, closing or other agreements with tax authorities or rulings
obtained from tax authorities to which Biosym or any of its Subsidiaries are a
party;
(h) All agreements between Biosym or any Subsidiary or any officer
or director of Biosym or its Subsidiaries on the one hand and Corning, its
Subsidiaries, or any entity controlled by, controlling or under common control
with Corning on the other, and all material transactions or obligations not
otherwise described in this Agreement between Biosym or any Subsidiary on the
one hand and Corning or any Corning Subsidiary on the other since December 31,
1994, including without limitation transfers of assets or rights, provision of
services, assignment of personnel and sharing of facilities;
(i) All other contracts, agreements, understandings, commitments,
leases, mortgages, notes, bonds, loan or credit agreements, deeds of trust,
indentures, security agreements or other instruments, whether written or oral
(other than those specifically included by subsection (a) through (g) above and
(j) through (n) below) and all amendments, consents, waivers, side letters and
commitments related thereto, to which Biosym or any of its Subsidiaries is a
party and which (i) if the total obligation is in excess of $20,000 cannot be
terminated without penalty by Biosym or its Subsidiaries on 30 days' notice or
(ii) individually requires payment by Biosym or such Subsidiary over its
remaining life of more than $50,000;
(j) All material agreements concerning any right of first refusal,
any invention assignment from non- employees or the disposition and/or use of
any trade secrets, copyrights or other intellectual property;
(k) All contracts, agreements or grants with any foreign, federal
or state government or any agency or instrumentality thereof which individually
require payment by or to Biosym or its Subsidiaries in excess of $50,000 or
require the rendering of substantial and material services by Biosym or its
Subsidiaries;
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(l) Any material agreement pursuant to which Biosym or its
Subsidiaries agreed not to engage in any business or compete in any line of
business in any geographic area or with any person;
(m) Any material technology or software development agreement,
arrangement or obligation, or any material technology or software cooperation
or exchange agreement, arrangement or obligation including without limitation
outstanding consortia agreements;
(n) Any effective agreement (except this Agreement and those
described herein) requiring the future disposition of any material portion of
the business or assets of Biosym or its Subsidiaries or concerning the future
acquisition of assets or shares of capital stock by Biosym or its Subsidiaries
of any other person.
Biosym has furnished to MSI samples of all of its material software
development agreements, consortia agreements, computer software licenses, and
software maintenance agreements. Items set forth pursuant to (a) through (n)
above being hereinafter collectively referred to as the "Contracts". Except
as otherwise set forth on the Biosym Disclosure Schedule, neither Biosym nor
its Subsidiaries is aware of any condition or event which, after notice or
lapse of time or both, would constitute a default by Biosym, its Subsidiaries
or a third party, except as to matters which are immaterial to the performance
of any such Contract.
3.10 Employees; Employee Benefits. Set forth on the Biosym
Disclosure Schedule hereto is a description of each material employee benefit
or compensation plan, policy or arrangement, including without limitation,
pension, retirement, deferred compensation, profit sharing, bonus or incentive,
medical, dental, health insurance and life insurance, other insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, stock options,
stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits or other employee benefit
plans of Biosym and each Subsidiary, under which employees of Biosym or any
Subsidiary are eligible to participate or derive a benefit (collectively
"Employee Plans" and individually "Employee Plan"), copies of all of which have
previously been made available or furnished to MSI. Except as set forth in the
Biosym Disclosure Schedule or as required by foreign law, neither Biosym nor
any Subsidiary is a party to, bound by, nor does it maintain or make any
contribution to any employment agreement, pension, retirement, deferred
compensation, profit sharing, bonus or incentive plan, policy or arrangement,
or any plan policy or arrangement providing for medical, dental or other health
insurance, life insurance, other insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, stock options, stock appreciation
rights or other forms of incentive compensation or post-retirement insurance,
compensation or benefits or other employee benefit plan or program (whether or
not legally binding), including, without limitation, any "employee benefit
plan" (as defined under Section 3(3) of the federal Employee Retirement Income
Security Act of 1974 ("ERISA"). Each Employee Plan complies in all material
respects with applicable laws, including, without limitation, ERISA and the IRC
where applicable. Each Employee Plan has been maintained materially in
compliance
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with its terms, and all applicable ERISA and other material requirements as to
the filing of reports, documents and notices with governmental agencies and the
furnishing of documents to participants or beneficiaries have been satisfied.
With respect to each applicable Employee Plan affecting U.S. employees, Biosym
has furnished to MSI copies of the most recently filed Form 5500, a summary
plan description, and the most recent Internal Revenue Service determination
letters, if any, with respect to each such Employee Plan. As to each Employee
Plan intended to qualify under IRC Section 401(a) or 403(a), (i) such Employee
Plan is designed to qualify and the corresponding trust for each such Employee
Plan is designed to qualify as a tax exempt trust under IRC Section 501(a), and
(ii) all contributions necessary to meet minimum funding requirements of IRC
Section 412 have been made or accrued. Neither Biosym nor any Subsidiary
maintains or has ever maintained or contributed to any Employee Plan subject to
Title IV of ERISA (relating to defined benefit pension plans). No "reportable
event" as defined in ERISA Section 4043(b) has occurred or is continuing with
respect to any Employee Plan which is subject to ERISA Section 4043(b) if any,
and to the best of Corning's and Biosym's knowledge, no "prohibited
transaction" as defined in IRC Section 4975 and ERISA Section 406 has occurred
with respect to any Employee Plan. Neither Biosym nor any Subsidiary has ever
contributed to any "multiemployer plan" as defined in ERISA Section 3(37). All
contributions and payments accrued under each Employee Plan, determined in
accordance with prior funding and accrual practices, as adjusted to include
proportional accruals for the period ending on the Closing Date, to the extent
they will not be discharged and paid on or prior to the Closing Date, are set
forth in the Biosym Financial Statements. Except as disclosed in writing to
MSI prior to the date hereof, there has been no amendment to, written
interpretation of or announcement (whether or not written) by Biosym or any
subsidiary relating to, or change in employee participation or coverage under,
any Employee Plan that would increase materially the expense of maintaining
such Employee Plan above the level of expense incurred in 1994. No tax under
Section 4980B of the IRC (which imposes penalties for failure to continue
coverage of group health plans) has been incurred in respect of any Employee
Plan that is a group health plan, as defined in Section 5000(b)(1) of the IRC.
With respect to the employees and former employees of Biosym and any
subsidiary, there are no employee post-retirement medical or health plans in
effect, except as required by Section 4980B of the IRC or as required by
foreign law.
3.11 Permits, Licenses and Compliance with Laws. All material
permits, licenses and approvals from federal, state, local and foreign
governmental and regulatory bodies held by Biosym and its Subsidiaries
(collectively the "Permits"), are valid and in force and sufficient for all
business presently conducted by Biosym and its Subsidiaries. Biosym and each
of its Subsidiaries is, and has been, in substantial compliance with all
foreign, federal, state and local laws, ordinances, codes, regulations, orders,
requirements, standards and procedures which are applicable to its business,
including without limitation all export control regulations. None of Biosym,
any Subsidiary or to Corning's or Biosym's knowledge any director, officer,
employee, agent or other person acting on behalf of Biosym or a Subsidiary has
used any corporate or other funds for unlawful contributions, payments, gifts
or entertainment, or made any unlawful expenditures relating to political
activity to government officials or others or established or maintained any
unlawful or unrecorded funds. None of Biosym, any Subsidiary or to Biosym's
knowledge any director, officer, employee, or agent, or other person acting on
behalf of Biosym or a Subsidiary has received any unlawful contributions,
payments, gifts or expenditures.
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3.12 Government Investigations and Claims. Except as may be
otherwise set forth on Biosym Disclosure Schedule, neither Biosym nor any
Subsidiary, nor any officer, director, agent or managing agent of Biosym or its
Subsidiaries, has been convicted of, charged with or, to the knowledge of
Biosym, investigated for any violation of federal or state law related to
fraud, theft, embezzlement, breach of fiduciary responsibility, financial
misconduct, obstruction of an investigation or controlled substances, or has
been excluded or suspended from participation in any federal or state
government contracting program or has been subject to any order or consent
decree of, or criminal or civil fine or penalty imposed by, any court or
governmental agency relating to Biosym, or its Subsidiaries, or their
businesses and no state of facts exists or has existed which would constitute
valid grounds for the assertion of a claim against Biosym or a Subsidiary by
any governmental authority, or agency including without limitation claims for
defective pricing, cost accounting standards noncompliance, unallowable costs
or fraud. Biosym and each Subsidiary are in compliance with all requirements
of its classified government contracts, if any.
3.13 Litigation and Claims. Set forth on Biosym Disclosure
Schedule is a list and description of (i) every material claim, judicial
complaint, suit, action and judicial, regulatory, arbitral or governmental
action, proceeding or investigation pending, or to the knowledge of Biosym or
any Subsidiary, threatened against or by Biosym or its Subsidiaries, or any of
their respective officers, directors, agents acting on behalf of Biosym, or
managing agents in relation to Biosym or such Subsidiaries, as the case may be,
(ii) each such material claim, judicial complaint, suit, action, proceeding or
governmental investigation or administrative matter settled, adjudicated or
otherwise disposed of after January 1, 1994, and (iii) any claim that Biosym,
its business or any of its products infringes, violates or breaches any patent,
trade secret, copyright or intellectual property right of a third party or any
agreement to which Biosym is a party. Neither Biosym nor any of its
Subsidiaries is aware of any basis for any material claim against Biosym or any
Subsidiary, whether or not such a claim has been asserted including without
limitation any claims resulting from the sale of products or services other
than customary and normal returns of product in the ordinary course of
business.
3.14 Environmental and Other Matters. Biosym and its Subsidiaries,
are not, nor is any facility owned or leased by Biosym, or its Subsidiaries,
operated by Biosym or to the knowledge of Biosym by any other party, in
violation of any foreign, federal, state or local law, ordinance or regulation
relating to environmental conditions on, under or about any such facility, or
any other real property owned or leased for use by Biosym or its Subsidiaries
including without limitation, soil, ground and water or working conditions.
From the time in which Biosym or any Subsidiary, first occupied each such
facility, neither Biosym nor any Subsidiary, nor to the knowledge of Biosym any
third party has used, generated, stored or disposed of, on or under or, about
such facility or transported to or from such facility any hazardous waste,
toxic substances or similar materials ("Hazardous Materials") except for
immaterial amounts of commercially available printing and office supplies or as
components of computer equipment and monitors manufactured by third parties
transported, owned, possessed, used and disposed of in accordance with law to
the best of Biosym's knowledge. For purposes of this Agreement, the term
"Hazardous Materials" shall be deemed to include, without limitation,
substances referred to as "hazardous
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substances", "hazardous materials", "hazardous waste", "toxic substances" or
such similar or comparable definitions in the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended, the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Occupational Safety and Health Act, or in equivalent foreign, state or local
legislation. There are no violations or claims of any violations by Biosym or
any Subsidiary under any foreign, federal or state laws or regulations
affecting employees or working conditions including, without limitation, the
Occupational Safety and Health Act and the regulations thereunder.
3.15 Corporate Documents and Minute Books; Officers and Directors.
All minute books and minutes of Corporate proceedings, Stock Transfer
Registers, Articles or Certificates of Incorporation and Bylaws of Biosym and
its Subsidiaries have been delivered to MSI for inspection and are correct and
complete and accurately reflect all actions and proceedings of the Shareholders
and Board of Directors of Biosym and its Subsidiaries to date including any
committees of the Board of Directors.
3.16 Bank Accounts, Loans. The Biosym Disclosure Schedule sets
forth a list of all bank accounts, lock boxes and other depositories, open
letters of credit, loans to or credit facilities in favor of Biosym and its
Subsidiaries identifying bank, branch and account number, as well as the
authorized signatories thereto, all authorized signatures for loans or other
credit facilities and the amount of any outstanding balance under any letter of
credit, loan or credit facility.
3.17 Brokers. Negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Biosym and Corning
without assistance of any broker or finder and no brokerage or finders'
commission or fee is payable by Biosym or Corning to any other party on account
of this Agreement or the transaction contemplated hereby.
3.18 Adverse Change. Since May 31, 1995, neither Biosym, nor any
of its Subsidiaries, has suffered any material adverse changes in its
financial conditions, assets, liabilities or business except changes in the
ordinary course of business, nor any damage, destruction or loss, whether or
not covered by insurance of any material portion of the assets reflected in the
Biosym Financial Statements.
3.19 Disclosure. No representation or warranty by Biosym nor any
written statement or certificate furnished to MSI pursuant hereto, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein and therein not misleading.
3.20 Proprietary Rights. In order to conduct its business as it is
presently being conducted, after due inquiry: (a) Biosym does not lack nor
does it require any right under any patent, patent application, trademark,
service mark, trademark or service mark registration, trade name, license,
copyright, intellectual property or trade secret license, assignment or royalty
agreement which it does not have or which has not been otherwise disclosed in
the Biosym Disclosure Schedule; (b) Biosym, to its knowledge, is not infringing
upon the rights of others with
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respect to any such matters and is not aware of any threatened claim or
litigation alleging such infringement. Biosym has not raised any claim and has
no knowledge that any party is infringing or otherwise using without Biosym's
consent and agreement any patent, patent application, copyright, trademark,
service mark or intellectual property or trade secret of Biosym which it can
protect.
3.21 Non-Assignable Rights. Except as set forth on the Biosym
Disclosure Schedule, neither the execution, delivery or performance of this
Agreement by Biosym nor the consummation of the transactions contemplated
hereby will require the affirmative consent or approval of any third party.
3.22 Notes and Accounts Receivable. The notes and accounts
receivable of Biosym reflected on the Biosym Financial Statements are stated in
a manner consistent with Biosym's prior practices and except as otherwise noted
therein have arisen only from bona fide transactions in the ordinary course of
business. The notes and accounts receivable of Biosym which have arisen since
May 31, 1995 are considered collectible consistently with Biosym's prior
practices, except to the extent of the reserves for such accounts receivable
taken by Biosym in a manner consistent with prior practice, and all such
accounts receivable have arisen only from bona fide transactions in the
ordinary course of business.
3.23 Investment Purposes. Corning is acquiring the MSI Common
Stock and MSI Convertible Stock for its own account, not as nominee or agent,
for investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act of 1933, as amended (the "1933 Act"). Corning understands that the MSI
Common Stock and MSI Convertible Stock have not been registered under the 1933
Act by reason of a specific exemption therefrom.
ARTICLE IV. MSI's Representations and Warranties
Except as disclosed in a document referring specifically to the
representations and warranties in this Agreement which is delivered by MSI to
Biosym and Corning prior to the execution of this Agreement (the "MSI
Disclosure Schedule"), MSI and MSI Acquisition hereby severally represent and
warrant to Biosym and Corning as follows:
4.1 Organization and Existence; Capitalization.
(a) MSI is a corporation duly organized and validly existing under
the laws of the State of Delaware and has the full corporate power to carry on
its business as it is now being conducted. Copies of the Certificate of
Incorporation and the Bylaws of MSI have been delivered to Biosym and as
delivered are complete and correct as of the date hereof. MSI is qualified to
do business in each jurisdiction where the nature of such business or its
assets or properties requires it to do so except where the failure to so
qualify would not have a material adverse effect on its business, assets or
properties taken as a whole.
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(b) The authorized capital stock and the number of shares issued
and outstanding of each class of capital stock of MSI as of the date hereof,
together with the holders thereof, is set forth on the MSI Disclosures Schedule
hereto and is held of record and to the best of MSI's knowledge beneficially by
the shareholders of MSI identified in the MSI Disclosure Schedule free and
clear of all liens, charges, restrictions, claims and encumbrances. All of the
outstanding shares of capital stock of MSI are validly issued, fully paid and
non-assessable. Except as set forth on the MSI Disclosure Schedule, , there
are no outstanding options, warrants, agreements, contracts, calls, commitments
or demands of any character to which MSI is a party relating to the capital
stock of MSI that either:
(i) obligates MSI to (A) issue, redeem, sell or purchase
any capital stock in MSI or any other security of
MSI, or (B) share the profits, revenues or income of
MSI, or
(ii) restricts the transfer of, or otherwise relates to
transactions in, the capital stock of MSI that would
in any way affect the Merger or the transactions
contemplated by this Agreement.
4.2 Subsidiaries' Organization and Existence; Capitalization. A
"Subsidiary" shall mean any corporation, partnership or other entity hereof,
wherever and however organized, in which MSI owns directly or indirectly more
than fifty percent (50%) of the voting stock, equity or beneficial interest, is
a partner of, or otherwise controls the management of, by having the right or
ability to designate a majority of the directors or members of the governing
body thereof, whether by agreement or otherwise.
(a) All Subsidiaries of MSI are identified on the MSI Disclosure
Schedule and each Subsidiary is a corporation or a partnership duly organized
and validly existing under the laws of the country or state of its organization
and has the full power to carry on its business as it is now being conducted.
Copies of the Certificate or Articles of Incorporation and the Bylaws or of the
partnership agreement of each such Subsidiary, have been delivered to Biosym
and as delivered are complete and correct as of the date hereof. Each
Subsidiary is qualified to do business in each jurisdiction where the nature of
such business or its assets or properties requires it to do so, except where
the failure to so qualify would not have a material adverse effect on MSI's
business, assets or properties taken as a whole.
(b) All of the outstanding shares of capital stock of each
Subsidiary are validly issued, fully paid and non-assessable. There are no
outstanding options, agreements, warrants, contracts, calls, commitments or
demands of any character relating to the capital stock of such Subsidiary.
(c) Except in connection with the Subsidiaries identified on the
MSI Disclosure Schedule, and in the case of TEIJIN Molecular Simulations
Incorporated ("TMSI") in which MSI holds fifty percent (50%) of the voting
equity or shares, neither MSI nor its Subsidiaries own directly or indirectly
any voting stock or equity or beneficial interest in any third party and do not
have the right or ability to designate directors or members of the governing
body of any third party.
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4.3 Authority to Execute and Perform Agreement. Subject only to
approval by MSI shareholders, a true and correct list of which is set forth on
the MSI Disclosure Schedule (the "MSI Shareholders"), MSI and MSI Acquisition
have the full legal right, power and authority to enter into, execute and
deliver this Agreement and in the case of MSI the Shareholders Agreement
described in Article VI below and to perform fully their respective obligations
hereunder and thereunder. This Agreement has been duly executed and delivered
by MSI and MSI Acquisition and is the valid and binding obligation of each of
them enforceable against MSI and MSI Acquisition in accordance with its terms
assuming that this Agreement constitutes a valid and binding agreement of
Biosym and Corning, except as enforcement may be limited by bankruptcy,
insolvency, or other similar laws affecting the enforcement of creditors'
rights generally and except that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought. The Boards of Directors of MSI and MSI Acquisition have approved
this Agreement and the consummation of the transactions contemplated hereby and
apart from approval by MSI Shareholders, no other corporate proceedings are
necessary to authorize this Agreement and the Shareholders Agreement or the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation by MSI or MSI Acquisition of the transactions contemplated
hereby at the Closing will not:
(a) conflict with or result in a breach or default of or
constitute or result in a default under any of the terms, conditions or
provisions of the Certificate of Incorporation, Bylaws or any governing
instruments of MSI or of any Subsidiary or to the best of MSI's knowledge,
TMSI;
(b) require the further approval or consent of any federal, state,
county, local court or other governmental or regulatory body or the approval or
consent of any other person, and such other approvals or consents of any
federal, state, county, local court or other governmental or regulatory body,
the failure of which to make or obtain would materially adversely affect the
ability of MSI or MSI Acquisition to consummate the Merger; or
(c) conflict with or result in any breach or violation of any of
the terms and conditions of, or constitute a default (or an event which with
notice or lapse of time or both constitute a default) under or a violation of,
any statute, regulation, order, judgment or decree applicable to MSI or any
Subsidiary, or any material instrument, material contract or other material
agreement to which MSI or any Subsidiary or to the best of MSI's knowledge,
TMSI is a party or to which MSI or any Subsidiary or to the best of MSI
knowledge, TMSI is bound or subject.
4.4 Financial Statements.
(a) MSI has delivered to Biosym copies of the financial statements
of MSI for the fiscal years ended December 31, 1993 and December 31, 1994,
audited by the accounting firm of Arthur Andersen and which statements include
balance sheets and statements of income, shareholders equity and cash flows and
footnotes thereto, and an unaudited balance sheet and statements of income and
cash flows for the period from January 1, 1995 to June 30, 1995 (collectively
the "MSI Financial Statements"). Except as set forth in the MSI Financial
Statements
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as of the dates and for the respective periods they represent the MSI Financial
Statements fairly present the financial position of MSI and its Subsidiaries
and the results of their operations and their cash flows in all material
respects, all in conformity with GAAP, consistently applied for the periods
indicated thereon (except as may be indicated in the notes thereto) except that
the balance sheet and statements of income and cash flow dated June 30, 1995 do
not contain notes or year end adjustments required by GAAP.
(b) MSI and its Subsidiaries had as of the date of the MSI
Financial Statements, no liabilities or obligations, secured or unsecured,
including tax liabilities due or to become due, not disclosed in the MSI
Financial Statements or the MSI Disclosure Schedule attached hereto that would
in accordance with GAAP be required to be disclosed in such Financial
Statements.
(c) As of the date of this Agreement, MSI and its Subsidiaries
have no actual or contingent liabilities or obligations secured or unsecured,
including tax liabilities not disclosed to Corning and Biosym in the MSI
Financial Statements, or the MSI Disclosure Schedule, except those liabilities
incurred in the ordinary course of business consistent with past practices
since June 30, 1995 or which do not exceed $100,000 in the aggregate.
(d) MSI has delivered to Biosym copies of the unaudited financial
statements of TMSI for the fiscal year ended March 31, 1995, which statements
include a balance sheet as of such date and a statement of income for the
twelve (12) month period then ended (collectively, the "TMSI Financial
Statements"). To the best of MSI's knowledge, the TMSI Financial Statements
fairly present in all material respects the financial position of TMSI as of
such date and the results of its operations for the twelve (12) month period
then ended. To the best of MSI's knowledge, TMSI has no actual or contingent
liabilities or obligations secured or unsecured, including tax liabilities, not
disclosed to Corning and Biosym in the TMSI Financial Statements or the MSI
Disclosure Schedule, except those liabilities incurred in the ordinary course
of business consistent with past practices since March 31, 1995 or which do not
exceed $100,000 in the aggregate.
4.5 Absence of Certain Changes or Events. Except as set forth on
the MSI Disclosure Schedule, since December 31, 1994, MSI and its Subsidiaries
and to the best of MSI's knowledge, TMSI have in all material respects
conducted its business only in the ordinary course consistent with past
business practices and there have not been any:
(a) Employee Relations. Employee relations disputes, including
without limitation threatened or actual employee claims;
(b) Stock Options, Dividends, etc. (i) Change in the authorized
or issued capital stock of MSI or its Subsidiaries or TMSI, (ii) grant of any
stock option or right to purchase shares of the authorized or issued capital
stock of MSI or any of its Subsidiaries or TMSI, (iii) issuance of any security
convertible into the capital stock of MSI or any of its Subsidiaries or TMSI,
(iv) agreement by MSI or any of its Subsidiaries or TMSI to do any of the
foregoing, or (v) declaration or payment or promise to make payment of any
dividend or other distribution with respect to the capital stock of MSI or any
of its Subsidiaries or TMSI;
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(c) Sale or Pledge of Assets; Incurring of Indebtedness. (i) Sale
or lease or transfer to a third party of any assets of MSI reflected on the MSI
Financial Statements or any of its Subsidiaries (other than the customer
software licenses or sales of computer equipment to customers) having an
original cost in excess of $10,000 for any single item and $50,000 in the
aggregate, (ii) mortgage or pledge of any material properties or assets of MSI
or any of its Subsidiaries or to the best of MSI's knowledge, TMSI, (iii)
indebtedness incurred, assumed or guaranteed by MSI or any of its Subsidiaries
or to the best of MSI's knowledge, TMSI that matures more than one year from
the date such indebtedness was incurred or which obligates MSI to more than
$50,000 in the aggregate, (iv) notice of termination or termination by a third
party or notice of termination or termination by MSI or any of its Subsidiaries
or to the best of MSI's knowledge, TMSI of any lease or contract, involving the
payment or receipt by MSI or any of its Subsidiaries of an amount in excess of
$25,000 in any one instance or $50,000 in the aggregate, except notice of
termination or termination of customer software licenses and software
maintenance agreements in the ordinary course of business, or (v) entering into
by MSI or any of its Subsidiaries of a lease or other contract, other than
customer agreements entered into in the ordinary course of business, which
cannot be terminated unilaterally by MSI without cost to MSI or any of its
Subsidiaries in excess of $25,000 in any one instance or $50,000 in the
aggregate;
(d) Employee Benefit Plans and Certain Salaried Employees. A
material change in any employment contract, bonus, stock option,
profit-sharing, pension, retirement, incentive or other similar arrangement of
MSI or any of its Subsidiaries as in effect on June 30, 1995 or any increase
outside the ordinary course of business in the compensation payable or to
become payable by MSI or any of its Subsidiaries to any of its officers,
employees or agents;
(e) Change in Accounting Practice or Inventory. Material change
in any accounting practice, capitalization of software development expenses or
writedown or revaluation of any asset including computer software;
(f) Adverse Determinations. Materially adverse determination in
any litigation, action, proceeding before any court or governmental body
(domestic or foreign) relating to MSI or its Subsidiaries or to the best of
MSI's knowledge, TMSI and their respective businesses, assets or properties;
(g) Product Changes. Material changes in the type, nature,
composition or quality of its products except in the ordinary course of
business and consistent with prior practice or customary business practices
prevailing in the industry generally; acceptance of orders in material amounts
from any customer under conditions relating to price, terms of payment, time of
delivery or like matters differing from the conditions regularly and usually
specified in the ordinary course of business; or change in its selling,
pricing, advertising or personnel practices, except in the ordinary course of
business, and consistent with prior practice or customary business practices
prevailing in the industry generally;
(h) Agreements Concerning (a)-(g). Any binding or enforceable
agreement or obligation of MSI or its Subsidiaries or to the best of MSI's
knowledge, TMSI (to the extent
<PAGE> 27
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paragraphs (a) through (g) above are applicable to TMSI) to make any of the
changes or cause any events described in paragraphs (a) through (g) above.
4.6 Tax Matters.
(a) Filing of Returns. (i) All federal, state, local and foreign
tax returns and tax reports required to be filed for MSI or its Subsidiaries or
to the best of MSI's knowledge, TMSI have been filed with the appropriate
taxing authorities on a timely basis, subject to any extension of such due
date, and to the best of MSI's knowledge, TMSI's returns and reports, all such
returns and reports are true, correct and complete in all material respects,
(ii) all federal, state, local and foreign taxes (including interest and
penalties) that are currently due from or relating to MSI and any rebate due to
MSI or its Subsidiaries or to the best of MSI's knowledge, TMSI (including
deferred taxes) in respect of all periods ending on or before the date hereof
have been fully paid or are adequately provided for on the books and the MSI
Financial Statements or are being contested in good faith by MSI, or TMSI as
the case may be, (iii) MSI and its Subsidiaries or to the best of MSI's
knowledge, TMSI have not received any notice of any audit by the Internal
Revenue Service or other taxing authority or notice that any issues have been
raised by or are currently pending before the Internal Revenue Service or any
other taxing authority whether or not in connection with any of the returns and
reports referred to in clause (i) above, and (iv) MSI and its Subsidiaries or
to the best of MSI's knowledge, TMSI have not given nor been requested to give
waivers or extensions of any statute of limitations relating to the payment of
any taxes referred to in this paragraph;
(b) Adjustments to Reported Tax. There are no material
adjustments to the federal, state and local and foreign tax returns and tax
reports of MSI or its Subsidiaries or to the best of MSI's knowledge, TMSI or
any resulting deficiencies or penalties proposed with respect thereto by the
Internal Revenue Service or any other taxing authority, and all deficiencies or
penalties proposed by such taxing authorities have been paid, reserved against
as shown on the MSI Financial Statements, or settled;
(c) Withholding. All federal, state, local or foreign taxes and
other charges, that MSI or its Subsidiaries are or were required by law to
withhold or to collect, have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority;
(d) No DISC, FSC or Possession Corporation. MSI has no domestic
international sales corporation within the meaning of Section 992 of the
Internal Revenue Code of 1986 as amended (the "IRC") nor any Foreign Sales
Corporation within the meaning of Section 922 of the IRC and is not an electing
corporation within the meaning of 936 of the IRC (relating to the possessions
tax credit);
(e) Tax Payments and Returns. MSI made available to Corning and
Biosym or their accountants, true and complete copies of all MSI consolidated
federal income and state and local (including the State of California) income
tax returns and all foreign, federal and state and local income tax returns
filed separately by any Subsidiary for years subsequent to December 31, 1992;
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(f) Tax Sharing Agreements. There are no tax sharing agreements
with respect to MSI or its Subsidiaries and to the best of MSI's knowledge,
TMSI concerning the payment of taxes;
(g) Tax-Exempt Property. Neither MSI nor its Subsidiaries has
made an election for federal income tax purposes to treat any of their
respective assets as tax-exempt bond financial property or tax-exempt use
property within the meaning of the IRC or is contractually obligated to a third
party to so treat the assets owned by that third party;
(h) Non-Deductible Compensation. There is no contract, plan or
agreement covering any employee or former employee of MSI or its Subsidiaries
that individually or in the aggregate would require MSI or its Subsidiaries to
make any payment that would not be deductible pursuant to the terms of Section
280G of the IRC;
(i) Liens. There are no liens for taxes (other than for taxes not
yet due and payable) upon the assets of MSI or any of its Subsidiaries;
(j) Accounting Adjustments. Neither MSI nor any of its
Subsidiaries has agreed to make, nor are they required to make, any adjustments
to their accounting methods that would have a tax impact on MSI or any of its
Subsidiaries under Section 481 of the IRC or any similar state, local or
foreign tax provisions;
(k) U.S. Real Property Holding Company. MSI is not, and has not
been, a "United States real property holding company" within the meaning of
Section 897 of the IRC;
(l) Foreign Person. MSI is not a "foreign person" as defined in
Section 1445(f)(3) of the IRC;
(m) Foreign Subsidiaries. None of MSI's foreign Subsidiaries:
(i) is engaged in a United States trade or business for federal income tax
purposes; (ii) is a passive foreign investment company within the meaning of
the IRC; or (iii) has made an election, or is required, to treat any asset as
owned by another person for tax purposes. None of the MSI foreign Subsidiaries
has an investment in United States property within the meaning of Section 956
of the IRC;
(n) Tax Elections. Neither MSI nor any of its Subsidiaries has
filed a consent under Section 341(f) of the IRC (or any corresponding provision
of state, local or foreign tax law) or agreed to have Section 341(f)(2) of the
IRC (or any corresponding provision of state, local or foreign tax law) apply
to it. Neither MSI nor any of its Subsidiaries has made and will not make a
deemed dividend election under Treasury Regulations Section 1.1502-32 or a
consent dividend under Section 565 of the IRC.
Notwithstanding any of the foregoing, no representation or warranty is
made by MSI with respect to the tax consequences that may result from the
transactions contemplated by this Agreement.
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4.7 Equipment. All of the material computer and other equipment
owned or used by MSI or its Subsidiaries are in usable operating condition, and
are, in view of their age and excluding normal wear and tear, not in need of
maintenance other than normal scheduled maintenance, and are free from any
known defects except such defects as do not substantially interfere with the
continued use thereof in the conduct of MSI's normal business operations.
Neither MSI nor any Subsidiary owns or has ever owned any buildings or other
real property. All of the material leases for office space of MSI or any
Subsidiary are valid and in full force and effect.
4.8 Products. The MSI Disclosure Schedule sets forth a
description of all computer software programs owned or licensed by MSI or its
Subsidiaries and licensed or intended to be licensed or sold to their
customers.
4.9 Contracts and Commitments. Set forth on the MSI Disclosure
Schedule hereto are complete and accurate lists as of the date hereof of the
following:
(a) Distribution, dealer or sales representation agreements,
(b) Supplier agreements or requirement contracts of MSI or any
Subsidiary not terminable without penalty on 30 days' notice which individually
are in excess of $50,000;
(c) Written consortia proposals (exclusive of consortia programs
existing as of the date of this Agreement and identified in the MSI Disclosure
Schedule) of MSI or any Subsidiary which individually are in excess of $150,000
and any grant request or proposal for a research and development contract
(including without limitation contracts for customized software development or
research services) in excess of $100,000 each;
(d) Purchase orders and purchase commitments of MSI or any
Subsidiary which individually are either (i) in excess of $50,000 or (ii) for
which the total obligation is in excess of $20,000 and which cannot be
terminated without penalty by MSI or its Subsidiaries on 90 days' notice;
(e) Personal property leases and other rental, use or service
arrangements of MSI and its Subsidiaries which either (i) cannot be terminated
without penalty by MSI or its Subsidiaries on 30 days' notice, or (ii)
individually requires payment by MSI or its Subsidiaries over its remaining
life of more than $50,000 in the aggregate;
(f) Real property leases and similar contracts and arrangements
pursuant to which MSI or any Subsidiary leases or rents any land, building,
facility, service center or other interest in realty which either (i) cannot be
terminated without penalty by MSI or such Subsidiary on 30 days' notice or (ii)
individually requires payment by MSI or its Subsidiaries over its remaining
life of more than $50,000 in the aggregate;
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(g) All indemnity or guaranty arrangements, business acquisition
agreements entered into after January 1, 1994, licensing agreements except as
described in subsection (j) or (m) below, non-compete agreements (other than
with existing or former employees), joint venture agreements, commission
agreements, closing or other agreements with tax authorities or rulings
obtained from tax authorities to which MSI or any of its Subsidiaries or to
the best of MSI's knowledge, TMSI are a party;
(h) All agreements between MSI or any Subsidiary or to the best of
MSI's knowledge, TMSI or any officer or director of MSI or its Subsidiaries on
the one hand, and any MSI Shareholder, and to the best of MSI's knowledge, any
Subsidiary of an MSI Shareholder or any entity controlling, controlled by or
under common control of an MSI Shareholder on the other hand, and all material
transactions or obligations not otherwise described in this Agreement between
MSI or any Subsidiary on the one hand or any MSI Shareholder or any Subsidiary
of an MSI Shareholder on the other since December 31, 1994, including without
limitation transfers of assets or rights, provision of services, assignment of
personnel and sharing of facilities;
(i) All other contracts, agreements, understandings, commitments,
leases, mortgages, notes, bonds, loan or credit agreements, deeds of trust,
indentures, security agreements or other instruments, whether written or oral
(other than those specifically included by subsection (a) through (g) above and
(j) through (n) below) and all amendments, consents, waivers, side letters and
commitments related thereto, to which MSI or any of its Subsidiaries is a party
and which (i) if the total obligation is in excess of $20,000 cannot be
terminated without penalty by MSI or its Subsidiaries on 30 days' notice or
(ii) individually requires payment by MSI or such Subsidiary over its remaining
life of more than $50,000;
(j) All material agreements concerning any right of first refusal,
any invention assignment from non- employees or the disposition and/or use of
any trade secrets, copyrights or other intellectual property;
(k) All contracts, agreements or grants with any foreign, federal
or state government or any agency or instrumentality thereof which require
payment by or to MSI or its Subsidiaries in excess of $50,000 or require the
rendering of substantial and material services by MSI or its Subsidiaries;
(l) Any material agreement pursuant to which MSI or its
Subsidiaries agreed not to engage in any business or compete in any line of
business in any geographic area or with any person;
(m) Any material technology or software development agreement,
arrangement or obligation, or any material technology or software cooperation
or exchange agreement, arrangement or obligation including without limitation
outstanding consortia agreements;
(n) Any effective agreement (except this Agreement and those
described herein) requiring the future disposition of any material portion of
the business or assets of MSI or its
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Subsidiaries or to the best of MSI's knowledge, TMSI or concerning the future
acquisition of assets or shares of capital stock by MSI or its Subsidiaries of
any other person.
MSI has furnished to Biosym samples of all its material software
development agreements or consortia agreements, computer software licenses,
software maintenance agreements. Items set forth pursuant to (a) through (n)
above being hereinafter collectively referred to as the "Contracts". Except
as otherwise set forth on the MSI Disclosure Schedule, neither MSI nor its
Subsidiaries is aware of any condition or event which, after notice or lapse of
time or both, would constitute a default by MSI, its Subsidiaries or any third
party, except as to matters which are immaterial to the performance of any such
Contract.
4.10 Employees; Employee Benefits. Set forth on the MSI Disclosure
Schedule hereto is a description of each material employee benefit or
compensation plan, policy or arrangement, including without limitation,
pension, retirement, deferred compensation, profit sharing, bonus or incentive,
medical, dental, health insurance and life insurance, other insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplement unemployment benefits, vacation benefits, stock options,
stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits, or other employee benefit
plans of MSI and each Subsidiary, under which employees of MSI or any
Subsidiary are eligible to participate or derive a benefit (collectively
"Employee Plans" and individually "Employee Plan"), copies of all of which have
previously been made available or furnished to Biosym. Except as set forth in
the MSI Disclosure Schedule or as required by foreign law, neither MSI nor any
Subsidiary is a party to, bound by, nor does it maintain or make any
contribution to any employment agreement, pension, retirement, deferred
compensation, profit sharing, bonus or incentive plan, policy or arrangement,
or any plan, policy or arrangement providing for medical, dental or other
health insurance, life insurance, other insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, stock options, stock
appreciation rights or other forms of incentive compensation or post-retirement
insurance, compensation or benefits, or other employee benefit plan or program
(whether or not legally binding), including, without limitation, any "employee
benefit plan" (as defined under Section 3(3) of the federal Employee Retirement
Income Security Act of 1974 ("ERISA"). Each Employee Plan complies in all
material respects with applicable laws, including, without limitation, ERISA
and the IRC where applicable. Each Employee Plan has been maintained in
material compliance with its terms, and all applicable ERISA and other material
requirements as to the filing of reports, documents and notices with
governmental agencies and the furnishing of documents to participants or
beneficiaries have been satisfied. With respect to each applicable Employee
Plan affecting U.S. employees, MSI has furnished to Biosym and Corning copies
of the most recently filed Form 5500, a summary plan description, and the most
recent Internal Revenue Service determination letters, if any, with respect to
such Employee Plan. As to each Employee Plan intended to qualify under IRC
Section 401(a) or 403(a), (i) such Employee Plan is designed to qualify and the
corresponding trust for each such Employee Plan is designed to qualify as a tax
exempt trust under IRC Section 501(a), and (ii) all contributions necessary to
meet minimum funding requirements of IRC Section 412 have been made or accrued.
Neither MSI nor any Subsidiary maintains or has ever maintained or contributed
to any Employee Plan subject to
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Title IV of ERISA (relating to defined benefit pension plans). No "reportable
event" as defined in ERISA Section 4043(b) has occurred or is continuing with
respect to any Employee Plan which is subject to ERISA Section 4043(b) if any,
and to the best of MSI's knowledge no "prohibited transaction" as defined in
IRC Section 4975 and ERISA Section 406 has occurred with respect to any
Employee Plan. Neither MSI nor any Subsidiary has ever contributed to any
"multiemployer plan" as defined in ERISA Section 3(37). All contributions and
payments accrued under each Employee Plan, determined in accordance with prior
funding and accrual practices, as adjusted to include proportional accruals for
the period ending on the Closing Date, to the extent they will not e discharged
and paid on or prior to the Closing Date, are set forth in the MSI Financial
Statements. Except as disclosed in writing to Biosym prior to the date hereof,
there has been no amendment to, written interpretation of or announcement
(whether or not written) by MSI or any subsidiary relating to, or change in
employee participation or coverage under, any Employee Plan that would increase
materially the expense of maintaining such Employee Plan above the level of the
expense incurred in 1994. No tax under Section 4980B of the IRC (which imposes
penalties for failure to continue coverage of group health plans) has been
incurred in respect of any Employee Plan that is a group health plan, as
defined in Section 5000(b)(1) of the IRC. With respect to the employees and
former employees of MSI and any subsidiary, there are no employee
post-retirement medical or health plans in effect, except as required by
Section 4980B of the IRC or as required by law.
4.11 Permits, Licenses and Compliance with Laws. All material
permits, licenses and approvals from federal, state, local and foreign
governmental and regulatory bodies held by MSI and its Subsidiaries
(collectively the "Permits") are valid and in force and sufficient for all
business presently conducted by MSI and its Subsidiaries. MSI and each of its
Subsidiaries and to the best of MSI's knowledge, TMSI is, and has been, in
substantial compliance with all foreign, federal, state and local laws,
ordinances, codes, regulations, orders, requirements, standards and procedures
which are applicable to its business, including without limitation all export
control regulations. None of MSI, any Subsidiary or to MSI's knowledge any
director, officer, employee or agent or other person acting on behalf of MSI or
a Subsidiary and to the best of MSI's knowledge, TMSI has used any corporate or
other funds for unlawful contributions, payments, gifts or entertainment, or
made any unlawful expenditures relating to political activity to government
officials or others or established or maintained any unlawful or unrecorded
funds. None of MSI, any Subsidiary or, to MSI's knowledge, any director,
officer, employee, or agent, or other person acting on behalf of MSI or a
Subsidiary has received any unlawful contributions, payments, gifts or
expenditures.
4.12 Government Investigations and Claims. Neither MSI nor any
Subsidiary nor to the best of MSI's knowledge, TMSI, nor any officer, director,
agent or managing agent of MSI or its Subsidiaries, has been convicted of,
charged with or, to the knowledge of MSI, investigated for any violation of
federal or state law related to fraud, theft, embezzlement, breach of fiduciary
responsibility, financial misconduct, obstruction of an investigation or
controlled substances, or has been excluded or suspended from participation in
any federal or state government contracting program or has been subject to any
order or consent decree of, or criminal or civil fine or penalty imposed by,
any court or governmental agency relating to MSI, or its Subsidiaries, or their
businesses. No state of facts exists or has existed which would constitute
valid grounds for the
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assertion of a claim against MSI or a Subsidiary or to the best of MSI's
knowledge, TMSI by any governmental authority, or agency including without
limitation claims for defective pricing, cost accounting standards
noncompliance, unallowable costs or fraud. MSI and each Subsidiary are in
compliance with all requirements of its classified government contracts, if
any.
4.13 Litigation and Claims. Set forth on the MSI Disclosure
Schedule is a list and description of (i) every material claim, judicial
complaint, suit, action and judicial, regulatory, arbitral or governmental
action, proceeding or investigation pending, or to the knowledge of MSI or any
Subsidiary, threatened against or by MSI or its Subsidiaries, or any of their
respective officers, directors, agents acting on behalf of MSI, or managing
agents in relation to MSI or such Subsidiaries, as the case may be, (ii) each
such material claim, judicial complaint, suit, action, proceeding or
governmental investigation or administrative matter settled, adjudicated or
otherwise disposed of after January 1, 1994, (iii) any claim that MSI, its
business or any of its products infringes, violates or breaches any patent,
trade secret, copyright or intellectual property right of a third party or any
agreement to which MSI is a party. Neither MSI nor any of its Subsidiaries is
aware of any basis for any material claim against MSI or any Subsidiary,
whether or not such a claim has been asserted including without limitation any
claims resulting from the sale of products or services other than customary and
normal returns of product in the ordinary course of business.
4.14 Environmental and Other Matters. MSI and its Subsidiaries,
are not, nor is any facility owned or leased by MSI or its Subsidiaries,
operated by MSI or to the knowledge of MSI by any other party, in violation of
any foreign, federal, state or local law, ordinance or regulation relating to
environmental conditions on, under or about any such facility, or any other
real property owned or leased for use by MSI or its Subsidiaries including
without limitation, soil, ground and water or working conditions. From the
time in which MSI or any Subsidiary, first occupied each such facility, neither
MSI nor any Subsidiary, nor to the knowledge of MSI any third party has used,
generated, stored or disposed of, on or under or, about such facility or
transported to or from such facility any Hazardous Materials, except for
immaterial amounts of commercially available printing and office supplies or as
components of computer equipment and monitors manufactured by third parties,
transported, owned, possessed, used and disposed of in accordance with law to
the best of MSI's knowledge. There are no violations or claims of any
violations by MSI or any Subsidiary under any foreign, federal or state laws or
regulations affecting employees or working conditions including, without
limitation, the Occupational Safety and Health Act and the regulations
thereunder.
4.15 Corporate Documents and Minute Books; Officers and Directors.
Copies of all minute books and minutes of Corporate proceedings, Stock Transfer
Registers, Articles or Certificates of Incorporation and Bylaws of MSI and its
Subsidiaries have been made available to Biosym for inspection and are correct
and complete and accurately reflect all actions and proceedings of the MSI
shareholders and Board of Directors of MSI and its Subsidiaries to date
including any committees of the Board of Directors.
4.16 Bank Accounts, Loans. The MSI Disclosure Schedule sets forth
a list of all bank accounts, lock boxes and other depositories, open letters of
credit, loans to or credit facilities in
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favor of MSI and its Subsidiaries identifying bank, branch and account number,
as well as the authorized signatories thereto, all authorized signatures for
loans or other credit facilities and the amount of any outstanding balance
under any letter of credit, loan or credit facility.
4.17 Brokers. Negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by MSI without
assistance of any broker or finder and no brokerage or finders' commission or
fee is payable by MSI to any other party on account of this Agreement or the
transactions contemplated hereby.
4.18 Adverse Change. Since December 31, 1994, neither MSI, nor any
of its Subsidiaries nor to the best of MSI's knowledge, TMSI, has suffered any
material adverse changes in its financial conditions, assets, liabilities or
business except changes in the ordinary course of business, nor any damage,
destruction or loss, whether or not covered by insurance of any material
portion of the assets reflected in the MSI Financial Statements.
4.19 Disclosure. No representation or warranty by MSI nor any
written statement or certificate furnished to Corning or Biosym pursuant
hereto, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein and therein not
misleading.
4.20 Proprietary Rights. In order to conduct its business as it is
presently being conducted, after due inquiry, (a) MSI does not lack nor does it
require any right under any patent, patent application, trademark, service
mark, trademark or service mark registration, trade name, license, copyright,
intellectual property or trade secret license, assignment or royalty agreement
which it does not have or which has not been otherwise disclosed in the MSI
Disclosure Schedule, (b) MSI, to its knowledge, is not infringing upon the
rights of others with respect to any such matters and is not aware of any
threatened claim or litigation alleging such infringement. MSI has not raised
any claim and has no knowledge that any party is infringing or otherwise using
without MSI's consent and agreement any MSI patent, patent application,
copyright, trademark, service mark or intellectual property or trade secret of
MSI which it can protect.
4.21 Non-Assignable Rights. Except as set forth on the MSI
Disclosure Schedule, neither the execution, delivery or performance of this
Agreement by MSI nor the consummation of the transactions contemplated hereby
will require the affirmative consent or approval of any third party.
4.22 Notes and Accounts Receivable. The notes and accounts
receivable of MSI reflected on the MSI Financial Statements are stated in a
manner consistent with MSI prior practices and except as otherwise noted
therein have arisen only from bona fide transactions in the ordinary course of
business. The notes and accounts receivable of MSI which have arisen since May
31, 1995 are considered collectible consistently with MSI prior practices,
except to the extent of the reserves for such accounts receivable taken
consistent with prior practice, and all such accounts receivable have arisen
only from bona fide transactions in the ordinary course of business.
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4.23 Continuity of Business. It is the present intention of MSI,
subsequent to the consummation of the Merger, to continue the general business
that Biosym currently conducts as more fully provided in the Shareholders
Agreement described in Section 6.1(h) below.
4.24 Investment Purposes. MSI Acquisition is acquiring the Biosym
common stock for its own account, not as nominee or agent, for investment and
not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the 1933 Act. MSI Acquisition
understands that the Biosym common stock have not been registered under the
1933 Act by reason of a specific exemption therefrom.
ARTICLE V. Certain Agreements
5.1 Investigations and Operations of Business of Biosym and
Subsidiaries. Between the date of this Agreement and the Closing Date:
(a) Access to Financial Records. Subject to the provisions of
that confidentiality agreement dated February 27, 1995 between MSI, Corning and
Biosym (the "Confidentiality Agreement"), from the date hereof until the
Closing Date, Biosym shall give MSI, and MSI shall give Biosym and their
respective representatives and agents appropriate access to books and records
of their respective Subsidiaries and shall cause their officers and independent
auditors to furnish each other appropriate financial and operations data,
including access by the other party and the other party's accountants to their
respective independent auditors' work papers for financial statements, with
respect to their business and properties and that of their respective
Subsidiaries as either party shall from time to time reasonably request of the
other; provided, however, that any such investigation (i) shall be conducted
upon reasonable prior notice at mutually agreed times and otherwise in such
manner as not to interfere unreasonably with the operation of the business of a
party or its Subsidiaries and (ii) shall not affect any of the representations
and warranties made hereunder. In the event the Merger is not consummated,
each party will return to the other and will cause its representatives to
return, all documents, work papers and other material obtained from such party
in connection with the transactions contemplated hereby and will hold such
material and business information derived therefrom confidential unless and
until such material or the information contained therein becomes part of the
public domain or is obtained from other sources who are entitled to disclose
such material or information without restriction in favor of the party which
disclosed such material or information.
(b) Preservation of Business. Biosym and MSI will use their best
efforts to preserve intact their business organizations, to keep available the
services of their present officers and employees and to preserve their present
relationships with persons having significant business relations with them.
(c) Operations in the Ordinary Course. Except as expressly
provided otherwise herein, Biosym and MSI and their respective Subsidiaries
shall operate their businesses only in the ordinary course and, by way of
amplification and not limitation, each of them shall not, except as may be
expressly required by this Agreement or with the written consent of the other
parties:
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(i) issue or commit to issue any capital stock or
other ownership interest in themselves or any
Subsidiary, other than pursuant to outstanding
options or other rights existing as of the date
hereof,
(ii) grant or commit to grant any options,
warrants, convertible securities or other rights to
subscribe for, purchase or otherwise acquire any
shares of theirs or their Subsidiaries' capital stock
or other ownership interest,
(iii) declare, set aside, or pay any dividend or
distribution with respect to the capital stock or
other ownership interest in themselves or any of
their Subsidiaries,
(iv) directly or indirectly redeem, purchase or
otherwise acquire or commit to acquire any capital
stock or other ownership interest in themselves or
any of their Subsidiaries,
(v) effect a split or reclassification of any of
their capital stock or that of their Subsidiaries or
any recapitalization of themselves or a Subsidiary,
(vi) enter into any research and development
agreement or other agreement, except with respect to
software license agreements and other agreements in
the ordinary course of business,
(vii) enter into any employment, consulting or
agency agreement or commitment with any person or
modify or cancel any such agreement, commitment or
contract in effect on the date hereof containing an
obligation to pay or accrue more than $75,000
annually (excluding sales commission paid at a rate
which is consistent with past practices and is in the
ordinary course of business) for any one such person,
(viii) enter into, or modify or cancel, any
agreement, contract or commitment relating to capital
expenditures,
(ix) except as provided in this Article V, enter
into, or modify or cancel, any agreement, contract,
indenture or other instrument relating to the
borrowing of money or other contracting for
indebtedness or the guarantee of any obligation for
the borrowing of money or other contracting for
indebtedness, or incur additional indebtedness under
any existing loan agreement or credit facility except
in the ordinary course of business,
(x) enter into, or modify or cancel, any
agreement, contract or commitment relating to the
disposition or acquisition of any interest in any
business enterprise,
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(xi) enter into any new line of business, or
terminate any existing line of business, or open, or
agree to open, or close, or announce the closure of,
any facility,
(xii) enter into, or modify or cancel any other
agreement, contract or commitment which is not
terminable without payment of an amount greater than
$100,000 or which agreements, contracts or
commitments are not terminable without payment of an
amount greater than $250,000 in the aggregate,
(xiii) adopt or amend or waive any conditions under
any Employee Plan, except as required by law or as
contemplated in this Agreement, or
(xiv) modify, amend, cancel or terminate any
material agreement, contract or instrument required
to be disclosed under Article III or IV.
5.2 Notifications of Breach. MSI, Biosym and Corning, as the case
may be, shall promptly notify the other of any action or inaction by either of
them or any other person which shall render inaccurate in any material respect
any of the respective representations and warranties contained herein.
5.3 Third Party Consents. Corning, Biosym and MSI shall use their
respective good faith reasonable efforts to obtain the consent or approval of
each third party whose consent or approval is required for the consummation by
it of the transactions contemplated hereby.
5.4 Maintenance of Assets. Biosym and MSI shall cause the assets
and property used by each of them in the conduct of their businesses and the
businesses of their Subsidiaries (i) to be maintained in usable operating
condition, damage by casualty and ordinary wear and tear excepted, and (ii) to
be used in the ordinary course of business consistent with past practice.
5.5 Payment of Certain Expenses. Biosym and Corning shall, prior
to the Closing, pay any fees and any estimated fees and disbursements related
to the transactions contemplated by this Agreement for which they are
respectively obligated.
5.6 Cooperation; Satisfaction of Conditions. Corning, Biosym, MSI
and MSI Acquisition shall (a) give assistance, to the extent within their
respective control, to each other in the preparation of required filings and
the seeking of required consents in any manner reasonably requested and (b) use
their respective best efforts to pursue, to the extent within their respective
control, the satisfaction of all other conditions to the consummation of the
Merger.
5.7 Certain Federal Income Tax Reporting. Corning, Biosym and MSI
agree to report the Merger as a reorganization under Sections 368(a)(2)(D) of
the IRC in all federal income tax returns and reports filed by either of them.
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5.8 Contribution to Biosym Capital. Prior to the Closing Date,
pursuant to an agreement dated August 11, 1995, Corning will contribute to
Biosym's capital all of the debt and liability for funds and accrued interest
thereon furnished to Biosym by Corning, and included as an intercompany loan
and accrued interest on the Biosym Financial Statements through the Closing
Date.
5.9 Adjustment for Net Working Capital. Within twenty-five (25)
days after the Closing, Corning's internal accountants will prepare and present
to MSI and MSI's internal accountants will prepare and present to Corning
separate statements (the "Net Working Capital Statement") setting forth the net
working capital of Biosym in the case of Corning and MSI in the case of MSI, in
each case as of the Closing Date. If within ten (10) days of receipt of the
Net Working Capital Statements neither MSI nor Corning provide written notice
to the other of any objection to the other's Net Working Capital Statement, the
statements shall be deemed accepted by both parties. Corning, if cash must be
added to Biosym's net working capital, or MSI if cash must be added to MSI net
working capital, shall pay the other party in immediately available funds the
difference between the Biosym and the MSI net working capital amounts shown on
the Net Working Capital Statements (the "Net Working Capital Adjustment")
within fifteen (15) days of receipt of the Net Working Capital Statements. Any
notice of written objection to a Net Working Capital Statement made by a party
under this Section 5.9 shall be made within ten (10) days of a party's receipt
of the other party's Net Working Capital Statement and must specifically state
the nature of the objection and its effect on the Net Working Capital
Adjustment and on any payment otherwise due hereunder, including any disputed
amount otherwise due hereunder. Notwithstanding receipt of any notice
objection to a Net Working Capital Statement made in accordance with this
Section 5.9, the party required to make any payment hereunder shall, within the
fifteen (15) days from receipt of the other party's Net Working Capital
Statement, make so much of that payment to the other party as is not in dispute
between the parties as a result of any notice of objection made under this
Section 5.9. As used in this Section 5.9, "net working capital" shall mean
current assets less current liabilities derived in the normal course of
business, not however including deferred revenues, and in the case of MSI
current assets shall include only one half the total of prepayments or advance
payments for minimums or future sales made by TMSI or of its Asian-Pacific or
Japanese distributors unrecognized as revenue as of the Closing Date and an
amount equal to $240,000 recorded as receivables to be received in connection
with the Combi Chem Inc. transaction described in the MSI Disclosure Schedule
4.5(c), all as otherwise calculated using GAAP and consistent with the
calculation of net working capital for Biosym and MSI shown on Exhibit D hereto
as of June 30, 1995. Any disagreement between the parties with the Net Working
Capital Statement or the Net Working Capital Adjustment shall be resolved by
meetings between the parties and their independent accountants; provided
however if such resolution is not reached within thirty (30) days of receipt
by a party of written notice of an objection from the other party, the parties
hereto shall submit the disagreement to a third firm of independent accountants
to be selected by agreement of Corning and MSI which shall render its written
opinion solely on the accuracy of the Net Working Capital Adjustment
calculation, its conformity with GAAP and the requirements of this section and
such opinion shall be conclusive of any dispute between the parties. The cost
of such third firm of independent accountants shall be paid by the party who
asserts a calculation of the Net Working Capital Adjustment under this Section
which is furthest from the amount determined by the third firm of independent
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accountants in its written opinion. Corning or MSI, as the case may be, shall
make payment of any sums (if any) required pursuant to the above described
written opinion within ten (10) days of receipt of any such opinion. In
addition to the foregoing, Corning shall add to any amount otherwise due from
it under this Section 5.9 (or subtract from any amount due to it under this
Section 5.9), the amount, if any, Corning is required to pay pursuant to that
certain letter agreement of even date concerning certain employee payments. At
all times in performing the procedures outlined above including without
limitation the preparation of the above described statement or the calculations
adjustment and described herein the parties shall cooperate in good faith with
one another.
5.10 Tax Indemnity. Corning shall pay or cause to be paid and hold
MSI and MSI Acquisition, their directors, officers and employees harmless for
any liability for the payment of any federal, state, local or foreign income
tax, penalties, additions to tax and interest payable by Biosym as result of an
obligation to contribute under Treasury Regulatory Section 1.1502-6 or similar
law or regulation to the payment of taxes, penalties, additions to tax and/or
interest determined on a combined or consolidated basis of Corning or any
current or former member of Corning's group of corporations filing consolidated
returns under the IRC or applicable state or foreign statute or local law, if
such payment of taxes, penalties, additions to tax and/or interest resulted
solely from the fact that Biosym participated in the filing of such combined
and consolidated returns and do not relate to or result from Biosym's income,
business, property or operations.
5.11 ERISA Indemnity. Corning shall pay or cause to be paid and
hold MSI and MSI Acquisition, their directors, officers and employees harmless
for any liability under ERISA and/or the IRC (including costs incurred with
respect to any actions, suits, investigations or proceedings instituted or
threatened to be instituted) resulting from any Employee Plan of Corning or any
entity (other than Biosym) which together with Corning would be treated as a
single employer under Section 414 of the IRC.
5.12 Post Closing Audit. Within 180 days after the Closing Date,
the independent public accountants, selected by MSI and agreed to by Corning,
will conduct an audit of Biosym's Financial Statements (including consolidated
balance sheets, statements of income, statements of cash flows) for year ended
December 30, 1994 and that portion of 1995 ending on the Closing Date. MSI and
Biosym will cooperate in such audit and make personnel reasonably available for
such purposes. Corning will use reasonable efforts to minimize the time and
attention required by Biosym and MSI management on the audit. Corning will
bear all fees and expenses of any Corning personnel assigned to provide
assistance to such accountants and of such accountants up to $70,000.
5.13 Further Assurances. MSI has caused certain of the MSI
Shareholders representing at least 65% of the outstanding shares of common
stock of MSI to execute the attached letter agreement in Exhibit E hereto
setting forth their approval of the Merger in the event that Biosym and Corning
comply with the terms and conditions of this Agreement.
ARTICLE VI. Conditions of Merger
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6.1 Conditions of Obligations of MSI. The obligations of MSI to
consummate the Merger are subject to the fulfillment or satisfaction on and as
of the Closing Date, of each of the following conditions (any one or more of
which may be waived by MSI, but only in a writing signed by the president of
MSI or one of its vice presidents):
(a) Representations and Warranties of Corning and Biosym to be
True; Performance by Corning and Biosym. The representations and warranties of
Corning and Biosym contained in Article III shall be true and correct at the
Closing Date with the same effect as though made at such time, except insofar
as such representations and warranties are given as of a particular date, or
except to the extent waived hereunder or affected by the transactions
contemplated or permitted herein; provided, however, that any inaccuracy of a
representation or warranty, on the date hereof or on the Closing Date, shall
not result in the non-satisfaction of this Section 6.1(a) unless any such
inaccuracy or inaccuracies, either (i) individually or in the aggregate,
constitute facts or circumstances having or which could reasonably be expected
to have a Material Adverse Effect on Biosym or (ii) are willful and intentional
representations that constitute common law fraud. For purposes of this
Agreement, a "Material Adverse Effect," with respect to any person or entity,
means a material adverse effect on the condition (financial or otherwise),
business, properties, assets, liabilities (including contingent liabilities) or
results of operations of such person or entity and its subsidiaries, taken as a
whole. Corning and Biosym shall have performed in all material respects all
obligations and complied in all material respects with all covenants and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing Date; and Corning and Biosym shall have delivered to
MSI a certificate in form and substance satisfactory to MSI, dated the Closing
Date and signed by the respective Presidents or Vice Presidents to the
knowledge of such individual officers after due inquiry, to all such effects.
(b) No Legal Proceedings. No injunction shall have been obtained,
and no suit, action or other proceeding shall be pending before any court or
governmental agency in which it is sought to investigate, challenge, restrain
or prohibit the consummation of the transactions contemplated hereby or
involving a claim that the consummation of the transactions contemplated hereby
would result in a violation of any law, decree or regulation of any government
or agency thereof having jurisdiction.
(c) Statutory Requirements and Biosym Shareholder Approval. All
statutory requirements for the valid consummation by Biosym and of the
transactions contemplated by this Agreement shall have been fulfilled,
including without limitation any required Biosym shareholder approval; all
authorizations, consents and approvals of all federal, state and local
governmental agencies and authorities, required to be obtained in order to
permit consummation by Biosym and MSI of the transactions contemplated by this
Agreement and to permit the businesses presently carried on by Biosym to
continue substantially unimpaired immediately following the Closing Date, shall
have been obtained and shall be in full force and effect.
(d) Third Party Consents. All consents and approvals of the
parties listed in Biosym Disclosure Schedule ____ shall have been obtained,
including without limitation the landlord's
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consent or waiver of consent for the assignment of Biosym's lease of real
property at 9685 Scranton Road, San Diego, California.
(e) Opinion of Counsel for Biosym. MSI shall have received from
Vincent P. Hatton, Assistant General Counsel of Corning, an opinion, dated the
Closing Date, substantially in form attached hereto as Exhibit F. In rendering
such opinion such counsel may rely, to the extent such counsel deems such
reliance necessary or appropriate, upon opinions of local counsel, reasonably
satisfactory to MSI as to matters of law and, as to matters of fact, upon
certificates of public officials and of any officer or officers of Biosym
provided the extent of such reliance is specified in such opinion.
(f) Resignations of Biosym Directors. Biosym shall have delivered
to MSI resignations of its Directors effective as of the Closing Date.
(g) Share Certificates. Tender of share certificates for all
outstanding stock of Biosym.
(h) Shareholders Agreement. Corning shall have executed and
delivered the Shareholders Agreement between Corning, MSI and certain MSI
shareholders listed in Schedule 4.1(n), substantially in the form of Exhibit G
hereto (the "Shareholders Agreement").
(i) Credit Facility. Execution of a revolving credit and loan
agreement in substantially the form of Exhibit H hereto.
(j) Contribution of Debt. Biosym shall have provided evidence
that the debt described in Section 5.8 was contributed to the capital of
Biosym.
(k) Tax Opinion. MSI shall have received the opinion of Brobeck,
Phleger & Harrison stating that the Merger and the transactions contemplated
hereby constitute a business reorganization under that Section 368 of the IRC.
(l) Certified Resolutions. Corning and Biosym shall have
delivered to MSI true and complete copies of the resolutions or actions by
written consent of their respective Boards of Directors and the stockholder of
Biosym pursuant to which the execution and consummation of this Agreement were
duly and validly authorized, certified by the respective Secretaries or
Assistant Secretaries to be in full force and effect as of the Closing Date.
6.2 Conditions of Obligations of Biosym. The obligations of
Biosym and Corning to consummate the Merger are subject to the fulfillment or
satisfaction, on and as of the Closing Date, of each of the following
conditions (any one or more of which may be waived by Biosym and Corning, but
only in a writing signed by the president of Biosym and Corning or one of their
respective vice presidents):
(a) Representations and Warranties of MSI and MSI Acquisition to
be True; Performance by MSI and MSI Acquisition. The representations and
warranties of MSI contained
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in Article IV shall be true and correct at the Closing Date with the same
effect as though made at such time, except insofar as such representations and
warranties are given as of a particular date or except to the extent waived
hereunder or affected by the transactions contemplated or permitted herein;
provided, however, that any inaccuracy of a representation or warranty, on the
date hereof or on the Closing Date, shall not result in the non-satisfaction of
this Section 6.2(a) unless any such inaccuracy or inaccuracies, either (i)
individually or in the aggregate, constitute facts or circumstances having or
which could reasonably be expected to have a Material Adverse Effect on MSI, or
(ii) are willful and intentional misrepresentations that constitute common law
fraud. For purposes of this Agreement, a "Material Adverse Effect", with
respect to any person or entity, means a material adverse effect on the
condition (financial or otherwise), business, properties, assets, liabilities
(including contingent liabilities) or results of operations of such person or
entity and its subsidiaries, taken as a whole. MSI shall have performed in all
material respects all obligations and complied in all material respects with
all covenants and conditions required by this Agreement to be performed or
complied with by it at or prior to the Closing Date; and MSI shall have
delivered to Biosym a certificate in form and substance satisfactory to Biosym,
dated the Closing Date and signed by MSI's President or one of its Vice
Presidents to the knowledge of such officer after due inquiry, to all such
effects.
(b) No Legal Proceedings. No injunction shall have been obtained,
or no suit, action or other proceedings shall be pending before any court or
governmental agency in which it is sought to investigate, challenge, restrain
or prohibit the consummation of the transactions contemplated hereby, or in
which it is sought to obtain damages in connection therewith, or involving a
claim that the consummation of the transactions contemplated hereby would
result in a violation of any law, decree or regulation of any government or
agency thereof having jurisdiction.
(c) Statutory Requirements and MSI Shareholder Approval. All
statutory requirements for the valid consummation by MSI of the transactions
contemplated by this Agreement shall have been fulfilled, including without
limitation any required MSI Shareholder approval; all authorizations, consents
and approvals of all federal, state and local governmental agencies and
authorities required to be obtained in order to permit consummation by Biosym
and MSI of the transactions contemplated by this Agreement shall have been
obtained and shall be in full force and effect.
(d) Third Party Consents. All consents and approvals of the
parties listed in the MSI Disclosure Schedule ____, shall have been obtained.
(e) Opinion of Counsel for MSI. Biosym shall have received from
Thomas Carney, Corporate Counsel of MSI, an opinion, dated the Closing Date,
substantially in the form attached hereto as Exhibit I. In rendering such
opinion such counsel may rely, to the extent such counsel deems such reliance
necessary or appropriate, upon opinions of local counsel reasonably
satisfactory to Biosym as to matters of law and, as to matters of fact, upon
certificates of public officials and of any officer or officers of MSI,
provided the extent of such reliance is specified in the opinion.
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(f) Tax Opinion. Corning and Biosym shall have received the
opinion of Brobeck, Phleger & Harrison stating that the Merger and the
transactions contemplated hereby constitute a business reorganization under
Section 368 of the IRC.
(g) Shareholders Agreement. Execution and delivery of the
Shareholders Agreement by MSI and certain MSI Shareholders.
(h) Share Certificates. Tender of share certificates for
5,776,558 shares of MSI Common Stock and for 1,467,825 shares of MSI Non-Voting
Convertible Stock.
(i) Certified Resolutions. MSI and MSI Acquisition shall have
delivered to Corning true and complete copies of the resolutions or actions by
written consent of their respective Board of Directors and the shareholder of
MSI Acquisition pursuant to which the execution and consummation of this
Agreement were duly and validly authorized, certified by their respective
Secretaries or Assistant Secretaries to be in full force and effect as of the
Closing Date.
(j) Restated Certificate of Incorporation. MSI shall have adopted
a Restated Certificate of Incorporation concerning the MSI Common Stock and MSI
Convertible Stock substantially as sent to MSI shareholders for approval on
August 2, 1995.
ARTICLE VII. Termination of Obligations and Waivers of Conditions;
Payment of Expenses
7.1 Termination of Agreement and Abandonment of Merger. Anything
herein to the contrary notwithstanding, this Agreement and the Merger
contemplated hereby may be terminated as follows, and in no other manner:
(a) Mutual Consent. At any time before the Closing Date by mutual
written consent of Biosym and MSI;
(b) Expiration Date. By either MSI or Biosym on written notice if
the Closing shall not have occurred by August 18, 1995 (which date may be
extended by mutual written agreement of MSI and Biosym); or
(c) Unilateral. By either party in the event it is not in
material breach of its obligations under this Agreement (the "Non-Breaching
Party"), and if there has been a breach by the other party (the "Breaching
Party") of (a) any of its representations and warranties hereunder such that
Section 6.1(a) (in the case of Biosym and Corning) and Section 6.2(a) (in the
case of MSI) will not be satisfied or (b) any of their respective covenants or
agreements contained in this Agreement such that Section 6.1(a) (in the case of
Biosym and Corning) and Section 6.2(a) (in the case of MSI and MSI Acquisition)
will not be satisfied, and, in both case (a) and case (b), such breach, if
capable of being cured, has not been cured at no material additional cost to
the Non-Breaching Party within ten (10) days (but in no event later than the
Effective Date) after written notice to the Breaching Party.
<PAGE> 44
- 37 -
7.2 Effect of Termination. In the event that this Agreement shall
be terminated pursuant to Section 7.1, all obligations of the parties hereto
under this Agreement shall terminate (except those under Sections 5.1(a)
concerning the return of information and 7.3 concerning payment of expenses and
under the Confidentiality Agreement dated February 27,, 1995 between Biosym and
MSI, which shall survive termination) and there shall be no liability of any
party to another (except by reason of a default hereunder which has not been
waived).
7.3 Payment of Expenses. If the Merger does not close, each of
the parties hereto will pay all of its own costs and expenses incident to their
respective negotiation and preparation of this Agreement and to their
performance of and compliance with all agreements and conditions contained
herein or therein on their part to be performed or complied with, including the
fees, expenses and disbursements of counsel and auditors. In addition, Corning
shall pay all legal fees incurred by Biosym in connection with the consummation
of the Merger.
ARTICLE VIII. Miscellaneous
8.1 Amendments. This Agreement and any Exhibit attached hereto
may be amended at any time by an instrument in writing signed respectively by
an authorized officer of, or individually by, each of the parties hereto,
making reference to this Agreement and expressing the plan or intention to
amend or modify it.
8.2 Further Instruments and Actions. Each party shall execute and
deliver such instruments and take such other action as shall be reasonably
required, or as shall be reasonably requested by any other party, in order to
carry out all transactions, agreements and covenants contemplated in this
Agreement, at or prior to the Closing Date.
8.3 Survival and Limitation of Representations and Warranties.
All claims under the respective representations and warranties of MSI and
Biosym contained herein and in any instrument delivered by them hereunder shall
be made no later than twelve (12) months after the Closing Date, except that
claims in connection with representations and warranties in Sections 3.6 or 4.6
may be made not later than the applicable statute of limitations for the
underlying tax liabilities described therein. The respective representations,
warranties and covenants of MSI and Biosym in this Agreement shall expire and
be terminated and extinguished twelve (12) months after the Closing Date;
provided however, the obligations of Corning under Sections 5.10 and 5.11 shall
survive for the relevant statutory period.
(b) No claim for damages arising out of any breach of the
representations and warranties in Article III or IV shall be made unless it is
brought in good faith and in the aggregate the damage or loss for all such
breaches is in excess of $250,000. All claims arising out of breach of the
representations and warranties in Article III may be set off against claims
arising out of a breach of the representations and warranties of Article IV and
claims arising out of a breach of the representations and warranties in Article
IV may be set off against claims arising out of breach of the representations
and warranties of Article III.
<PAGE> 45
- 38 -
8.4 Arbitration. All disputes arising in connection with this
Agreement, the Merger or transactions contemplated herein, excluding however
disagreements described in Section 5.11 between the parties which are not
resolved by means of direct negotiations between them shall be finally settled
by arbitration in accordance with this Section 8.4. The arbitration shall be
held in or around Chicago, Illinois and shall be conducted in accordance with
the commercial arbitration rules of the American Arbitration Association (AAA)
by three arbitrators, appointed by consent of Corning and MSI, which consent
shall not be unreasonably withheld or delayed. If the parties cannot agree
upon the arbitrators, either may apply to the AAA to appoint the arbitrators.
The arbitrators shall resolve the dispute within 60 days after the dispute is
submitted to them but shall not be empowered to award exemplary or punitive
damages. Any decision by the arbitrators shall be binding upon the parties and
may be entered as a final judgment in any court having jurisdiction. The cost
of any arbitration proceeding shall be borne by the parties as the arbitrators
shall determine if the parties have not otherwise agreed. The arbitrators
shall render their final decision in writing to the parties, which decision
shall explain the reasons therefor.
8.5 Publicity. MSI and Biosym agree that all press releases,
announcements and other publicity concerning this Agreement shall be subject to
the prior approval by both of them except to the extent required by law or
applicable regulation.
8.6 Governing Law. This Agreement and the legal relations between
the parties shall be governed by and construed in accordance with the
substantive laws of the State of Delaware.
8.7 Notices. Any notices or other communications required or
permitted thereunder shall be sufficiently given if hand delivered or sent by
registered mail or certified mail, postage prepaid, or by overnight courier or
delivery service addressed, if to Biosym: c/o Corning Incorporated, One
Riverfront Plaza, Corning, New York 14831, Attention: Secretary, cc: General
Counsel, and if to MSI: Molecular Simulations Inc., 16 New England Executive
Park, Burlington, Massachusetts 01803-5297, Attention: President, cc:
Corporate Counsel, or such other address as shall be furnished in writing by
any of the parties, and any such notice or communication shall be deemed to
have been given as of the date so mailed (except that a notice of change of
address shall not be deemed to have been given until received by the
addressee).
8.8 No Assignment. This Agreement may not be assigned, by
operation of law or otherwise, and any attempt to do so shall be null and void.
8.9 Headings. The descriptive headings of the several Articles,
Sections and paragraphs of this Agreement are inserted for convenience only and
do not constitute part of this Agreement.
8.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties hereto and delivered to each of the other parties hereto.
<PAGE> 46
- 39 -
8.11 Waiver. Any failure of either party to insist upon
performance of any provision of this Agreement shall not constitute a waiver of
performance of the same obligation at a different time or any other right which
such party may have under this Agreement.
8.12 Severability. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such
provision to other persons or circumstances shall continue in full force and
effect and in no way be affected, impaired or invalidated.
8.13 Entire Agreement, Modification and Interpretation. This
Agreement, including the Schedules and Exhibits attached hereto and the
documents referred to herein, shall constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and shall supersede
all previous negotiations, commitments, writings or letters of intent with
respect to such subject matter. This Agreement may not be amended, modified or
waived except by a subsequent written agreement duly signed by the authorized
representatives of the parties hereto. No principle of construction or
interpretation shall be applied to construe this Agreement or any part of it
against the party which drafted the Agreement.
<PAGE> 47
- 40 -
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
MOLECULAR SIMULATIONS INC.
By: /s/ Molecular Simulations Inc.
------------------------------
MSI ACQUISITION INC.
By: /s/ MSI Acquisition Inc.
------------------------------
BIOSYM TECHNOLOGIES, INC.
By: /s/ Biosym Technologies, Inc.
------------------------------
CORNING INCORPORATED
By: /s/ Corning Incorporated
-------------------------------
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.26
JOINT VENTURE AGREEMENT
February 14, 1992
between
POLYGEN CORPORATION
and
TEIJIN LIMITED
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 - DEFINITIONS 1
ARTICLE 2 - EFFECTIVE DATE AND TERM 2
ARTICLE 3 - SCHEDULE OF EVENTS 2
3.1 Closing 2
3.2 Filing of Incorporation Documents 3
3.3 Distributorship Agreement 3
ARTICLE 4 - ESTABLISHMENT OF THE COMPANY 3
4.1 Formation of the Company 3
4.2 Articles of Incorporation 3
4.3 Name and Principal Office 3
4.4 Procedures Involving Japanese Government 4
ARTICLE 5 - PURPOSES OF THE COMPANY 4
5.1 Corporate Purposes 4
5.2 Cooperation 4
ARTICLE 6 - CAPITAL OF THE COMPANY; SHAREHOLDERS AND ASSETS 4
6.1 Capital Stock 4
6.2 Subscription of Capital Shares 5
6.3 Rights; Restrictions 5
6.4 Working Capital Loans 5
6.5 Preemptive Rights 5
6.6 Securities 6
ARTICLE 7 - BUSINESS YEAR AND ACCOUNTING 6
7.1 Business Year 6
7.2 Accountant and Financial Statements 6
7.3 Access to Books, Records and Facilities 7
7.4 Records and Books; Internal Reports 7
7.5 Statutory Auditor 7
ARTICLE 8 - OPERATION OF THE COMPANY; ASSISTANCE;
PRODUCT DEVELOPMENT COORDINATION;
RIGHTS OF FIRST REFUSAL TO PRODUCTS 7
8.1 Adoption and Implementation of Operating
Procedures 7
8.2 Assistance to the Company 7
</TABLE>
- i-
<PAGE> 3
<TABLE>
<S> <C>
8.3 Product Development Coordination 8
8.4 Rights of First Refusal to Teijin's Products 8
8.5 Right of First Refusal to Teijin Systems
Technology 9
8.6 Obligation to Proceed Diligently 9
8.7 Company as Exclusive Distributor 9
8.8 Duty of Management to Act Impartially 10
8.9 Employee Benefits 10
ARTICLE 9 - SHAREHOLDERS' MEETINGS 10
9.1 Shareholders' Meetings 10
9.2 Shareholders' Resolutions 10
ARTICLE 10 - MANAGEMENT OF THE COMPANY 11
10.1 Board of Directors 11
10.2 Election of Directors 12
10.3 Board of Directors' Meetings 12
10.4 Resolutions of Board of Directors Meetings 12
10.5 Mutual Consultation 13
10.6 Management 13
ARTICLE 11 - RESTRICTION ON TRANSFER OF SHARES 13
ARTICLE 12 - RIGHT OF FIRST REFUSAL 14
ARTICLE 13 - PROFITS AND DIVIDENDS POLICY 15
ARTICLE 14 - SECRECY 15
14.1 Obligation of Secrecy 15
14.2 Obligation Not to Use 16
14.3 Observance by Company 16
14.4 Indemnity; Injunctive Relief 16
ARTICLE 15 - TERMINATION 17
15.1 Termination 17
15.2 Effect of Termination 18
ARTICLE 16 - DISSOLUTION 18
16.1 Events Triggering Dissolution 18
16.2 Management of Company During Winding Up 18
16.3 Distribution of Assets 18
16.4 Documents and Records 19
ARTICLE 17 - REPRESENTATIONS, WARRANTIES AND COVENANTS 19
17.1 Representations, Warranties and Covenants of PMSI 19
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
17.2 Representations, Warranties and Covenants of
Teijin 20
ARTICLE 18 - GOVERNING LAW AND LANGUAGE; DISPUTE RESOLUTION 21
18.1 Governing Law and Language 21
18.2 Dispute Resolution 21
ARTICLE 19 - ENFORCEMENT 22
19.1 Severability 22
19.2 Waiver of Obligation 22
19.3 Specific Performance/Injunctive Relief 22
19.4 Rights of Shareholders are Cumulative 23
19.5 Third Parties 23
ARTICLE 20 - GENERAL TERMS 23
20.1 Assignment 23
20.2 Amendment 23
20.3 Notices 23
20.4 Compliance by Company 24
20.5 Entire Agreement 24
20.6 Force Majeure 24
20.7 Headings 24
20.8 Counterparts 24
20.9 Export Compliance 24
20.10 Parties Advised by Counsel - No Interpretation
Against Drafter 25
EXHIBITS
Exhibit A: Distributorship Agreement
Exhibit B: Common Stock Purchase Agreement
Exhibit C: Corporate License Agreement
Exhibit D-2: English translation of Articles of
Incorporation
</TABLE>
-iii-
<PAGE> 5
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT ("Agreement") is made as of the 14th day
of February, 1992 by and between Polygen Corporation (doing business as Polygen
Molecular Simulations Incorporated), a Delaware corporation, having its
principal office at 200 Fifth Avenue, Waltham, Massachusetts 02154, U.S.A.
(hereinafter "PMSI"), and Teijin Limited, a corporation organized under the laws
of Japan, having its principal office at 6-7, Minamihommachi 1-chome, Chuo-ku,
Osaka 541, Japan (hereinafter "Teijin"). PMSI and Teijin shall hereinafter be
collectively referred to as the "Shareholders" and individually as a
"Shareholder".
RECITALS
WHEREAS, the Shareholders desire to enter into a strategic partnership
through the formation of a joint venture corporation in Japan upon the terms and
conditions set forth below for the purposes of marketing, distributing,
licensing, selling and supporting PMSI's and its subsidiaries' computational
chemistry software products in the Territory and establishing a strong strategic
business in the Territory which has direct relationships with customers and a
strong technology base.
WHEREAS, the Shareholders desire to acquire the stock of such
corporation, and the Shareholders desire to provide for the consistent and
uniform management of such corporation.
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Shareholders hereby agree as follows:
ARTICLE 1 - DEFINITIONS
For the purposes of this Agreement, the following terms shall, unless
the context otherwise requires, have the meanings set forth below:
1.1 "Company" means the corporation to be organized under the laws
of Japan pursuant to Article 4 hereof.
1.2 "Territory" means the entire country of Japan, which Territory may
be expanded from time to time by mutual agreement of the Shareholders to include
other countries in the Asian Pacific Rim such as Korea and Taiwan.
1.
<PAGE> 6
1.3 "Products" mean those computational chemistry software products
marketed presently or in the future by PMSI or PMSI Subsidiaries as defined in
the Distributorship Agreement attached hereto as Exhibit A and as to which the
Company shall have the right to act as a distributor under the Distributorship
Agreement.
1.4 "Distributorship Agreement" means the distributorship agreement by
and between PMSI and the Company in the form attached hereto as Exhibit A.
1.5 "Stock Purchase Agreement" means the common stock purchase
agreement by and between PMSI and Teijin in the form attached hereto as Exhibit
B, pursuant to which Teijin shall make an equity investment in PMSI through the
purchase of newly issued PMSI common stock.
1.6 "Corporate License Agreement" means the corporate license agreement
by and between PMSI and Teijin in the form attached hereto as Exhibit C,
pursuant to which PMSI shall grant Teijin a non-exclusive corporate license to
use the Products.
1.7 "PMSI Subsidiaries" mean and include any corporation, company or
other corporate entity in the United States or any other country in the world
whose voting stock is, at any time during the term of this Agreement, fifty
percent (50%) or more directly owned by PMSI.
ARTICLE 2 - EFFECTIVE DATE AND TERM
This Agreement shall become effective on the later to occur of: (i) the
date of execution of this Agreement by the Shareholders, or (ii) the date on
which all Japanese governmental clearance (whether in the form of an approval,
notification or otherwise) is obtained with respect to Japanese foreign exchange
and trade control regulations, and shall continue until terminated as provided
in Article 15 hereof.
ARTICLE 3 - SCHEDULE OF EVENTS
3.1 Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place on March 6, 1992 (the "Closing
Date"), or such other subsequent date as the Shareholders may agree. The Closing
shall be held at the offices of Teijin in Tokyo, Japan, or at such other place
as the Shareholders may agree. Prior to or at the Closing, the Shareholders
shall concurrently execute and enter into this Agreement, the Stock Purchase
Agreement, the Corporate License Agreement, and any other agreements and/or
document(s) as they or
2.
<PAGE> 7
their legal counsel may mutually deem necessary or appropriate in the
circumstances.
3.2 Filing of Incorporation Documents. As soon as practicable following
the execution of this Agreement, the Shareholders shall file or arrange for the
filing of the incorporation documents for the Company.
3.3 Distributorship Agreement. As soon as practicable after the
incorporation of the Company, PMSI and the Company shall enter into the
Distributorship Agreement whereby the Company shall be appointed as PMSI's
exclusive distributor with respect to the marketing, distribution, licensing,
sale and support of the Products in the Territory.
ARTICLE 4 - ESTABLISHMENT OF THE COMPANY
4.1 Formation of the Company. As soon as practicable after the
execution of this Agreement, the Shareholders will cause the Company to be
organized and incorporated as a joint stock company (Kabushiki Kaisha) under the
laws of Japan. All reasonable costs incurred in connection with the
incorporation and qualification of the Company in Japan shall be borne by the
Company to the extent legally permitted under the laws of Japan. The remainder
of such costs shall be shared equally by the Shareholders.
4.2 Articles of Incorporation. The Articles of Incorporation of the
Company shall be in the form attached hereto as Exhibit D-1 (Japanese original);
the English translation of which is attached hereto as Exhibit D-2. In the event
of any conflict between this Agreement and the Articles of Incorporation, this
Agreement shall prevail and the Shareholders shall amend the Articles of
Incorporation of the Company as necessary, to the extent permitted by law, to
eliminate such conflict. Notwithstanding the foregoing, in the course of
incorporating the Company, the promoter(s) may revise the Japanese original
Articles of Incorporation as required or suggested by the Notary Public or
District Registry in charge to the extent that no conflict between the revised
Japanese Articles of Incorporation and this Agreement and/or the English
translation attached hereto as Exhibit D-2 is created as a result of such
revision.
4.3 Name and Principal Office. The corporate name of the Company shall
be Teijin Molecular Simulations Incorporated in English and
[ Japanese Translation] in Japanese or, if such name is not available, such
other name as is acceptable to the Shareholders. The principal place of
business of the Company shall initially be located at Chiyoda-ku, Tokyo, Japan.
3.
<PAGE> 8
4.4 Procedures Involving Japanese Government. Teijin shall be
responsible for completing and/or assisting PMSI in completing any approval
and/or notification procedures required by law involving the Japanese government
(national and/or local) with respect to the formation of the Company, including
but not limited to assisting PMSI in filing with the relevant Japanese
governmental ministries all required notices under the Foreign Exchange and
Foreign Trade Control Law of Japan, as amended, concerning PMSI's purchase of
stock in the Company. The Company shall: (i) file any and all reports and
notices and take any and all other further action as necessary or appropriate to
establish and maintain its existence under the laws of Japan, and (ii) be
responsible for completing any approval procedures required by law involving the
Japanese government with respect to the importation, marketing, distribution,
licensing, sale and support of the Products in the Territory.
ARTICLE 5 - PURPOSES OF THE COMPANY
5.1 Corporate Purposes. The Company shall pursue the following business
purposes:
(a) the importation, marketing, distribution, licensing and sale of the
Products in the Territory through all legitimate channels, including direct,
through subdistributors and OEMS;
(b) the provision of technical support services for the Products and
contract services relating to the Products; and
(c) other business activities which the Board of Directors of the
Company may from time to time decide.
5.2 Cooperation. The Shareholders agree to cooperate with each other in
good faith in the fulfillment of the above purposes and activities and otherwise
in the implementation of the provisions of this Agreement, and shall jointly
develop a business plan for the Company.
ARTICLE 6 - CAPITAL OF THE COMPANY; SHAREHOLDERS AND ASSETS
6.1 Capital Stock. The Company shall have one class of shares
designated common stock, to which the rights more particularly defined in
Section 6.3 hereof shall attach. The total authorized capital of the Company
shall consist of sixteen thousand (16,000) shares of common stock, with a par
value of fifty thousand Japanese yen (Y50,000) each.
4.
<PAGE> 9
6.2 Subscription of Capital Shares.
(a) The Company shall issue four thousand (4,000) shares of common
stock at the time of its incorporation. The Shareholders shall subscribe for
such initial shares to be issued by the Company as follows:
<TABLE>
<CAPTION>
Shareholder Common Shares Percentage
----------- ------------- ----------
<S> <C> <C>
PMSI 2,000 (50%)
Teijin 2,000 (50%)
</TABLE>
(b) In consideration for its shares, PMSI shall pay to the Company,
within forty-five (45) days after the date of execution of this Agreement and as
the Shareholders may agree, the sum of [*]. In consideration for its shares,
Teijin shall pay to the Company, within forty-five (45) days after the date of
execution of this Agreement and as the Shareholders may agree, the sum of [*].
The obligation of each Shareholder to subscribe and pay for shares as
above-stated shall be conditioned upon a subscription and payment, within
twenty-four (24) hours, by the other Shareholder of its respective portion
thereof.
6.3 Rights; Restrictions. All shares issued by the Company shall have
equal voting and other rights, preferences and restrictions as set forth in the
Company's Articles of Incorporation attached hereto as Exhibit D-1.
6.4 Working Capital Loans. To the extent that funds generated from the
operations of the Company are not sufficient to cover all proper operational
expenses thereof, loans to the Company for working capital purposes in such sums
reasonably determined by the Board of Directors of the Company to be necessary
to fund such operational expenses ("Operating Loans") shall be obtained and
shall be severally guaranteed (if necessary) by the Shareholders in
proportion to their then respective shareholdings in the Company. Use of any
Operating Loans or other lines of credit by the Company shall be in
accordance with a budget set by the Board of Directors of the Company.
6.5 Preemptive Rights. The Shareholders shall have preemptive rights to
subscribe and pay for any additional new shares of the Company that are issued
in the future, in proportion to their then existing respective shareholdings in
the Company. Each Shareholder shall exercise its preemptive rights by sending
written notice to the Company of its intent to subscribe for the new shares of
the Company, within fourteen (14) days of being notified by the Company of such
capital increase. In each case, the subscription of and payment for such new
shares
* CONFIDENTIAL TREATMENT REQUESTED
5.
<PAGE> 10
shall be consummated within thirty (30) days following receipt by the Company of
the Shareholder's written notice.
If either Shareholder shall not wish to subscribe for the shares
covering any capital increase, such Shareholder shall immediately notify the
Company and the other Shareholder thereof in writing, whereupon the preemptive
right of the first Shareholder shall pass to the other Shareholder and the
latter shall have the right to subscribe for all or any part of the shares not
so subscribed, and shall exercise such right in the manner set forth in the
preceding paragraph.
6.6 Securities. Unless otherwise agreed to between the Shareholders in
writing, the Company shall not issue any equity, including convertible bonds,
bonds with warrants or any other type of security, holders of which can acquire
an equity interest in the Company, without the prior approval of the Board of
Directors of the Company.
ARTICLE 7 - BUSINESS YEAR AND ACCOUNTING
7.1 Business Year. The business and tax year of the Company shall be
from April 1 to March 31 of each calendar year, provided that the first business
and tax year of the Company shall begin on the date of its incorporation and end
on the next occurring March 31.
7.2 Accountant and Financial Statements. The Company, at its expense,
shall employ an independent certified public accountant, as agreed to by the
Board of Directors of the Company, to perform an annual audit of the books and
records of the Company and to prepare any and all tax returns of the Company
required under Japanese law. Within sixty (60) days after the close of each
business year of the Company, an audited balance sheet and profit and loss
statement of the Company prepared in accordance with generally accepted
accounting principles in Japan consistently applied, together with a report of
such accountant shall be prepared in the Japanese language, translated into the
English language, and sent to each Shareholder. Any services of such accountant
other than such audit, performed at the request of either Shareholder, shall be
at the cost of the requesting Shareholder. Within thirty (30) days after the
close of each month of the business year of the Company, an unaudited balance
sheet and profit and loss statement of the Company for such month, prepared in
accordance with generally accepted accounting principles in Japan consistently
applied and certified by the chief financial officer of the Company to be true,
correct and complete in all material respects, shall be prepared in the Japanese
language, translated into the English language, and sent to each Shareholder.
6.
<PAGE> 11
7.3 Access to Books, Records and Facilities. Each of the Shareholders,
at its own expense, shall have full and complete access, through an accountant
or other agent of its choice, to the books, records and facilities of the
Company during normal business hours for the purpose of inspection, making
copies, auditing or any other purpose not inconsistent with the best interests
of the Company. The books and records of the Company will be in the Japanese
language with a summary of such records to be made available, upon request, in
the English language. The cost of preparing the English language summary shall
be borne by the Company.
7.4 Records and Books; Internal Reports. The types of records and
accounting books which the Company will maintain shall be established by the
Board of Directors of the Company in accordance with any applicable law and
shall reflect generally accepted accounting principles in Japan. Such records
and books shall be maintained at the Company's principal office or, to the
extent permitted by applicable law, at such other location as the Company's
Board of Directors shall determine. If either Shareholder shall desire any
additional information or operating reports to be generated by the Company, such
Shareholder may cause such reports to be prepared at its own expense.
7.5 Statutory Auditor. In addition to the independent certified public
accountant to be employed pursuant to Section 7.2 hereof, the Company shall have
one (1) statutory auditor to be nominated by Teijin and to be elected by
resolution of the General Shareholders' Meeting.
ARTICLE 8 - OPERATION OF THE COMPANY; ASSISTANCE;
PRODUCT DEVELOPMENT COORDINATION;
RIGHTS OF FIRST REFUSAL TO PRODUCTS
8.1 Adoption and Implementation of Operating Procedures. All operating
procedures, including, without limitation, pricing policies with respect to the
licensing/sale of the Products in the Territory, staffing and hiring,
compensation of employees, supervision of work and marketing of the Products,
shall be determined under guidelines established by action of the Board of
Directors of the Company.
8.2 Assistance to the Company. Teijin will assist the Company in the
development of its business by providing a highly qualified management, staff
and necessary facilities for the Company's operations, at a reasonable
compensation. The Company's sales and support staff shall be solely engaged in
marketing and providing services related to the Products in the Territory. PMSI
will technically assist and provide initial technical staffing to the Company.
The salaries, travel, overseas assignment (where applicable) and incidental
expenses of
7.
<PAGE> 12
all staff shall be borne by the Company while they are attached to the Company.
8.3 Product Development Coordination. Teijin agrees that, during the
term of this Agreement, it will coordinate its product development activities in
the field of computational chemistry with PMSI such that:
(a) Teijin and its subsidiaries will not, during the term of this
Agreement, engage in the development, licensing, or sale of any product ([*])
that Competes (as such term is defined below) with the Products or any other
software product under development or planned to be developed by PMSI and/or
PMSI Subsidiaries which are disclosed to Teijin in writing in sufficient detail
to enable Teijin to comply with the provisions of this Section 8.3(a). For the
purposes of this Agreement, two products shall be considered to "Compete" with
one another if the sale of one product to a customer would substantially
substitute for the sale of the other product to such customer. Without limiting
the obligations of the parties hereunder, Teijin and PMSI shall consult with
each other on a yearly basis to determine which products are competitive
products; and
(b) In the event that Teijin and/or any of Teijin's subsidiaries
intends to develop or develops a computational chemistry product ([*]) which
could be reasonably interfaced, built upon or otherwise combined with software
platforms or products of PMSI or those of PMSI Subsidiaries, Teijin and/or the
Teijin subsidiary in question shall notify PMSI in writing and shall develop
such product, in consultation with PMSI, to integrate or otherwise be compatible
with PMSI's and PMSI Subsidiaries' software platforms or products.
8.4 Rights of First Refusal to Teijin's Products.
(a) Teijin hereby grants the Company, during the term of this
Agreement, a right of first refusal to market, license, sell or otherwise
distribute computational chemistry software products developed by Teijin or any
Teijin subsidiary under the conditions described in Section 8.3(b) above in the
Territory on an exclusive basis, and upon other terms that are substantially
equivalent to the terms granted to the Company by PMSI under the Distributorship
Agreement; provided, however, that such right of first refusal shall not extend
to products that are, as of the date hereof, marketed by Teijin or a Teijin
subsidiary.
* CONFIDENTIAL TREATMENT REQUESTED
8.
<PAGE> 13
(b) Teijin also hereby grants PMSI, during the term of this Agreement,
a right of first refusal to market, license, sell or otherwise distribute
computational chemistry products developed by Teijin or any Teijin subsidiary in
all parts of the world outside of the Territory reserved to the Company, on an
exclusive basis, and upon other terms that are substantially equivalent to the
terms of the Distributorship Agreement between PMSI and the Company. Teijin
agrees to promptly and fully disclose in good faith to PMSI all computational
chemistry products developed by Teijin or any Teijin subsidiary and the parties
shall mutually identify those products that are suitable for distribution by
PMSI pursuant to its right of first refusal hereunder.
8.5 [*]
8.6 Obligation to Proceed Diligently. If the Company, PMSI, or TST
exercises its right of first refusal to market and distribute products as set
forth in Sections 8.4(a), 8.4(b) or 8.5 above, as the case may be, it shall
diligently pursue commercial distribution of such product(s). If the party
exercising such right of first refusal shall fail to diligently pursue the
commercial distribution of the product(s) for which it has acquired distribution
rights for a period of ninety (90) consecutive days in any twelve (12)-month
period after the exercise of such right of first refusal, following notice from
the other party of the same and a thirty (30)-day period to cure, the party
which developed or introduced the product(s) shall thereafter have the right to
market and distribute such product(s) in the territory in question.
8.7 Company as Exclusive Distributor. PMSI agrees that, during the term
of this Agreement, the Company shall be PMSI's sole vehicle in the Territory for
the distribution of the
9.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 14
Products in the Territory as contemplated by the Distributorship Agreement.
8.8 Duty of Management to Act Impartially. Notwithstanding the
foregoing provisions, the management of the Company shall at all times act only
in the best interests of the Company. Each Shareholder hereby assures the other,
and further agrees to be responsible for ensuring, that any management or other
personnel nominated, appointed or otherwise supplied by it shall abide by the
terms of this Agreement and the Distributorship Agreement and act impartially
and in the best interests of the Company, including but not limited to
transacting on an arms'-length basis with any subdistributor, sub-agent or
value-added reseller who is directly or indirectly owned or controlled by either
Shareholder.
8.9 Employee Benefits. Employees of the Company shall receive benefits
under the benefit plans as determined under guidelines established by action of
the Board of Directors of the Company.
ARTICLE 9 - SHAREHOLDERS' MEETINGS
9.1 Shareholders' Meetings. Shareholders of the Company shall receive
notice in both the Japanese and English languages of each Shareholder's Meeting
at least fourteen (14) days before the scheduled date of such meeting. The
Company shall have at least one Ordinary General Meeting of Shareholders each
calendar year at a time and location determined by the Board of Directors of the
Company. Any Extraordinary or Special Meeting of Shareholders of the Company
shall be held from time to time at the request of a Shareholder of the Company
according to applicable law or as called for by a resolution of the Board of
Directors.
9.2 Shareholders' Resolutions. The quorum for Shareholders' Meetings
shall consist of a majority of the total outstanding shares of the Company.
Unless otherwise required by applicable law, all resolutions may be passed by an
affirmative vote of a majority of the shares present and entitled to vote;
provided that in the case of the matters listed below, unless otherwise agreed
by the Shareholders, such matters shall be submitted to the Shareholders for
approval by a special resolution of the Shareholders' Meeting, which special
resolution must be adopted by an affirmative vote of not less than two-thirds
(2/3) of the shares present and entitled to vote, unless otherwise set forth
herein:
(a) Modification or amendment of the Articles of Incorporation of the
Company;
10.
<PAGE> 15
(b) Assignment or other transfer of all or an important part of the
business of the Company, or acquisition of all or an important part of the
business of others;
(c) Reduction in capital;
(d) Dissolution and/or liquidation except as provided in Article 16
below;
(e) Payment of dividends;
(f) Dismissal of Directors of the Company;
(g) Merger or consolidation of the Company, which shall be adopted by
an affirmative vote of not less than two-thirds (2/3) of the shares
outstanding;
(h) Change in the business purposes of the Company; and
(i) Such other matters as required by law or the Articles of
Incorporation of the Company to be determined by a special resolution of the
Shareholders' Meeting.
Notwithstanding the foregoing, if at any time after the third anniversary of the
Effective Date of this Agreement, either Shareholder proposes that any of the
actions set forth in Section 9.2(b), (d), (g) or (h) above be taken, such
Shareholder shall send written notice of its proposal (the "Proposal Notice") to
the other and if such action is not adopted by the required vote of the
Shareholders within thirty (30) days following the date of the Proposal Notice,
the proposing Shareholder shall have the right to require mutual consultation
between the senior management of the Shareholders by written notice to the other
in accordance with Section 10.5 hereof.
ARTICLE 10 - MANAGEMENT OF THE COMPANY
10.1 Board of Directors. The Company shall be managed by a Board of
Directors to be composed of six (6) individuals, three (3) to be nominated by
each of PMSI and Teijin, respectively; except, however, that, for such period as
shall be mutually agreed to by the Shareholders, the Board of Directors of the
Company shall consist of four (4) members, two (2) to be nominated by each of
PMSI and Teijin, respectively. The Company shall have two (2) representative
directors, one to be appointed from the Directors nominated by PMSI and the
other from the Directors nominated by Teijin, who shall serve for such period as
11.
<PAGE> 16
shall be mutually agreed to by the Shareholders. The representative directors
shall have the authority to act severally on behalf of the Company.
10.2 Election of Directors. The Directors of the Company shall be
elected at the Shareholders' Meeting. Each party hereby agrees to vote its
shares for the candidates so nominated. The Shareholders hereby agree that if
any of the Directors dies, resigns or leaves office before the expiration of his
term, such vacancy shall be filled promptly and in any event prior to the Board
of Directors taking any major action and each Shareholder will vote its shares
so that a new Director, to be selected by the Shareholder who nominated the
departed Director, shall be elected as his successor. The Shareholders expressly
agree that the voting agreement contained in this Section 10.2 shall be
specifically enforceable. The maximum amount of compensation to be paid to the
Directors shall be determined by resolution of the Shareholders' Meeting.
10.3 Board of Directors' Meetings. Notice of Board of Directors'
meetings shall be given in both the Japanese and English languages to each
Director and the statutory auditor at least twenty (20) days before the
scheduled date of such meeting unless such notice is waived in writing by all of
the Directors and the statutory auditor. The Board of Directors shall meet at
least once every three (3) months at times and places to be mutually agreed.
10.4 Resolutions of Board of Directors Meetings. The quorum for
meetings of the Board of Directors of the Company shall be a majority of the
total number of Directors in office. The approval of a majority of the Board of
Directors present at any such meeting shall be required for any of the
following:
(a) adoption of the annual business plan (including financial and
operating plans) of the Company and any amendments thereto;
(b) changes in capital;
(c) appointment and dismissal of executive personnel, including but not
limited to a general manager and officers of the Company, and the compensation
of such officers;
(d) the entering into of any agreement between the Company and either
of Teijin and PMSI or an affiliate, director or employee of either of them;
(e) the appointment and dismissal of any subdistributor, sub-agent,
value-added reseller or OEM under the Distributorship Agreement and the terms of
any agreement with any such subdistributor, sub-agent, value-added reseller or
OEM; and
12.
<PAGE> 17
(f) the setting of guidelines and approval of any changes relating to
the use of Teijin's name, PMSI's name and/or the Company logo in advertising,
brochures and related materials.
As promptly as practicable following the formation of the Company, the
Board of Directors shall pass resolutions defining the extent of authority to be
given to the Company's management in relation to approval by said management of
(i) indebtedness for borrowed money by the Company (including the guarantee of
any indebtedness by the Company) and (ii) capital expenditures of the Company.
The approval authority of the Company's management shall, at a minimum, be
reviewed by the Board of Directors once a year and, if necessary, adjusted as
the Board of Directors may deem fit.
If agreement cannot be reached on any of the matters enumerated in this
Section 10.4 above, with the exception of Section 10.4(f) above, Teijin and PMSI
shall each have the right to give written notice to the other party and request
mutual consultation between senior management of the Shareholders relating to
such matter in accordance with Section 10.5 below.
10.5 Mutual Consultation. Within thirty (30) days after notice by
either Shareholder requesting mutual consultation in accordance with the terms
of this Agreement, the Shareholders, through their respective senior management,
shall commence negotiations and shall negotiate in good faith for a period of
not less than thirty (30) and not more than ninety (90) days to accomplish a
mutually agreeable resolution of the matter. Unless otherwise agreed, senior
management of the Shareholders shall meet at least three (3) times during such
ninety (90)-day negotiation period. In the event that such matter cannot be so
resolved, this Agreement shall be terminated and the Company shall be dissolved
and liquidated in accordance with the procedures set forth in Article 16 hereof
no later than two hundred and seventy (270) days from the date of the notice
requesting mutual consultation.
10.6 Management. Teijin shall provide the management personnel for the
Company and shall nominate the President of the Company for such period as shall
be mutually agreed to by the Shareholders for approval by the Board of Directors
of the Company.
ARTICLE 11 - RESTRICTION ON TRANSFER OF SHARES
Each of the Shareholders covenants and agrees that it shall not sell,
transfer, assign, convey, pledge, encumber or in any way dispose of or create
any interest whatsoever in, any or all of its shares in the Company without the
prior written consent of
13.
<PAGE> 18
the other Shareholder, such consent not to be unreasonably withheld; provided,
however, that either Shareholder may freely transfer its shares in the Company
to an acquirer or successor-in-interest of all or substantially all its business
without the prior consent of the other Shareholder, subject to the condition
that the acquirer or transferee of such shares shall expressly agree in writing
to become bound by the terms of this Agreement, the Distributorship Agreement
and the Corporate License Agreement. Not less than twenty-two (22) days prior to
a Shareholder entering into a definitive and binding agreement providing for its
acquisition by, or the sale of substantially all its business to, a competitor
who is located in the territory of the other Shareholder, the Shareholder to be
acquired shall send written notice of the same to the other Shareholder. The
Shareholders shall then mutually consult at the senior management level
concerning the effect of such acquisition or sale on the Company. The purpose of
such consultation shall be to assure that the acquisition of the Shareholder in
question shall have as little impact on the conduct of the Company's business as
possible and to preserve as much as possible the conduct of the business of the
Company as it existed prior to such acquisition. The Shareholders shall cause
the Company to register with the Commercial Registry of Japan, and to have the
Articles of Incorporation of the Company contain, a statement to the effect that
any transfer of any shares of the Company is subject to the prior approval of
the Company's Board of Directors. Any transfer or attempted transfer in
violation of this Article 11 shall be null and void and of no effect.
ARTICLE 12 - RIGHT OF FIRST REFUSAL
Except where shares in the Company are to be sold or otherwise
transferred to an acquirer or successor-in-interest of all or substantially all
of either Teijin's or PMSI's business in accordance with the provisions of
Article 11 hereof, if either Teijin or PMSI desires to sell or transfer its
ownership in the Company, in whole or in part, the selling party shall first
notify the other party in writing (the "Transfer Notice") of the proposed sale
or transfer (including the price and proposed transferee). The Transfer Notice
shall be signed by both the selling party and by the proposed transferee and
shall set forth the number of shares in the Company which the selling party
proposes to transfer, together with all material terms and conditions of the
proposed transfer, and must constitute a binding commitment on both such parties
for the transfer of shares subject only to the Right of First Refusal (as
defined hereafter). The other party shall have a right of first refusal for
ninety (90) days after the date such notice is delivered to purchase the selling
party's shares in the Company at the proposed sale price (the "Right of First
Refusal"). The other party shall exercise its Right of First Refusal by giving
notice
14.
<PAGE> 19
of acceptance in writing to the selling party within the 90-day period provided
above. If the other party does not exercise this Right of First Refusal within
the ninety (90)-day period provided, the selling party may conclude a transfer
of the shares to the proposed transferee on the terms and conditions and for the
price set forth in the Transfer Notice, subject to the prior written consent
requirement of Article 11 hereof. Any proposed transfer on terms and conditions
different from those described in the Transfer Notice or to an entity other than
the proposed transferee identified in the Transfer Notice, as well as any
subsequent proposed transfer by the selling party, shall again be subject to the
Right of First Refusal. The transfer of any stock elected to be acquired
pursuant to the Right of First Refusal shall be consummated within forty-five
(45) days following the receipt of the written acceptance of the selling party's
offer. Any sale or transfer of any shares of stock of the Company shall be void
unless the provisions of this Article have been complied with.
ARTICLE 13 - PROFITS AND DIVIDENDS POLICY
Unless otherwise agreed by the Shareholders, the whole of the profits
of the Company shall after such provisions and reserves as may be required and
considered appropriate by the Shareholders and subject to the availability of
tax credits, be retained by the Company in respect of each business year.
ARTICLE 14 - SECRECY
14.1 Obligation of Secrecy. Without the prior written consent of the
supplying Shareholder, no receiving Shareholder, its officers, directors, agents
or employees shall, in the case of Confidential Information (as defined
hereafter) of a business nature, both during the term of this Agreement and for
a period of three (3) years after termination of this Agreement, and in the case
of all Confidential Information of a technical nature, both during the term of
this Agreement and for a period of ten (10) years after termination of this
Agreement, in any manner whatsoever disclose or communicate such information to
a third party, except as legally required by any governmental or judicial
agency, and each Shareholder agrees to keep such Confidential Information
strictly confidential. For the purpose of this Agreement, the term "Confidential
Information" shall mean and include any and all financial and other information
relating to the Company, information concerning this Agreement and its terms and
conditions and the relationship of the Shareholders hereto, business and
financial information of either Shareholder, and technical information relating
to the Products (including, without limitation, design specifications,
instructions and know-how) acquired either directly or indirectly by either
Shareholder
15.
<PAGE> 20
hereunder; provided, however, that all such Confidential Information shall be
clearly marked as "confidential" and the term "Confidential Information" shall
not include any information which:
(a) has become or entered the public domain through no fault of the
receiving party; or
(b) was in the demonstrable possession of the receiving party prior to
or at the time of receipt hereunder; or
(c) was or has been obtained lawfully from a third party; or
(d) has been independently developed by the receiving party without
violation of its obligations under this Agreement, and which independent
development is properly documented by such party.
This Section 14.1 shall in no way supersede the respective
confidentiality and non-use provisions of any of the agreements attached as
Exhibits to this Agreement, and the confidentiality and non-use provisions in
any such agreement shall prevail over the provisions of this Section 14.1 with
respect to that agreement.
14.2 Obligation Not to Use. Each Shareholder agrees that it shall not
use any Confidential Information obtained from the other Shareholder or from the
Company for any purpose whatsoever except in a manner expressly provided for in
this Agreement; provided, however, that in the event this Agreement is
terminated for any reason other than breach by a Shareholder, the Shareholders
may freely use Confidential Information relating to or of the Company but not of
either Shareholder; provided, further, however, that in the event this Agreement
is terminated for breach by either Shareholder, only the non-breaching
Shareholder shall be entitled to use Confidential Information relating to or of
the Company but not of either Shareholder.
14.3 Observance by Company. Each of the Shareholders agrees to cause
the Company to abide and be bound by the confidentiality and non-use obligations
of Sections 14.1 and 14.2 hereof for the periods specified in Section 14.1 and
subject to the exceptions set forth in Section 14.2 above.
14.4 Indemnity; Injunctive Relief. Each Shareholder shall indemnify and
hold the other harmless from any loss, liability and expenses suffered by the
other Shareholder as a result of any unauthorized disclosure, communication or
use of any Confidential Information by the receiving Shareholder, its officers,
directors, employees or agents. The Shareholders acknowledge that irreparable
injury will result to the other in the event of
16.
<PAGE> 21
a breach or threatened breach of any of the provisions of this Article and agree
that in the event of a breach or threatened breach, the complaining Shareholder
shall be entitled, in addition to any other available remedy, to seek injunctive
and other equitable relief from a court of competent jurisdiction. The
obligations contained in Sections 14.1, 14.2, 14.3 and 14.4 of this Article
shall survive the termination of this Agreement.
ARTICLE 15 - TERMINATION
15.1 Termination. This Agreement may be terminated in writing by a
Shareholder in the event of the occurrence of any one or more of the following:
(a) the other Shareholder fails to perform any material obligation
of this Agreement or any of the agreements attached as an Exhibit to this
Agreement and such default is not cured within sixty (60) days after written
notice of the default made by the other Shareholder;
(b) the other Shareholder shall be dissolved or liquidated due to
adverse financial conditions, be declared bankrupt or insolvent, or becomes a
party for more than ninety (90) days to proceedings or arrangements involving
liquidation, receivership, reorganization or the settlement of its debts, except
for any action instituted by the other Shareholder, and the non-affected
Shareholder gives written notice to such Shareholder that it wishes to terminate
this Agreement. A Shareholder subject to any of the events described herein
shall promptly notify the other Shareholder of its occurrence in writing;
(c) mutual consultation between the Shareholders in accordance
with Section 10.5 hereof fails to resolve the matter(s) being negotiated within
the period specified therein;
(d) the acquisition by either Teijin or PMSI of all of the shares
of the Company;
(e) the Company is declared bankrupt by a court of competent
jurisdiction or is the subject of a final decision for the commencement of
corporate reorganization procedures;
(f) the Shareholders agree that, taking into account all pertinent
market conditions, the performance of the Company does not justify its continued
existence; and
(g) the accumulated deficit of the Company exceeds [*]
and mutual consultation between the Shareholders in the manner set forth in
17.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 22
Section 10.5 fails to resolve the deficit issue within ninety (90) days of such
deficit being incurred.
15.2 Effect of Termination. Upon the termination of this Agreement for
any reason, the Distributorship Agreement shall terminate forthwith.
Notwithstanding the foregoing, PMSI agrees that if this Agreement is terminated
under Section 15.1(a) for a breach or default by PMSI in its obligations, PMSI
shall continue to provide technical support and updating services to customers
of the Company and TST for a minimum period of two (2) years following the date
of such termination.
ARTICLE 16 - DISSOLUTION
16.1 Events Triggering Dissolution. If an event described in Sections
15.1 (a), (b), (c), (e), (f) or (g) occurs, the Shareholders shall effect a
liquidation of the Company as promptly as possible and the Company shall
immediately commence to wind up its affairs. Nothing in this Article 16 shall
relieve a Shareholder who has breached this Agreement from its liability for
damages incurred by the other Shareholder due to such breach.
16.2 Management of Company During Winding Up. During the period of the
winding up of the affairs of the Company, the rights and obligations of the
Shareholders set forth herein with respect to the management of the Company
shall continue. For purposes of winding up, the Shareholders shall continue to
act as such and shall make all decisions relating to the conduct of any business
or operations during the winding up period and to the sale or other disposition
of the Company's assets; provided that if the termination of the Company results
from an event described in Sections 15.1(a) (material breach) or 15.1(b)
(bankruptcy) above (an "Event"), the Shareholder subject to such Event shall
have no further right to participate in the management or affairs of the Company
or to vote on shareholder decisions but shall nonetheless be bound by all
decisions made by the non-Event Shareholder. Each Shareholder hereby waives any
claim it may have against the non-Event Shareholder that may arise out of
management by such Shareholder of the Company, so long as such Shareholder acts
in good faith.
16.3 Distribution of Assets. The assets of the Company shall be applied
or distributed upon dissolution in the following order of priority:
(a) First, in payment of debts and obligations of the Company to third
parties which shall include Teijin and/or PMSI as the holder of any secured
loan;
(b) Second, in payment of debts and obligations of the Company to
Teijin and/or PMSI;
18.
<PAGE> 23
(c) Last, the balance, if any, to the Shareholders in proportion to
their respective ownership percentages in the Company.
In the event that the liabilities of the Company exceed its assets at
the time of dissolution under this Article, the Shareholders shall contribute
such additional capital as necessary to cover any debts, expenses or other
liabilities of the Company in proportion to their then existing ownership
interests in the Company.
16.4 Documents and Records. All documents and records of the Company
including, without limitation, all financial records, vouchers, cancelled checks
and bank statements, shall be delivered to Teijin upon termination of the
Company unless the Company has been purchased by PMSI pursuant to Article 12
hereof, in which case such delivery shall be made to PMSI. Unless otherwise
agreed, the Shareholders, as appropriate, shall retain such documents and
records for a period of not less than ten (10) years and shall make such
documents and records available during normal business hours to the other for
inspection and copying at such other's cost and expense. In the event any
Shareholder ("Withdrawing Venturer") for any reason ceases as provided herein to
be a Shareholder at any time prior to termination of the Company, and the
Company is continued without the Withdrawing Venturer, the other Shareholder
("Surviving Venturer") agrees that said documents and records of the Company up
to the date of the termination of the Withdrawing Venturer's interest shall be
maintained by the Surviving Venturer, its successors and assigns, for a period
of not less than ten (10) years thereafter; provided, however, that if there is
an audit or threat of audit, such documents and records shall be retained until
the audit is completed and any tax liability finally determined. Said documents
and records shall be available for inspection, examination and copying by the
Withdrawing Venturer at its expense and upon reasonable written notice.
ARTICLE 17 - REPRESENTATIONS, WARRANTIES AND COVENANTS
17.1 Representations, Warranties and Covenants of PMSI. To induce
Teijin to enter into this Agreement, PMSI represents, warrants and covenants
to Teijin as follows:
(a) PMSI is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware, has the lawful power to own
its properties and to engage in the business it conducts, and is duly qualified
and in good standing as a foreign corporation in all jurisdictions where failure
to qualify would materially adversely affect PMSI in the performance of this
Agreement. PMSI will take all actions
19.
<PAGE> 24
necessary to maintain this status throughout the term of this Agreement;
(b) The making and performance of this Agreement, the Distributorship
Agreement, and the Corporate License Agreement by PMSI will not (with the
passage of time, the giving of notice, or both) violate the Articles of
Incorporation or Bylaw provisions of PMSI, or result in a default under a
contract, agreement, or instrument to which PMSI is a party or by which PMSI or
its property is bound;
(c) PMSI has the corporate power and authority to enter into and
perform this Agreement, the Distributorship Agreement, and the Corporate License
Agreement, and to incur the obligations herein and therein provided for, and has
taken all corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, the Distributorship Agreement, and the Corporate
License Agreement;
(d) This Agreement, the Distributorship Agreement, and the Corporate
License Agreement when delivered will be valid, binding and enforceable in
accordance with their respective terms, subject only to bankruptcy, insolvency,
or other similar laws affecting the enforcement of creditor's rights; and
(e) PMSI is acquiring stock in the Company for investment purposes only
and not for distribution.
17.2 Representations, Warranties and Covenants of Teijin. To induce
PMSI to enter into this Agreement, Teijin represents, warrants and covenants to
PMSI as follows:
(a) Teijin is a corporation duly organized, validly existing and in
good standing under the laws of Japan, has the lawful power to own its
properties and to engage in the business it conducts and is duly qualified and
in good standing as a foreign corporation in all jurisdictions where failure to
qualify would materially adversely affect Teijin in the performance of this
Agreement. Teijin will take all actions necessary to maintain this status
throughout the term of this Agreement;
(b) The making and performance of this Agreement and the Corporate
License Agreement by Teijin will not (with the passage of time, the giving of
notice, or both) violate the Articles of Incorporation of Teijin, or result in a
default under a contract, agreement, or instrument to which Teijin is a party or
by which Teijin or its property is bound;
20.
<PAGE> 25
(c) Teijin has the corporate power and authority to enter into and
perform this Agreement and the Corporate License Agreement, and to incur the
obligations herein and therein provided for, and has taken all corporate action
necessary to authorize the execution, delivery, and performance of this
Agreement and the Corporate License Agreement;
(d) This Agreement and the Corporate License Agreement when delivered
will be valid, binding and enforceable in accordance with their respective
terms, subject only to bankruptcy, insolvency, or other similar laws affecting
the enforcement of creditor's rights; and
(e) Teijin is acquiring stock in the Company for investment purposes
only and not for distribution.
ARTICLE 18 - GOVERNING LAW AND LANGUAGE; DISPUTE RESOLUTION
18.1 Governing Law and Language. This Agreement is made in accordance
with and shall be governed and construed under the laws of Japan; provided that
to the extent that any Exhibit hereto contains its own choice of law provision,
the terms of that choice of law provision shall govern and prevail over this
provision with respect to any dispute under the Exhibit in question. This
Agreement has been negotiated and executed in the English language, and the
rules of construction and definitions of the English language shall be applied
in interpreting this Agreement. Unless otherwise specifically required
hereunder, all notices and other communications required or permitted under this
Agreement shall be written in the English language.
18.2 Dispute Resolution. If a dispute arises between the Shareholders
arising out of or in relation to this Agreement, the Shareholders shall use all
reasonable efforts to resolve the dispute through good faith discussions. If a
dispute arises between the Company and PMSI arising out of or in relation to
this Agreement or the Distributorship Agreement, Teijin shall act on behalf of
the Company in the following dispute resolution process. The senior management
of each Shareholder commits itself to respond promptly to any and all such
disputes. In the event that the Shareholders are unable, after exerting all
reasonable efforts, to resolve the said dispute(s), the said dispute(s) shall be
finally settled through binding arbitration on the following basis:
(a) The arbitration shall be conducted by a panel of three (3)
arbitrators under the International Arbitration Rules of the American
Arbitration Association then in force, by which each Shareholder and the Company
agrees to be bound. Within thirty (30) days after notice of arbitration has been
given, each of the Shareholders shall appoint one (1) arbitrator. The
21.
<PAGE> 26
arbitrators appointed by the Shareholders shall then appoint a third arbitrator,
who shall serve as the presiding arbitrator.
(b) If demand for arbitration is made by Teijin (either for itself or
on behalf of the Company), the place of arbitration shall be Boston,
Massachusetts, U.S.A, and if demand for arbitration is made by PMSI, the place
of arbitration shall be Tokyo, Japan.
(c) The language to be used in the arbitration shall be English.
(d) Any arbitrator may be of any nationality, and need not be a lawyer
or hold any other professional status or membership.
(e) The arbitral award shall be rendered in writing, shall state the
reasons for the award, and shall be final and binding upon the Shareholders (and
the Company, as the case may be). In no event shall the arbitral award include a
sum for punitive damages.
(f) Judgment upon any award may be entered by any court of competent
jurisdiction, or application may be made to such a court for judicial acceptance
of the award and any appropriate order including enforcement.
(g) Each of the Shareholders shall bear its own expenses and attorneys'
fees (and Teijin shall bear the Company's expenses and attorneys' fees in the
case where Teijin is acting on behalf of the Company) in connection with the
arbitration.
ARTICLE 19 - ENFORCEMENT
19.1 Severability. In the event that any provision of this Agreement,
or any portion thereof, shall be held invalid, illegal or unenforceable under
applicable law, the remainder of this Agreement shall remain valid and
enforceable.
19.2 Waiver of Obligation. Either Shareholder may waive or reduce in
writing any obligation of or restriction upon the other under this Agreement.
19.3 Specific Performance/Injunctive Relief. Nothing contained herein
shall bar a Shareholder's right to obtain specific performance of the provisions
of this Agreement and injunctive relief against threatened conduct that will
cause loss or damages, under customary equity rules, including applicable rules
for obtaining restraining orders and preliminary injunctions.
22.
<PAGE> 27
19.4 Rights of Shareholders are Cumulative. The Shareholders' rights
hereunder are cumulative and no exercise or enforcement by a Shareholder of any
right or remedy hereunder shall preclude the exercise or enforcement by such
Shareholder of any other right or remedy, hereunder or otherwise, which such
Shareholder is entitled by law to enforce.
19.5 Third Parties. Nothing in this Agreement is intended, nor shall be
deemed, to confer any rights or remedies upon any person or legal entity not a
party hereto.
ARTICLE 20 - GENERAL TERMS
20.1 Assignment. The rights, duties and obligations under this
Agreement shall not be assignable by either Shareholder without the prior
written consent of the other Shareholder. This Agreement shall be binding upon
and inure to the benefit of the Shareholders and their respective legal
representatives, heirs, administrators, executors, successors and permitted
assigns.
20.2 Amendment. This Agreement may be amended only by a written
instrument signed by duly authorized representatives of each of the
Shareholders.
20.3 Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing, in the English
language, and shall be effective when delivered personally, or three (3)
business days after being properly sent by commercial overnight carrier, or two
(2) business days after being transmitted by telex or facsimile transmission, or
ten (10) days after being mailed if sent by registered or certified airmail
postage prepaid and addressed to the Shareholder at its address set forth below,
unless by such notice a different person, address or number shall have been
designated for giving notice hereunder:
If to PMSI to:
Polygen Corporation
200 Fifth Avenue
Waltham, Massachusetts 02154
U.S.A.
Attention: Michael J. Savage
President
23.
<PAGE> 28
If to Teijin, to:
Teijin Limited
Iino Building
1-1, Uchisaiwai-cho 2-chome
Chiyoda-ku
Tokyo 100
Japan
Attention: Takehisa Tokunaga
Manager, Information System
Development Department
20.4 Compliance by Company. Each Shareholder agrees to cause the
Company to perform all acts which may be required of the Company under the
provisions of this Agreement, including but not limited to the provisions of
Section 8.5 (Right of First Refusal to TST) and Article 14 (Secrecy) hereof. A
copy of this Agreement shall be filed in the records of the Company and the
Shareholders shall cause the Company to be bound by all provisions applicable to
it.
20.5 Entire Agreement. This Agreement, together with all the Exhibits
attached hereto and incorporated herein by reference, constitutes the entire,
final, complete and exclusive agreement between the parties hereto and
supersedes all previous agreements, communications and/or representations,
written or oral, with respect to the subject matter hereof.
20.6 Force Majeure. Neither Shareholder shall be liable to the other
for its failure to perform any of its obligations under this Agreement during
any period in which such performance is delayed because rendered impractical or
impossible due to circumstances beyond its reasonable control, provided that the
party experiencing the delay promptly notifies the other of the delay.
20.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions of this Agreement.
20.8 Counterparts. This Agreement may be signed in counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same instrument.
20.9 Export Compliance. The Shareholders acknowledge that each must
comply with rules and laws of their respective governments relating to
restriction on exports and that their obligations hereunder are conditional upon
such compliance. Each Shareholder agrees to use its best efforts to obtain any
export license, letters of assurance or other documents necessary in the future
with respect to the transfer of technology covered by this Agreement and the
agreements which are Exhibits hereto.
24.
<PAGE> 29
20.10 Parties Advised by Counsel - No Interpretation Against Drafter.
This Agreement has been negotiated between unrelated parties who are
sophisticated and knowledgeable in the matters contained in this Agreement and
who have acted in their own self interest. In addition, each Shareholder has
been represented by legal counsel. Accordingly, any rule of law, including
Section 1654 of the California Civil Code, as well as any other statute, law,
ordinance, or common law principles or other authority of any jurisdiction of
similar effect, or legal decision that would require interpretation of any
ambiguities in this Agreement against the party who has drafted it is not
applicable and is hereby waived. The provisions of this Agreement shall be
interpreted in a reasonable manner to effect the purpose of the Shareholders,
and this Agreement shall not be interpreted or construed against any party to
this Agreement because that party or any attorney or representative for that
party drafted this Agreement or participated in the drafting of this Agreement.
IN WITNESS WHEREOF, Teijin and PMSI have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
written above.
POLYGEN CORPORATION
By: /s/ Michael J. Savage
-------------------------
Name: Michael J.Savage
Title: President
Teijan Limited
By: /s/ H. Itagaki
-------------------------
Name: Hiroshi Itagaki
Title: President and
Chief Executive Officer
25.
<PAGE> 30
LIST OF EXHIBITS
Exhibit A Distributorship Agreement
Exhibit B Common Stock Purchase Agreement
Exhibit C Corporate License Agreement
Exhibit D-2 English Translation of Articles of Incorporation
of the Company
26.
<PAGE> 31
Exhibit A
DISTRIBUTORSHIP AGREEMENT
___________ , 1992
between
POLYGEN CORPORATION
and
TEIJIN MOLECULAR SIMULATIONS INCORPORATED
<PAGE> 32
TABLE OF CONTENTS
Page
1. DEFINITIONS ................................................... 1
(a) "Agreement" .......................................... 1
(b) "Customer" ........................................... 2
(c) "Documentation" ...................................... 2
(d) "End User License Agreement" ......................... 2
(e) "PMSI Customers" ..................................... 2
(f) "Software" ........................................... 2
(g) "Subdistributor ...................................... 2
(h) "Sublicense" ......................................... 2
(i) "Territory" .......................................... 2
(j) "Trademarks" ......................................... 2
2. APPOINTMENT AND GRANT OF LICENSE .............................. 2
(a) Distributor License .................................. 2
(b) Limited Demonstration/Training/Support License ....... 3
(c) Documentation License ................................ 3
(d) Grant of Right to Sublicense ......................... 4
(e) General License Provisions ........................... 4
(f) Exclusivity .......................................... 5
3. ORDER PROCEDURE AND SHIPMENT AND DELIVERY TERMS ............... 6
(a) Orders ............................................... 6
(b) Shipping and Delivery ................................ 6
(c) Cancellation of Orders ............................... 7
(d) Localization and Shipment from Japan ................. 7
4. PRICES (LICENSING FEES) AND PAYMENT TERMS ..................... 7
(a) Licensing Fees ....................................... 7
(b) Taxes ................................................ 8
(c) Payment Schedule ..................................... 8
(d) Installation Fees .................................... 8
(e) Maintenance Fees ..................................... 8
(f) Discounts to Subdistributors and Customers ........... 9
(g) Hardware ............................................. 9
5. OBLIGATIONS AND FUNCTIONS OF THE COMPANY ...................... 9
(a) Management and Support of Distribution ............... 9
(b) Relationship with Subdistributors .................... 9
(c) Adequate Company Facilities and Customer Satisfac-
tion ................................................. 10
(d) Promotion and Marketing .............................. 10
(e) Contract Services .................................... 10
(f) Porting .............................................. 10
i.
<PAGE> 33
(g) OEM Arrangements ..................................... 10
(h) Company's General Businesslike Conduct ............... 11
(i) Technical Support and Other Staff .................... 11
(j) Installation ......................................... 11
(k) Keeping PMSI Informed ................................ 11
(l) Reports and Forecasts ................................ 11
(m) Competing Representations ............................ 11
6. OBLIGATIONS OF PMSI ........................................... 12
(a) Availability of Documentation ........................ 12
(b) Training ............................................. 12
(c) Developments ......................................... 12
(d) Third Party OEM Arrangements ......................... 12
(e) Maintenance Upon Termination ......................... 12
(f) Bug Fixes ............................................ 13
7. WARRANTIES, DISCLAIMERS AND LIMITATIONS OF LIABILITY .......... 13
(a) PMSI's Warranty ...................................... 13
(b) Warranty Disclaimers and Limitations ................. 13
(c) No Warranty Pass-Through ............................. 13
(d) Limitation of Liability .............................. 13
8. INDEMNITY ..................................................... 14
(a) Proprietary Rights ................................... 14
(b) Other Indemnity ...................................... 15
9. PROPRIETARY RIGHTS ............................................ 15
(a) Ownership of Proprietary Rights ...................... 15
(b) No Modification ...................................... 15
(c) Trademarks and Trade Names ........................... 15
(d) Nondisclosure and Non-Use ............................ 16
10. COMPLIANCE WITH LAWS .......................................... 17
(a) Export Law Compliance ................................ 17
(b) Foreign Corrupt Practices Act ........................ 18
(c) Licenses and Permits ................................. 18
11. EFFECTIVE DATE, TERM, TERMINATION AND EFFECT OF
TERMINATION ................................................... 18
(a) Effective Date ....................................... 18
(b) Term ................................................. 18
(c) Termination by Either Party .......................... 19
(d) Termination by PMSI .................................. 19
(e) No Other Rights Upon Termination ..................... 19
(f) Effect of Termination ................................ 19
(g) The Company's Duties Upon Termination ................ 20
ii.
<PAGE> 34
12. GENERAL TERMS .................................................. 21
(a) Assignment ............................................ 21
(b) Benefits and Binding Nature of Agreement .............. 21
(c) Entire Agreement ...................................... 21
(d) Force Majeure ......................................... 21
(e) Notice ................................................ 21
(f) Governing Law and Official Language ................... 22
(g) Dispute Resolution .................................... 22
(h) Waiver ................................................ 23
(i) Severability .......................................... 23
(j) Rights and Remedies Cumulative ........................ 23
(k) No Agency - Independent Contractors ................... 23
(l) Captions and Section References ....................... 23
(m) Counterparts .......................................... 24
(n) No Limitation on Supplier PMSI ........................ 24
(o) Parties Advised by Counsel -- No Interpretation
Against Drafter ....................................... 24
(p) Authority to Enter Into and Execute Agreement ......... 24
APPENDICES
Appendix A: Software
Appendix B: Polygen (PMSI) Standard Software License
Agreement
Appendix C: Price List
Appendix D: Wire Transfer (Bank) Information
Appendix E: PMSI Trademarks
iii.
<PAGE> 35
DISTRIBUTORSHIP AGREEMENT
This Distributorship Agreement is made and entered into as of the ____
day of __________ , 1992, by and between Polygen Corporation (doing business as
Polygen Molecular Simulations Incorporated), a Delaware corporation, having its
principal place of business at 200 Fifth Avenue, Waltham, Massachusetts 02154,
U.S.A. ("PMSI") and Teijin Molecular Simulations Incorporated, a corporation
organized under the laws of Japan, with its principal place of business at 1-1,
Uchisaiwai-cho 2-chome, Chiyoda-ku, Tokyo 100, Japan ("the Company").
RECITALS
A. PMSI and Teijin Limited, a corporation organized under the laws of
Japan with its principal office at 6-7, Minamihommachi 1-chome, Chuo-ku, Osaka
541, Japan ("Teijin") have entered into a Joint Venture Agreement dated as of
February 14, 1992 (the "Joint Venture Agreement"), pursuant to which the Company
was organized as a joint venture corporation under the laws of Japan.
B. PMSI and its subsidiaries are engaged in the design, development and
licensing of proprietary computational chemistry software products and related
documentation.
C. It was contemplated by PMSI and Teijin under the Joint Venture
Agreement that the Company be appointed as PMSI's exclusive distributor in the
Territory (as defined below) of the Software (as defined below).
D. PMSI is willing to grant to the Company an exclusive right to market
and sublicense the Software and related documentation in the Territory,
subject to the terms and conditions set forth in this Agreement.
THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto agree as follows:
AGREEMENT
1. DEFINITIONS.
For the purpose of this Agreement, the following terms shall have the
following meanings unless otherwise required by the context:
(a) "Agreement" shall mean this Distributorship Agreement as it may be
amended from time to time.
1.
<PAGE> 36
(b) "Customer" shall mean any third party user to whom the Company has,
in accordance with the terms of this Agreement and the End User License
Agreement, granted the right to use the Software.
(c) "Documentation" shall mean the standard user documentation and
sales support materials which PMSI has published or may publish during the term
of this Agreement.
(d) "End User License Agreement" shall mean the Company's standard end
user license agreement, pursuant to which Customers are Sublicensed by the
Company the right to use the Software. Pursuant to Section 2(d)(ii) hereof, the
End User License Agreement shall contain terms that are substantially the same
as those found in PMSI's Standard Software License Agreement, a current copy of
which is attached hereto as Appendix B.
(e) "PMSI Customers" shall mean any third party user in the Territory
to whom PMSI or PMSI's agent has granted the right to use the Software prior to
the Effective Date hereof.
(f) "Software" shall mean the computational chemistry software products
marketed by PMSI or PMSI's subsidiaries and licensed hereunder, to be provided
in machine readable (object code) form, and set forth on Appendix A attached
hereto, as such Appendix A may be amended from time to time by PMSI and the
Company in accordance with Section 2(a) below.
(g) "Subdistributor" shall mean any subdistributor, agent or value-
added reseller authorized by the Company to distribute the Software.
(h) "Sublicense" shall mean the non-exclusive, non-transferable right
(unless otherwise stated) to sublicense (without the further right to
sublicense) Software pursuant to the End User License Agreement.
(i) "Territory" shall mean the entire country of Japan, which Territory
may be expanded from time to time by mutual agreement of PMSI and Teijin to
include other countries in the Asian Pacific Rim such as Korea and Taiwan.
(j) "Trademarks" shall mean any trademark which PMSI owns or has right
to use as may be designated by PMSI from time to time.
2. APPOINTMENT AND GRANT OF LICENSE.
(a) Distributor License. Subject to the terms and conditions
contained herein, PMSI hereby grants to the Company, and the Company hereby
accepts, the exclusive, non-transferable and indivisible right to market the
Software in the Territory during
2.
<PAGE> 37
the term hereof solely for distribution to Customers located in the Territory.
The Company shall have no right to assign or otherwise transfer any or all of
its rights under this Agreement except as may be otherwise provided in Section
2(d) hereof with respect to the licensing and sublicensing of Customers. It is
the intention of the parties to amend Appendix A of this Agreement from time to
time to include within the definition of "Software" under this Agreement, all
computational chemistry software products that are developed or marketed by PMSI
or its subsidiaries in the future during the term of this Agreement, including
extensions of, replacements for, or improvements of the software products
presently enumerated on Appendix A; provided, however, that PMSI may at its
option exclude from "Software" and the scope of this Agreement, software
products for which it does not have distribution rights for the Territory due to
limitations or restrictions imposed by the licensor or party providing such
software products to PMSI. Notwithstanding the grant of exclusivity under this
Section 2(a), PMSI may, upon prior notice to the Company, license Software to
third parties outside the Territory who will bundle the Software with hardware
and distribute those bundled products in the Territory, provided that such
bundling shall be on an OEM basis.
(b) Limited Demonstration/Training/Support License. PMSI hereby grants
and the Company hereby accepts, subject to the terms and conditions specified
herein, an exclusive license, except for licenses to use the Software for
demonstration and support activities that have been or may be granted by PMSI to
OEM's or computer manufacturers, to use in the Territory, during the term
hereof, the Software for demonstration and technical support of the Software,
and for training of Company and Subdistributor personnel on the Software.
(c) Documentation License. PMSI hereby grants and the Company hereby
accepts, subject to the terms and conditions specified herein, an exclusive
license, except for licenses to use the Documentation for demonstration and
support activities that have been or may be granted by PMSI to OEM's or computer
manufacturers, to use the Documentation in the Territory during the term hereof
for the purpose of enabling the Company to carry out its sublicensing and
support obligations to PMSI Customers and Customers under this Agreement. The
Company may, at its expense, translate, copy and repackage the Documentation as
is necessary in connection with its Sublicensing of the Software pursuant to
Section 2(d) hereof. All translations of the Documentation shall, pursuant to
Section 2(e)(i) hereof, include PMSI copyright and other proprietary rights
notices. PMSI shall retain title to and ownership of any such translations of
the Documentation.
3.
<PAGE> 38
(d) Grant of Right to Sublicense.
(i) The licenses granted under this Agreement are non-transferable,
except that the Company is hereby authorized to grant Sublicenses to Customers
of the Company or to Customers of Subdistributors for use of the Software on any
appropriate platform on the terms and conditions set forth below. Sub-licenses
of the Software may only be granted to Customers who represent that they shall
not use the Software to provide any service bureau or consulting service to any
third party, or to re-export the Software without first obtaining written
permission from PMSI. Software provided to Customers shall be in
machine-readable (object) code.
(ii) Until termination of this Agreement, the Company shall Sublicense
and provide the Software and Documentation to Customers pursuant only to the
terms of an End User License Agreement. Promptly following the execution of this
Agreement, the Company shall, at its expense, develop an End User License
Agreement in the Japanese language, together with an English language
translation of the same, which End User License Agreement shall contain terms
that are substantially equivalent to those set forth in PMSI's Standard Software
License Agreement (Appendix B hereto). Without prejudice to the generality of
the foregoing, and in addition to such terms, the End User License Agreement
shall expressly provide that: (x) the End User License Agreement (and any
related software maintenance agreement) between the Customer and the Company
shall be automatically assigned to PMSI or PMSI's designee in the event of
termination of this Agreement for any reason, and (y) the terms of the End User
License Agreement shall govern and control in the event of any inconsistency
between its terms and those of any purchase order between the Customer and the
Company. The Company shall provide PMSI with copies of its End User License
Agreement and the English translation thereof for PMSI's written approval. The
Company shall not transfer Software to a Customer unless and until the Company
shall have obtained a signed copy of the End User License Agreement from the
Customer, and the Company agrees to obtain prior written approval from PMSI to
any modifications or changes to the pre-approved End User License Agreement.
(iii) The Company agrees to use its reasonable commercial efforts to
ensure that each Customer sublicensed pursuant to this Agreement continues to
comply with the terms of the End User License Agreement. The Company shall
maintain adequate Customer records which may be inspected by PMSI during regular
business hours upon reasonable prior written notice.
(e) General License Provisions. All licenses granted herein shall be
further subject to the following:
4.
<PAGE> 39
(i) The Software and Documentation and any copies thereof shall in all
cases remain the exclusive property of PMSI. The Company agrees to reproduce and
include any PMSI copyright notices and other legends both in and on every copy
of the Software or Documentation in every form, including partial copies and
modifications of the Software.
(ii) Except as expressly set forth in Sections 2(c) and 6(a) hereof,
the Company agrees not to copy, provide, or otherwise make available any of the
Software or Documentation, in whole or in part in any form, to any person other
than employees of the Company, Subdistributors and Customers as provided for in
this Section 2. The Company agrees to take appropriate action by instruction,
agreement, or otherwise with the Company's employees or other persons permitted
access hereunder to the Software or Documentation to satisfy its obligations
under this Agreement with respect to the use, copying, modification, protection,
and security of the Software and Documentation.
(iii) The Company agrees not to license or ship any Software to any
person in the Territory which the Company knows or has reason to know, based
upon information provided to it by the licensee at the time of grant of such
license, will cause or permit the Software ultimately to be shipped, licensed or
used outside of the Territory.
(f) Exclusivity. The grant by PMSI to the Company of certain
"exclusive" rights with respect to the Territory shall mean that, unless
otherwise expressly permitted herein, PMSI shall have no right to, directly or
indirectly, exercise, or permit third parties to exercise, those rights in the
Territory. This shall mean, without limitation, that, without the express
written consent of the Company, PMSI:
(i) shall not itself license or ship any Software to any person in
the Territory; and
(ii) shall not license or ship any Software to any person outside of
the Territory which PMSI knows or has reason to know, based upon information
provided to it by the licensee at the time of grant of such license, will cause
or permit the Software ultimately to be shipped, licensed or used in the
Territory;
(iii) provided, however, that PMSI may:
(x) grant licenses to OEM or computer manufacturers to use the
Software and Documentation for demonstration and support activities; and
(y) grant corporate licenses to third parties outside of the
Territory; provided, however, that in the event
5.
<PAGE> 40
PMSI grants a corporate license to a third party located outside of the
Territory that has subsidiaries or facilities in the Territory, and if, at the
time of entering into such corporate license, PMSI has a reasonable belief that
a significant level (if any) of licenses will be shipped into the Territory as a
consequence of such corporate license, PMSI and the Company shall determine in
good faith the manner in which revenues arising from such third party corporate
license are to be divided between PMSI and the Company. Similarly, in the event
the Company grants a corporate license to a third party located in the Territory
that has subsidiaries or facilities outside of the Territory, and if, at the
time of entering into such corporate license, the Company has a reasonable
belief that a significant level (if any) of licenses will be shipped outside of
the Territory as a consequence of such corporate license, the Company and PMSI
shall determine in good faith the manner in which revenues arising from such
third party corporate license are to be divided between the Company and PMSI.
PMSI shall cause PMSI's subsidiaries to comply with the foregoing provisions and
limitations with respect to any Software which they have, directly or
indirectly, licensed to the Company hereunder.
3. ORDER PROCEDURE AND SHIPMENT AND DELIVERY TERMS.
(a) Orders. The Company shall submit written purchase orders for
Software in accordance with the then current order processing procedures of PMSI
as designated from time to time by PMSI. All purchase orders placed with PMSI
for Software shall be subject to acceptance by PMSI at its principal place of
business, such acceptance not to be unreasonably withheld. PMSI shall use
reasonable efforts to meet the resale requirements of the Company and to make
deliveries in accordance with the delivery date on orders so accepted, but PMSI
shall not be liable to the Company, any Subdistributor or Customer or to any
other party, for PMSI's delay in delivery or failure to deliver any products
that are under development by PMSI at the time an order is received. If the
Company manufactures and packages Software in Japan by replicating "master"
copies of the Software and Documentation provided by PMSI, instead of submitting
purchase orders for each copy of the Software and Documentation to PMSI, the
Company shall, within eight (8) business days of the end of each calendar month,
and in addition to the reports required under Section 5(l) hereof, report to
PMSI the date of shipment and quantity of such Software shipped during such
month and the fees for such Software received from PMSI Customers, Customers and
Subdistributors during such month.
(b) Shipping and Delivery. The following shipping and delivery
procedures shall apply to Software and Documentation ordered by the Company from
PMSI pursuant to Section 3(a) above,
6.
<PAGE> 41
but shall not apply to Software and Documentation that is manufactured and
packaged by the Company in Japan for shipment directly to PMSI Customers,
Customers and Subdistributors in the Territory. In the absence of specific
instructions from the Company, the shipping and packaging method used will be at
the discretion of PMSI. Deliveries shall be made F.O.B. (as defined in Incoterms
1990, Publ. No. 460 of the International Chamber of Commerce) from PMSI's
warehouse or manufacturing facility, and shall be shipped to the Company's
address as first set forth in this Agreement. Unless the Company's order
specifies the name of a carrier, PMSI will select the carrier. PMSI shall bear
the risk of loss until such time as a shipment has been placed on board the
carrier, at which time the risk of loss shall be borne by the Company. Any
claims for damage or loss in transit shall be placed by the Company through the
carrier. All shipments will be shipped by PMSI freight collect, or if prepaid,
such freight will be subsequently billed to the Company, and the Company will
reimburse PMSI for such freight in accordance with Section 4 below. PMSI
reserves the right to deliver in advance of estimated delivery dates.
(c) Cancellation of Orders. The Company may cancel any order (or part
thereof) for Software by giving PMSI written notice of such cancellation.
(d) Localization and Shipment from Japan. The Company will as soon as
practical, at its expense, develop a Japanese language version of the
Documentation and/or manufacture, package and ship the Software to PMSI
Customers, Customers and Subdistributors from the Company's facilities in Japan
in accordance with procedures mutually agreed upon between PMSI and the Company.
Following the localization of the Software and Documentation pursuant to this
Section 3(d), the Company may manufacture and package the Software in Japan and
ship such Software directly to PMSI Customers, Customers and Subdistributors in
the Territory. In such case, the Company shall, within eight (8) business days
of the end of each calendar month, and in addition to the reports required under
Section 5(l) hereof, report to PMSI in English the date of shipment and quantity
of such Software shipped during such month and the fees for such Software
received from PMSI Customers, Customers and Subdistributors during such month.
4. PRICES (LICENSING FEES) AND PAYMENT TERMS.
(a) Licensing Fees. In consideration of the licenses and rights granted
to the Company under this Agreement, the Company agrees to pay PMSI the fees
specified in PMSI's price list attached to this Agreement as Appendix C (the
("Price List"), as in effect when each order is accepted by PMSI, less an
initial discount of [*] of such Price List for the period ending on [*]; such
discount to be re-negotiated
* CONFIDENTIAL TREATMENT REQUESTED
7.
<PAGE> 42
annually in good faith by PMSI and the Company. Such fees are exclusive of, and
the Company shall pay, all shipping charges for each order. PMSI agrees to give
written notice to the Company at least sixty (60) days in advance of the
effective date of any change in its Price List. Such changes in PMSI's Price
List shall be made no more frequently than once during each calendar year, shall
be made only after consultation with the Company, and shall be commercially
reasonable.
(b) Taxes. Any and all fees and other amounts due to PMSI from the
Company under this Agreement are exclusive of, and the Company shall pay and
shall indemnify and hold PMSI harmless against (i) any liability for, any sales,
use, property, license, value added, withholding, import, excise or similar tax,
federal, state or local, U.S. and non-U.S., that may be imposed upon or with
respect to the Software products or their delivery, sale, licensing, use,
ownership or possession, and (ii) any duties, tariffs, customs, import and
related fees and charges, exclusive of taxes based on PMSI's net income.
Notwithstanding the foregoing, Japanese income tax may be withheld by the
Company from the license fees payable to PMSI pursuant to Section 4(a) hereof,
so long as such withholding is required by Japanese law. The Company shall
provide PMSI with copies of tax receipts or other documents evidencing that such
taxes withheld have been paid to the Japanese tax authorities. Such evidence
shall be forwarded to PMSI no later than thirty (30) days after such taxes have
been paid.
(c) Payment Schedule. PMSI shall invoice the Company each time Software
is shipped in accordance with the Price List attached hereto as Appendix C. The
Company will make payment to PMSI by the twentieth (20th) of each month for all
shipments made by the Company or by PMSI in the preceding month in U.S. dollars
by wire transfer of immediately available funds to such bank account as is
specified in Appendix D attached hereto, as may be revised from time to time by
PMSI. Invoices shall be considered paid when PMSI is in receipt of such funds or
upon confirmation of receipt by the bank. From and after the date of any default
of any payment due hereunder, until such default is cured, interest shall accrue
at the rate of two percent (2%) per month on such unpaid amounts, or at the
maximum rate permitted by Massachusetts law, if less.
(d) Installation Fees. The Company may not charge Customers
installation fees except as set forth in Appendix C or as otherwise approved in
writing by PMSI.
(e) Maintenance Fees. For each Software product, maintenance and
updates shall be provided by the Company, on behalf of PMSI, to PMSI Customers
and Customers. This maintenance service shall be provided to PMSI Customers and
Customers in accordance with PMSI's policies and the terms of the Company's
standard
8.
<PAGE> 43
software maintenance agreement to be entered into between the Company and PMSI
Customers or Customers, which terms shall be mutually determined and approved by
PMSI and the Company (the "Software Maintenance Agreement"). Unless and until
the maintenance pricing shall be adjusted by PMSI in accordance with the terms
of this Agreement, the maintenance pricing to be paid to PMSI for a given
Software product shall conform to the maintenance pricing schedule shown in
attached Appendix C, less an initial discount of [*] to be
retained by the Company for the period ending on [*]; such discount
to be re-negotiated annually in good faith by PMSI and the Company. The fee for
the annual maintenance contracts and their renewals shall be paid in advance of
the effective date or renewal date thereof (as the case may be) by the Company
to PMSI.
(f) Discounts to Subdistributors and Customers. Nothing contained
herein shall prevent or otherwise limit the Company's ability to grant
additional discounts to Subdistributors and/or Customers; provided, however,
that all such discounts are and shall be borne entirely by the Company or its
Subdistributor.
(g) Hardware. PMSI shall sell to the Company workstations manufactured
by Silicon Graphics Inc. ("SGI") at [*] of the Japanese list
price for the period ending on March 31, 1993. Thereafter, PMSI shall use
reasonable commercial efforts to extend or continue its existing relationships
with SGI and other value-added reseller hardware vendors in order to offer and
sell such hardware to the Company at a favorable price. The Company agrees to
purchase such hardware from PMSI as long as PMSI is able to offer such hardware
at prices equal to or more favorable than prices available to the Company from
other sources.
5. OBLIGATIONS AND FUNCTIONS OF THE COMPANY.
(a) Management and Support of Distribution. The Company shall be
responsible for managing and supporting the distribution of the Software in the
Territory, including the management of Subdistributors and value-added reseller
relationships.
(b) Relationship with Subdistributors. The Company may, in its
reasonable discretion, appoint and authorize Subdistributors to subdistribute
the Software in the Territory. In doing so, the Company shall enter into
agreements or arrangements with such Subdistributors that maximize, and shall
act to the best interests of, the distribution and support of the Software in
the Territory. The Company shall use reasonable commercial efforts to ensure
compliance by such Subdistributors with all of the Company's obligations under
this Agreement, and at all times transact with such Subdistributors on an
arms'-length basis.
*CONFIDENTIAL TREATMENT REQUESTED
9.
<PAGE> 44
(c) Adequate Company Facilities and Customer Satisfaction. The Company
will establish, staff, equip and maintain such place or places of business in
such location or locations in the Territory as may be necessary to provide good
customer service and support and marketing coverage in the Territory. The
Company shall use its best efforts to ensure customer satisfaction including
maintaining a qualified sales force to promote the sale/Sublicensing of the
Software.
(d) Promotion and Marketing. The Company agrees to use its best efforts
to market, distribute, Sublicense and support the Software throughout the
Territory and further agrees that its marketing and advertising efforts will be
of high quality, in good taste, and will preserve the professional image and
reputation of PMSI and the Software. The Company agrees to include in all
related advertising materials all applicable proprietary rights' notices and any
other notices of PMSI as they appear on or in the Software. PMSI may provide, at
its option, a reasonable amount of advertising material in English, as requested
by the Company, for use in the Company's efforts to market the Software. All
such material shall remain the property of PMSI and, upon request, the Company
agrees to return same to PMSI without cost to PMSI. If required by Customer
demand, the Company shall translate all such materials into the Japanese
language or other language necessary for proper marketing of the Software in the
Territory and provide such materials to PMSI for review. PMSI shall retain title
to and ownership of any such translations. The Company agrees to refrain from
making any claim or representation concerning the Software in excess of those
made by PMSI.
(e) Contract Services. The Company may enter into application contracts
with PMSI Customers or Customers whereby the Company will provide services to
address customer problems related to the use of the Software in the Territory.
The Company may also act as PMSI's agent with respect to the development or
establishment of strategic technology partner (STP) relationships with major
Customers and PMSI Customers in the Territory.
(f) Porting. The Company shall act as PMSI's agent with respect to
establishing and managing porting contracts with computer companies in the
Territory. PMSI agrees to use its best commercial efforts to supply information
necessary to complete porting that is reasonably requested by the Company.
(g) OEM Arrangements. The Company shall endeavour to establish OEM
arrangements with third parties in the Territory, and PMSI agrees to use its
best commercial efforts to supply information necessary to establish such
arrangements.
10.
<PAGE> 45
(h) Company's General Businesslike Conduct. The Company shall at all
times conduct its business in a businesslike manner and will not engage in any
deceptive, misleading, illegal or unethical business practice or any practice
that will reflect unfavorably on PMSI or the Software.
(i) Technical Support and Other Staff. The Company agrees to develop,
maintain and train or otherwise provide a competent technical and scientific
support organization for the Software that will be responsible for the
installation and on-site servicing of the Software, the provision of remote
telephone support services, and the provision of training and application
development to PMSI Customers, Customers and Subdistributors. The Company shall
at all times have a sufficient number of competent office, sales, service and
other employees to carry out its obligations under this Agreement.
(j) Installation. The Company shall be responsible for the installation
of the Software at Customers' facilities, either directly or through
Subdistributors.
(k) Keeping PMSI Informed. The Company agrees to use its best efforts
to keep PMSI fully informed of all governmental, commercial and industrial
activities and plans which affect, or could affect, the Software in the
Territory. The Company shall consult with PMSI regarding any advertising or
trade practice which might affect the good name, trademarks, goodwill, or
reputation of PMSI or the Software.
(l) Reports and Forecasts. The Company shall furnish to PMSI in
English: (i) within eight (8) business days after the end of each calendar
month, a report on the monthly sales and Sublicensing of the Software in the
Territory for the preceding month, identifying the Software shipped by the
Company or Subdistributors to Customers and the respective locations and contact
persons of such Customers, and showing the price and national currency involved
in which the Software was sold/Sublicensed and for which services relating
thereto were provided, and (ii) a rolling six (6)-month forecast of sales on a
monthly basis. The Company shall also furnish PMSI with such other reports as
PMSI may reasonably require from time to time.
(m) Competing Representations. In consideration for the license granted
to the Company under Section 2 above, the Company agrees that during the term of
this Agreement, the Company shall not develop, contract to develop, manufacture,
sell, license, lease or otherwise distribute or exploit in any manner any
product that is directly competitive with the Software in the Territory. For the
purposes of this Agreement, a product shall be considered to be competitive with
the Software if the sale of that product could result in lower sales of the
Software.
11.
<PAGE> 46
6. OBLIGATIONS OF PMSI.
(a) Availability of Documentation. PMSI shall provide the Company with
one (1) copy of all Documentation in the English language including sales
literature, training manuals, operator manuals, graphic materials, and other
documentation relating to the Software. The Company may translate, copy, and
repackage the Documentation as is necessary in accordance with the terms of
Section 2(c) above.
(b) Training. PMSI will provide intensive training for a reasonable
number of the Company's personnel at PMSI's facilities in the U.S.A., for a
reasonable number of days per year. The Company shall pay all travel, living and
incidental expenses of its personnel. PMSI shall also provide technical
instructors for seminars to be held in Japan on a periodic basis, subject to the
availability and reasonable schedules of such instructors. All travel, living
and incidental expenses of such instructors shall be borne by the Company.
(c) Developments. During the term of this Agreement, PMSI will use
reasonable commercial efforts to provide the Company with full and complete
information concerning all improvements, updates, enhancements, and
modifications to the Software and will provide the Company with such
improvements, updates, enhancements and modifications for distribution to
Customers at the same time as PMSI makes any such improvement, update,
enhancement or modification generally available to its other customers. In
addition, if there is any software product which is under development by PMSI
which may be added to the definition of "Software" pursuant to Section 2(a)
hereof, PMSI shall use its reasonable commercial efforts to provide the Company,
on a regular basis as it becomes available, with full and complete information
concerning such product, including, but not limited to, the projected
development and shipping schedule, beta release, documentation and other
information that would assist with pre-marketing preparation.
(d) Third Party OEM Arrangements. In the event that PMSI enters into an
OEM arrangement with a third party relating to the manufacture and distribution
of bundled PMSI software and third party hardware products (as contemplated
under Section 2(a) hereof), which arrangement includes distribution by such
third party in the Territory being served by the Company, PMSI agrees to
negotiate in good faith with the Company to have the Company provide technical
support for such bundled products in the Territory (if necessary). PMSI shall
give advance written notice to the Company of such OEM arrangements if support
by the Company is necessary.
(e) Maintenance Upon Termination. Upon the termination of this
Agreement and provided that the relevant End User License
12.
<PAGE> 47
Agreements and Software Maintenance Agreements have been assigned to PMSI or its
designee in accordance with Section 11(f)(iii) hereof, PMSI shall use its best
efforts to arrange for the continued maintenance and support of PMSI Customers,
Customers and the Software in the Territory.
(f) Bug Fixes. PMSI will use its reasonable commercial efforts to
notify the Company in writing of any outstanding bugs or other defects in the
Software and will endeavour to correct such bugs and defects and supply such
corrections to the Company in accordance with PMSI's reasonable commercial
procedures.
7. WARRANTIES, DISCLAIMERS AND LIMITATIONS OF LIABILITY.
(a) PMSI's Warranty. All Software is warranted as provided in Section
10 of the current form of PMSI's Standard Software License Agreement attached
hereto as Appendix B, the provisions of which are made a part hereof by
reference.
(b) Warranty Disclaimers and Limitations. THE WARRANTIES DESCRIBED IN
7(a) ABOVE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. The
warranties shall apply only if PMSI's examination discloses to PMSI's
satisfaction that alleged defects actually exist and were not caused by misuse,
unauthorized modifications, neglect, improper installation or testing, attempts
to repair, or the like, or by accident, fire, power surge or failure, or other
hazard.
(c) No Warranty Pass-Through. The Company shall not pass through to its
Customers or any other third party the warranties made by PMSI under this
Section 7, shall make no other representations to its Customers or any other
third party on behalf of PMSI, and shall expressly indicate to its Customers
that they must look solely to the Company in connection with any problems,
warranty, claim or other matters concerning the Software. No warranty,
representation or agreement herein shall be deemed to be made for the benefit of
any Customer or any other third party. Notwithstanding the foregoing, the
Company may pass through only to Customers only those warranties specified in
Section 10 of the attached PMSI Standard Software License Agreement (Appendix B
hereto). Repair or replacement of code or other items does not extend the
warranty period beyond the initial warranty period which shall begin on the date
of installation of the Software at the Customer's facilities.
(d) Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS
OF PROFITS, REVENUE, DATA, OR USE, INCURRED BY EITHER PARTY OR ANY THIRD PARTY,
WHETHER IN AN ACTION IN CONTRACT OR TORT OR BASED ON A WARRANTY, EVEN IF THE
13.
<PAGE> 48
OTHER PARTY OR ANY OTHER PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. PMSI'S LIABILITY FOR ANY DAMAGES UNDER THIS AGREEMENT SHALL IN NO EVENT
EXCEED THE AMOUNTS ACTUALLY PAID BY THE COMPANY TO PMSI UNDER THIS AGREEMENT.
SOME STATES AND JURISDICTIONS OUTSIDE OF THE UNITED STATES DO NOT ALLOW THE
LIMITATION OR EXCLUSION OF IMPLIED WARRANTIES, OR LIABILITY FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY. THE
COMPANY ACKNOWLEDGES THAT THE ALLOCATION OF RISKS AND BENEFITS UNDER THIS
AGREEMENT ARE BASED ON, AND THE LICENSE FEES UNDER THIS AGREEMENT WOULD BE
GREATER IN THE ABSENCE OF, THE LIMITATIONS DESCRIBED ABOVE.
8. INDEMNITY.
(a) Proprietary Rights. PMSI will defend the Company against a claim
that the Software furnished and used within the scope of this Agreement
infringes any third party patent, copyright or other intellectual property right
("Claim"), and PMSI will indemnify the Company for any damages finally awarded
by a court of competent jurisdiction based upon a Claim, or any amount that is
paid to finally settle a Claim, so long as PMSI has approved the settlement in
writing, provided that: (i) the Company notifies PMSI in writing within thirty
(30) days of any Claim, (ii) PMSI has sole control of the defense and all
related settlement negotiations, and (iii) the Company provides PMSI with the
assistance, information and authority necessary to perform the above. Reasonable
out-of-pocket expenses incurred by the Company in providing such assistance will
be reimbursed by PMSI.
(i) Notwithstanding the foregoing, PMSI shall have no liability for any
claim of patent or copyright infringement based on: (A) a modification by the
Company of the Software or the use of a superseded or altered release of the
Software if such infringement would have been avoided by the use of current or
unaltered releases of the Software that PMSI provides to Distributor, or (B) the
combination, operation or use of the Software furnished under this Agreement
with products or data not furnished by PMSI if such infringement would have been
avoided by the use of the Software without such products or data.
(ii) In the event the Software is held or is believed by PMSI to
infringe, PMSI shall have the option, at its expense, to (A) modify the Software
to be non-infringing, (B) obtain for the Company the right to continue using and
distributing the Software, or (C) terminate this Agreement with respect to the
infringing Software and refund the fees paid for such Software, to the extent
each Customer, if any, requests a corresponding refund, but in any event the
amount of the refund shall equal [*].
14.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 49
(iii) This Section 8(a) states the Company's exclusive remedy and
PMSI's entire liability for any infringement.
(b) Other Indemnity. The Company shall be responsible and shall
indemnify and hold PMSI harmless for any and all losses, liability or damages
arising out of or incurred in connection with (i) Company's, Subdistributors' or
Customers' marketing, distribution, use or Sublicensing of the Software, except
for valid warranty claims under Section 7 above and valid third party
infringement Claims under Section 8(a) above, and (ii) any unauthorized
representation, warranty or agreement, express or implied, made by Company, any
Subdistributor or Customer to or with any other Customers or any third party
with respect to the Software.
9. PROPRIETARY RIGHTS.
(a) Ownership of Proprietary Rights. PMSI shall retain all of its
rights, title and interest in and to and ownership of all copyrights,
trademarks, trade secrets, patents, mask works and all other industrial and
intellectual property embodied in the Software including any improvements,
updates, enhancements or modifications to the Software. Except as otherwise
expressly provided in this Agreement, the Company has no right, title or
interest in the Software or any industrial or intellectual property relating to
the Software and shall not copy, reproduce, reverse engineer, decompile,
disassemble, or otherwise use, in whole or in part, the Software. The Company
shall keep each and every item to which PMSI retains title free and clear of all
claims, liens, and encumbrances except those of PMSI, and any act of the
Company, voluntary or involuntary, purporting to create a claim, lien, or
encumbrance on such item shall be void.
(b) No Modification. Except as required under Section 3(d) hereof, the
Company shall distribute the Software only in the form shipped by PMSI, and the
Company shall not alter, modify, or change the Software or its package or use in
relation to any product or any trademark of the Company or any third parties
without the prior written consent of PMSI.
(c) Trademarks and Trade Names.
(i) In connection with the distribution or advertising of the Software,
the Company may use such trade names or Trademarks of PMSI listed in Appendix E,
as may be amended from time to time by PMSI. The Company acknowledges the
validity of such Trademarks and trade names and PMSI's ownership thereof. All
such marks and names and any additional marks of which PMSI may in the future be
the proprietor will bear the designation (TM) or the designation (R) as
specified by PMSI. The Company agrees to submit to PMSI any published material
not previously reviewed by
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<PAGE> 50
PMSI containing references to the Software for PMSI's approval prior to the
publication or release of such published material, such approval shall not be
unreasonably withheld. The Company shall not challenge PMSI's rights to use the
Trademarks or trade names which PMSI may apply to or use in connection with the
Software. If the Company in the course of its business in the distribution of
the Software acquires any goodwill or reputation in any of the Trademarks or
trade names of PMSI applied thereto, then at the expiration or termination of
this Agreement all such goodwill or reputation automatically shall vest in PMSI
without any separate payment or other consideration of any kind to Distributor,
and the Company agrees to take all such actions necessary to effect such
vesting.
(ii) The Company shall, at the request and expense of PMSI, do such
acts or things as PMSI may reasonably require for the purpose of obtaining,
maintaining, enforcing and preserving any of the Trademarks, trade names or
other proprietary rights of PMSI in the Territory; provided, however, that the
Company agrees that only PMSI has the right to enjoin any infringement or
registration by a third party of the trademarks, trade names or similar rights.
In the event that any unlawful copying of the Software, infringement of PMSI's
rights in the Software, or infringement or registration by a third party of
the trademarks, trade names or other property rights of PMSI in the Territory
comes to the attention of the Company, the Company shall immediately inform PMSI
in writing, stating the full facts of the infringement or registration known to
it, including the identity of the suspected infringer or registrant, the place
of the asserted infringement or registration and evidence thereof. The Company
agrees to cooperate fully with PMSI at the expense of PMSI if PMSI sues to
enjoin such infringements or to oppose or invalidate any such registration.
Notwithstanding the foregoing, in the event that PMSI refuses in writing to
enjoin such infringements or to oppose or invalidate any such registration
following a written request by the Company to do so, the Company may, at its
expense, sue to enjoin or otherwise oppose any such infringement of PMSI's
proprietary rights.
(iii) Except as permitted herein, the Company shall not (nor shall it
attempt to) adopt, use, or register any acronym, Trademark, trade names or other
marketing name of PMSI or any confusingly similar work or symbol as part of the
Company's own name or the name of any of its affiliates or the names of the
products it markets.
(d) Nondisclosure and Non-Use.
(i) Without the prior written consent of the supplying party, no
receiving party, its officers, directors, agents or employees shall, in the case
of Confidential Information (as defined hereafter) of a business nature, both
during the term of
16.
<PAGE> 51
this Agreement and for a period of three (3) years after termination of this
Agreement, and in the case of Confidential Information of a technical nature,
both during the term of this Agreement and for period of ten (10) years after
the termination of this Agreement, in any manner whatsoever disclose or
communicate such information to a third party, except as legally required by a
governmental or judicial agency, and each party agrees to keep such Confidential
Information strictly confidential. For the purpose of this Agreement, the term
"Confidential Information" shall mean and include any and all financial and
other information relating to PMSI's or the Company's business and their
respective relationships with Teijin, the Software, the Documentation,
information relating to the Software (including but not limited to technical
information such as design specifications, instructions, and know-how) acquired
either directly or indirectly by either party hereunder; provided, however, that
all such Confidential Information shall be clearly marked as "confidential" and
the term "Confidential Information" shall not include any information which:
(1) has become or entered the public domain through no fault
of the receiving party; or
(2) was in the demonstrable possession of the receiving party
prior to or at the time of receipt hereunder; or
(3) was or has been obtained lawfully from a third party; or
(4) has been independently developed by the receiving party
without violation of its obligations under this Agreement, and which independent
development is properly documented by such party.
(ii) Each party agrees, during the term of this Agreement, that it
shall not use any Confidential Information obtained from the other for any
purpose whatsoever except in a manner expressly provided for in this Agreement.
The provisions of this Section 9(d) shall survive the termination of this
Agreement.
10. COMPLIANCE WITH LAWS.
(a) Export Law Compliance. The Company understands and recognizes that
the Software and other materials made available to it hereunder may be subject
to the export administration regulations of the United States Department of
Commerce and other United States government regulations related to the export of
technical data and equipment and products produced therefrom. The Company
represents that it is familiar with and agrees to comply with all such
regulations, including any future modifications thereof, in connection with the
distribution of the Soft-
17.
<PAGE> 52
ware. The Company agrees that it will not export or re-export outside the
Territory, directly or indirectly, any Software or technical data relating to
the Software without the prior written consent of PMSI and without complying
with all applicable regulations. The Company agrees to obtain the same agreement
from each of its Subdistributors and Customers. The Company hereby agrees to
indemnify and hold PMSI harmless from any breach of this Section 10(a) by it,
any Subdistributor and/or Customer.
(b) Foreign Corrupt Practices Act. The Company hereby agrees to refrain
from making any payments to third parties which could cause PMSI to violate the
U.S. Foreign Corrupt Practices Act. The Company hereby agrees to indemnify and
hold PMSI harmless from any breach of this Section 10(b).
(c) Licenses and Permits. The Company shall be responsible for
obtaining at its own expense, and shall use its best efforts to obtain, any and
all required non-U.S. governmental authorizations, including without limitation
any import licenses and foreign exchange permits. The Company shall provide
proof of compliance with required non-U.S. governmental authorization to PMSI
upon request. PMSI shall not be liable if any authorization is delayed, denied,
revoked, restricted or not renewed. The Company shall bear all such risks and
costs caused thereby. In addition, if this Agreement is terminated due to a
default of the Company, PMSI or its designee shall be exclusively entitled,
free-of-charge, to any rights the Company may have acquired as a result of, or
in, governmental approvals, authorizations or permits. If this Agreement is
terminated due to a default of PMSI, PMSI shall pay the Company a reasonable sum
to be mutually agreed upon for the exclusive transfer to PMSI or its designee of
any such rights the Company may have acquired as a result of, or in, said
governmental approvals, authorizations or permits. The Company agrees to use its
best efforts to effect the transfer of interest in the foregoing approvals,
authorizations or permits to PMSI or to any third party so identified by PMSI.
11. EFFECTIVE DATE, TERM, TERMINATION AND EFFECT OF TERMINATION.
(a) Effective Date. This Agreement shall become effective on the later
to occur of: (i) the date of execution of this Agreement by the parties, or (ii)
the date on which Japanese governmental clearance (whether in the form of an
approval, notification or otherwise) is obtained with respect to Japanese
foreign exchange and trade control regulations (the "Effective Date")
(b) Term. This Agreement shall commence on the Effective Date and shall
remain in full force and effect until the dissolution of the Company pursuant to
the terms of the Joint Venture Agreement or unless the parties otherwise agree.
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<PAGE> 53
(c) Termination by Either Party. Notwithstanding anything in this
Agreement to the contrary, either party shall have the right, in addition and
without prejudice to any other rights or remedies, to terminate this Agreement
immediately upon written notice to the other party if the other party commits
any material breach of any of the terms of this Agreement which, in the case of
a breach capable of remedy, shall not have been remedied within thirty (30) days
of the receipt by the party in default of notice specifying the breach and
requiring its remedy.
(d) Termination by PMSI. PMSI shall have the right, in addition and
without prejudice to any other rights or remedies, to terminate this Agreement:
(i) upon the termination of the Joint Venture Agreement for any
reason, unless otherwise mutually agreed between PMSI and Teijin where all the
shares of the Company are acquired by either Teijin or PMSI pursuant to Section
12 of the Joint Venture Agreement; or
(ii) upon written notice at any time for breach of Section 9
hereof (Proprietary Rights).
(e) No Other Rights Upon Termination. It is expressly understood and
agreed that the rights of termination as provided in this Agreement are absolute
and that both parties hereto have considered the making of expenditures in
preparing for performance as contemplated by this Agreement and possible losses
and damages incident and resulting to them that may result in the event of its
termination. Therefore, in agreeing to said terms of termination it is with the
full knowledge of such possibilities and except as provided herein neither party
hereto shall be responsible to the other for compensation, damages or otherwise
by reason of such termination of this Agreement at any time. Further, no
payments in the nature of severance payments shall be due either party upon
termination of this Agreement at any time. Without limiting the generality of
the foregoing, the Company understands and acknowledges that any contracts or
other arrangements it enters into with any third parties with respect to the
Software will be subject and subordinate to the rights of termination set forth
in this Agreement. The Company will indemnify and hold PMSI harmless from any
and all liability, loss, damages, costs or expenses incurred by PMSI in
connection with claims by any such third party made because of the termination
of this Agreement.
(f) Effect of Termination. Termination or expiration of this Agreement
shall not affect any other rights of either party which may have accrued up to
the date of such termination or expiration and the Company shall not be relieved
of any obligation for any sums due to PMSI for the Software or services covered
by purchase orders accepted prior to termination or expi-
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<PAGE> 54
ration or any confidentiality obligations of the Company under Section 9(d) of
this Agreement. Upon termination:
(i) the due date of all outstanding invoices to the Company for the
Software shall automatically be accelerated to become due and payable by
immediate wire transfer on the effective date of termination, even if longer
terms have been previously agreed to;
(ii) all orders or portions thereof remaining unshipped as of the
effective date of termination shall automatically be cancelled; and
(iii) all executed End User License Agreements and Software
Maintenance Agreements between Customers and the Company then in effect, and all
rights and obligations thereunder, shall immediately be assigned by the Company
to PMSI or its designee.
(g) The Company's Duties Upon Termination. Upon the termination or
expiration of this Agreement, the Company agrees to do the following:
(i) refrain thereafter from representing itself as a distributor of
PMSI or using any trademarks or trade names of PMSI;
(ii) immediately return to PMSI or immediately destroy (A) all
Confidential Information of PMSI including but not limited to advertising matter
and (B) all other printed material in its possession or under its control
containing or bearing any trademark or trade names of PMSI;
(iii) take all appropriate steps to remove and cancel its listing in
telephone books, directories, public records or elsewhere, which state or
indicate that the Company is a distributor of PMSI;
(iv) make available to PMSI for a period of one (1) year for
inspection and copying all books and records of the Company that pertain to the
Company's performance of and compliance with its obligations, warranties and
representations under this Agreement; and
(v) immediately cease using the applicable Software, and certify in
writing to PMSI within thirty (30) days after such termination that the Company
has either destroyed, permanently erased or returned to PMSI the Software, all
related Documentation and all copies. This requirement applies to copies in all
forms, partial and complete, in all types of media and computer memory and
storage, and whether or not modified or merged into other programs or materials.
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12. GENERAL TERMS.
(a) Assignment. Except in connection with the sale of all or
substantially all of PMSI's assets, or its business (by merger or otherwise), or
any similar transfer by PMSI, any attempted assignment of the rights or
delegation of the obligations under this Agreement shall be void without the
prior written consent of the non-assigning or non-delegating party.
(b) Benefits and Binding Nature of Agreement. In the case of any
permitted assignment or transfer of or under this Agreement, this Agreement or
the relevant provisions shall be binding upon, and inure to the benefit of, the
successors, executors, heirs, representatives, administrators and assigns of the
parties hereto.
(c) Entire Agreement. This Agreement, together with the Appendices
attached hereto and incorporated herein by reference, embodies the final,
complete and exclusive understanding between the parties, and replaces and
supersedes all previous agreements, understandings or arrangements between the
parties with respect to its subject matter. No modification or waiver of any
terms or conditions hereof, nor any representations or warranties shall be of
any force or effect unless such modification or waiver is in writing and signed
by an authorized officer of each party hereto. It is expressly agreed that any
of the terms and conditions of the Company's purchase order or the like shall be
superseded by the terms and conditions of this Agreement.
(d) Force Majeure. Neither party shall be liable to the other for its
failure to perform any of its obligations under this Agreement, except for
payment obligations, during any period in which such performance is delayed
because rendered impracticable or impossible due to circumstances beyond its
reasonable control, including but not limited to fire, flood, earthquake,
explosion, acts of God, labor trouble or shortage, inability to obtain or
shortage of materials, equipment or transportation, insurrections, riots, war,
acts or requirements of the governments in any state, provided that the party
experiencing the delay promptly notifies the other of the delay. Any
installation, warranty, technical support, consulting services and other
services to be performed at the Company's facility may not be performed if PMSI
reasonably believes conditions at such facility represent a safety or health
hazard to any PMSI employee.
(e) Notice. All notices concerning this Agreement shall be written in
the English language and shall be deemed to have been received (i) ten (10) days
after being properly airmailed, postage prepaid, (ii) three (3) business days
after being properly sent by commercial overnight courier, or (iii) two (2)
business days after being transmitted by confirmed telecopy, in each case
addressed to the relevant party at its address first
21.
<PAGE> 56
set forth in this Agreement to the attention of Michael J. Savage, President, in
the case of PMSI, and to the attention of ______________________________________
in the case of the Company.
(f) Governing Law and Official Language. This Agreement is made in
accordance with and shall be governed and construed under the laws of the State
of Massachusetts, U.S.A., as applied to agreements executed and performed
entirely in Massachusetts by Massachusetts residents and in no event shall this
Agreement be governed by the United Nations Convention on Contracts for the
International Sale of Goods; provided, however, that the provisions of this
Agreement relating to dispute resolution, as set forth in Section 12(g) below,
shall be governed exclusively by the United States Arbitration Act (9 U.S.C.
Section et. seq.) notwithstanding any different or contrary provision of state
law. The official text of this Agreement and any Appendix or any notice given or
accounts or statements required by this Agreement shall be in English. In the
event of any dispute concerning the construction or meaning of this Agreement,
reference shall be made only to this Agreement as written in English and not to
any other translation into any other language.
(g) Dispute Resolution. If a dispute arises between the parties arising
out of or in relation to this Agreement, the parties shall use all reasonable
efforts to resolve the dispute through good faith discussions. The senior
management of each of PMSI and the Company commits itself to respond promptly to
any such dispute. In the event that PMSI and the Company are unable, after
exerting all reasonable efforts, to resolve the said dispute, the said dispute
shall be finally settled through binding arbitration on the following basis:
(i) The arbitration shall be conducted by a panel of three (3)
arbitrators under the International Arbitration Rules of the American
Arbitration Association then in force, by which each of PMSI and the Company
agrees to be bound. Within thirty (30) days after notice of arbitration has been
given, each of PMSI and the Company shall appoint one (1) arbitrator. The
arbitrators appointed by the parties shall then appoint a third arbitrator, who
shall serve as the presiding arbitrator.
(ii) If demand for arbitration is made by the Company, the place of
arbitration shall be Boston, Massachusetts, U.S.A, and if demand for arbitration
is made by PMSI, the place of arbitration shall be Tokyo, Japan.
(iii) The language to be used in the arbitration shall be English.
22.
<PAGE> 57
(iv) Any arbitrator may be of any nationality, and need not be a
lawyer or hold any other professional status or membership.
(v) The arbitral award shall be rendered in writing, shall state the
reasons for the award, and shall be final and binding upon the parties. In no
event shall the arbitral award include a sum for punitive damages.
(vi) Judgment upon any award may be entered by any court of
competent jurisdiction, or application may be made to such a court for judicial
acceptance of the award and any appropriate order including enforcement.
(vii) Each of PMSI and the Company shall bear its own expenses and
attorneys' fees in connection with the arbitration.
(h) Waiver. Any waiver (express or implied) by either party of any
default or breach of this Agreement shall not constitute a waiver of any other
or subsequent default or breach.
(i) Severability. In the event that any provision of this Agreement
shall be unenforceable or invalid under any applicable law or be so held by
applicable court decision, such unenforceability or invalidity shall not
render this Agreement unenforceable or invalid as a whole, and, in such event,
such provision shall be changed and interpreted so as to best accomplish the
objectives of such unenforceable or invalid provision within the limits of
applicable law or applicable court decisions.
(j) Rights and Remedies Cumulative. Except as expressly provided
herein, the rights and remedies provided in this Agreement shall be cumulative
and not exclusive of any other rights and remedies provided by law or otherwise.
(k) No Agency - Independent Contractors. The Company shall act as an
independent contractor under the terms of this Agreement. The Company is not,
and shall not be deemed to be, an employee, agent, partner or legal
representative of PMSI for any purpose. The Company shall not be entitled to
enter into any contracts in the name of, or on behalf of PMSI, nor shall the
Company be entitled to pledge the credit of PMSI in any way or hold itself out
as having authority to do so.
(l) Captions and Section References. The section headings appearing in
this Agreement are inserted only as a matter of convenience and in no way
define, limit, construe or describe the scope or extent of such section or in
any way affect such section.
23.
<PAGE> 58
(m) Counterparts. This Agreement may be executed in counterparts with
the same force and effect as if each of the signatories had executed the same
instrument.
(n) No Limitation on Supplier PMSI. Nothing in this Agreement shall be
construed so as to preclude PMSI from selling or otherwise marketing any of the
Software to (i) any Customer outside the Territory, (ii) any value added
reseller or original equipment manufacturers outside the Territory, or (iii) any
other distributors outside the Territory.
(o) Parties Advised by Counsel -- No Interpretation Against Drafter.
This Agreement has been negotiated between unrelated parties who are
sophisticated and knowledgeable in the matters contained in this Agreement and
who have acted in their own self interest. In addition, each party has been
represented by legal counsel. Accordingly, any rule of law, including Section
1654 of the California Civil Code, as well as any other statute, law, ordinance,
or common law principles or other authority of any jurisdiction of similar
effect, or legal decision that would require interpretation of any ambiguities
in this Agreement against the party who has drafted it is not applicable and is
hereby waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the purpose of the parties, and this Agreement shall
not be interpreted or construed against any party to this Agreement because that
party or any attorney or representative for that party drafted this Agreement or
participated in the drafting of this Agreement.
(p) Authority to Enter Into and Execute Agreement. Both parties
represent and warrant to each other that they have the right and lawful
authority to enter into this Agreement for the purposes herein and that there
are no other outstanding agreements or obligations inconsistent with the terms
and provisions hereof.
24.
<PAGE> 59
Appendix A
SOFTWARE
(attached)
26.
<PAGE> 60
APPENDIX B
POLYGEN (PMSI) STANDARD SOFTWARE LICENSE AGREEMENT
(attached)
27.
<PAGE> 61
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be signed and delivered by their duly authorized representatives as of the
date first set forth above.
POLYGEN CORPORATION
By: ________________________
Michael J. Savage,
President
TEIJIN MOLECULAR SIMULATIONS INCORPORATED
By: ______________________
Name:
Title:
25.
<PAGE> 62
Appendix A: Software
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING PRODUCTS PRICE LIST
PRICING SUMMARY
JAPAN END-USER BUNDLED PRICE LIST
EFFECTIVE JANUARY 01, 1992
--------------------------------------------------
PRICES ARE VALID ONLY WHEN PURCHASED WITH HARDWARE
--------------------------------------------------
Prices include software documentation, but do not include
hardware, installation, training, or continuing license fees.
<TABLE>
<CAPTION>
SYSTEM SOFTWARE DESKTOP
- -----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBEXX......... BIOGRAF (Indigo)..................2.2...............Now.......Yen 5,250,000....Yen 2,265,000.......4320
XGNMEXX........ NMRgraf (Indigo)..................2.2...............Now.......Yen 3,500,000....Yen 1,750,000.......2880
POLEXX......... Polaris (Indigo)..................3.0...............Now.......Yen 2,625,000....Yen 1,312,500.......2160
XGPGEXX........ POLYGRAF (Indigo).................2.2...............Now.......Yen 7,000,000....Yen 3,500,000.......5760
QNTXX.......... QUANTA (Indigo)...................3.2...............Now.......Yen 3,750,000....Yen 1,875,000.......3600
QINORGXX....... Inorganic Solids Modeling.........3.2...............Now.......Yen 3,750,000....Yen 1,875,000.......2550
QPOLYXX........ Polymer Dynamics..................3.2...............Now.......Yen 3,750,000....Yen 1,875,000.......2550
QPROTXX........ Protein Modeling..................3.2...............Now.......Yen 3,750,000....Yen 1,875,000.......2550
QSTARXX........ X-Ray Structure Analysis..........3.2...............Now.......Yen 3,750,000....Yen 1,875,000.......2550
</TABLE>
NOTE: If QUANTA is purchased, at least one copy of networked CHARMm
must be available for use.
<TABLE>
<CAPTION>
SYSTEM SOFTWARE PERSONAL
- -----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBEXX......... BIOGRAF (SGI/IBM).................2.2...............Now.......Yen 7,000,000...Yen 3,500,000.......5760
XGNMEXX........ NMRgraf (SGI/IBM).................2.2...............Now.......Yen 5,250,000...Yen 2,625,000.......4320
POLEXX......... Polaris (SGI).....................3.0...............Now.......Yen 4,375,000...Yen 2,187,500.......3600
XGPGEXX........ POLYGRAF (SGI/IBM)................2.2...............Now.......Yen 10,500,000...Yen 5,250,000.......8640
QNTXX.......... QUANTA (SGI/IBM)..................3.2...............Now.......Yen 6,240,000...Yen 3,120,000.......6000
QINORGXX....... Inorganic Solids Modeling.........3.2...............Now.......Yen 4,992,000...Yen 2,496,000.......3400
QPOLYXX........ Polymer Dynamics..................3.2...............Now.......Yen 4,992,000...Yen 2,496,000.......3400
QPROTXX........ Protein Modeling..................3.2...............Now.......Yen 4,992,000...Yen 2,496,000.......3400
QSTARXX........ X-Ray Structure Analysis..........3.2...............Now.......Yen 4,992,000...Yen 2,496,000.......3400
</TABLE>
NOTE: If QUANTA is purchased, at least one copy of networked CHARMm
must be available for use.
--------------------------------------
PRICE PER SERVICE UNIT (SU)
--------------------------------------
<TABLE>
<CAPTION>
Level 1 Level 2
<S> <C> <C>
Commercial Yen 220 Yen 265
Academic Yen 35 Yen 105
</TABLE>
--------------------------------------
Proprietary and Confidential Polygen/Molecular Simulations Japan Price List
January 30, 1992
<PAGE> 63
System Software Professional/Power
________________________________________________________________________________
<TABLE>
<CAPTION>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
XGBHXX..........BIOGRAF (SGI/IBM)..............2.2.........Now..........Yen10,500,000...Yen5,250,000......8640
XGNMHXX.........NMRgraf (SGI/IBM)..............2.2.........Now..........Yen 8,750,000...Yen4,375,000......7200
POLHXX..........Polaris (Stardent/SGI).........3.0.........Now..........Yen 6,125,000...Yen3,062,500......5040
XGPGHXX.........POLYGRAF (SGI/IBM).............2.2.........Now..........Yen15,750,000...Yen7,875,000.....12960
QNTXX...........QUANTA (SGI/IBM)...............3.2.........Now..........Yen 6,240,000...Yen3,120,000......6000
QINORGXX........Inorganic Solids Modeling......3.2.........Now..........Yen 4,992,000...Yen2,496,000......3400
QPOLYXX.........Polymer Dynamics...............3.2.........Now..........Yen 4,992,000...Yen2,496,000......3400
QPROTXX.........Protein Modeling...............3.2.........Now..........Yen 4,992,000...Yen2,496,000......3400
QSTARXX.........X-Ray Structure Analysis.......3.2.........Now..........Yen 4,992,000...Yen2,496,000......3400
Note: If QUANTA is purchased, at least one copy of networked CHARMm must be available for use.
QUANTA Options SGI/IBM
_______________________________________________________________________________________________________________
<CAPTION>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
QBDSXX..........Brownian Dynamics Sim. ........3.2.........Now..........Yen 2,500,000...Yen1,250,000......1705
Note: Purchase of Brownian Dynamics requires purchase of UHBD.
QCRYSTXX........Crystal Modeling...............3.2.........Now..........Yen 2,125,000...Yen1,062,500......1450
QHELIXXX........Helix Modeling.................3.2.........Now..........Yen 2,125,000...Yen1,062,500......1450
QMM2XX..........MM2 Interface..................3.2.........Now..........Yen 1,250,000...Yen 625,000.......850
QPBEXX..........Poisson-Boltzmann Electro......3.2.........Now..........Yen 2,125,000...Yen1,062,500......1450
Note: Purchase of Poisson-Boltmann Electrostatics requires purchase of UHBD.
QOPINTXX........QUANTA Open Interface..........3.2.........Now..........Yen 5,000,000...Yen2,500,000......3410
QQMIXX..........Quantum Mechanics Interface....3.2.........Now..........Yen 2,500,000...Yen1,250,000......1705
QNMRSXX.........NMR Structure..................3.2......Dec, 1991.......Yen 4,992,000...Yen2,496,000......2400
QUANTA NMR Software SGI/IBM
_______________________________________________________________________________________________________________
<CAPTION>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
QMADXX..........MADNMR..........................x..........Now..........Yen 3,750,000...Yen1,825,000......2555
QMADPXX.........MADNMR+.........................x..........Now..........Yen 6,250,000...Yen3,125,000......4260
QDISNOEXX.......DISCON/NOESYSIM.................x..........Now..........Yen 2,500,000...Yen1,250,000......1705
</TABLE>
__________________________________
<TABLE>
PRICE PER SERVICE UNIT(SU)
__________________________________
<CAPTION>
<S> <C> <C>
Level 1 Level 2
Commercial Yen 220 Yen 265
Academic Yen 35 Yen 105
</TABLE>
__________________________________
Polygen/Molecular Simulations Japan Price List
January 30, 1992 Proprietary and Confidential
<PAGE> 64
CERIUS SOFTWARE SGI/IBM
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann.SU
- --------------- ------------------------------ -------- ------------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
BUILDER MODULES
CSVSXX Visualizer (required for all) 2.3 Now Yen 437,500 Yen 218,750 400
CSCRXX Crystals 2.3 Now Yen1,312,500 Yen 656,250 1200
CSCLRXX Surfaces 2.3 Mar., 1992 Yen 437,500 Yen 218,750 400
CSINTXX Interfaces 3.0 Mar., 1992 Yen 437,500 Yen 218,750 400
CSPLXX Polymers 2.3 Now Yen 437,500 Yen 218,750 400
CALCULATION MODULES
CSOF1XX Open Force Field MM/MD(1) 3.0 Mar., 1992 Yen6,562,500 Yen3,281,500 6000
CSOF2XX Open Force Field MM/MD(2) 3.0 Mar., 1992 TBD TBD TBD
CSSRPXX Sorption 2.3 Now Yen2,187,500 Yen1,093,750 2000
CSPCKXX Crystal Packer 2.3 Now Yen1,312,500 Yen 656,250 1200
CSMPXX MopacU1 2.3 Now Yen 875,000 Yen 437,500 800
CSSMXX Statmech 2.3 Now Yen2,625,000 Yen1,312,500 2400
CSDLSXX DLS-UI 2.3 Now Yen1,093,750 Yen 546,875 1000
CSDF1XX Diffraction I 2.3 Now Yen2,625,000 Yen1,312,500 2400
CSDF2XX Diffraction II 2.3 Now Yen1,750,000 Yen 875,000 1600
CSDF3XX Diffraction III 2.3 Now Yen1,093,750 Yen 546,875 1000
CSDF4XX Diffraction IV 2.3 Now Yen2,625,000 Yen1,312,500 2400
CSRTVXX Rietveld 3.0 Mar., 1992 Yen1,750,000 Yen 875,000 1600
CSHRXX HRTEM 2.3 Now Yen2,625,000 Yen1,312,500 2400
</TABLE>
NOTE: PRICES INCLUDE FIRST YEAR MAINTENANCE
NOTE: DLS-UI, Sorption, Diffraction I, Diffraction III, HRTEM,
Surfaces, Interfaces, Crystal Packer, and Rietveld require CERIUS
Crystals.
NOTE: StatMech requires CERIUS Polymers.
NOTE: When quoting Open Force Field MM/MD, all Builder Modules should
be included in the quote.
NOTE: Open Force Field MM/MD) (1) is for Desktop and Personal/Entry
machines only. Open Force Field MM/MD (2) is for Professional and Power
machine only.
AVS CHEMISTRYVIEWER
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann.SU
- --------------- ------------------------------ -------- ------------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Chemistry Viewer alone Yen1,312,500 Yen 656,250 720
Chemistry Viewer with AVS Yen1,750,000 Yen 875,000 1440
</TABLE>
NOTE: First year maintenance is required with AVS and Chemistry Viewer
------------------------------
Price per Service Unit (SU)
------------------------------
Level 1 Level 2
Commercial Yen220 Yen265
Academic Yen 35 Yen105
------------------------------
Proprietary Polygen/Molecular Simulations Japan Price List January 30, 1992
and
Confidential
<PAGE> 65
<TABLE>
<CAPTION>
CHARMm ALL PLATFORMS
- ----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDESKXX........Desktop CHARMm...................21.3........Now........Yen 3,750,000*.......Yen 1,875,000*....... 2550
CPERSXX........Personal CHARMm..................21.3........Now........Yen 5,990.000*.......Yen 2,995.000*....... 4085
CPROFXX........Professional CHARMm..............21.3........Now........Yen10,500.000*.......Yen 5,250.000*....... 7160
CPARLXX........Power CHARMm.....................21.3........Now........Yen18,000.000*.......Yen 9,000.000*.......12270
</TABLE>
NOTE: At least one copy of networked CHARMm must be available for use.
Above prices (*) effective only at time of purchase with QUANTA
and include standard discounts. For individual CHARMm pricing,
see pricing below.
NOTE: Desktop CHARMm is only available for the SGI Indigo.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CPERSXX........Personal Stand-alone CHARMm......21.3........Now........Yen11,980,000........Yen 5,990,000........ 8165
CPROFXX........Professional Stand-alone CHARMm..21.3........Now........Yen15,000.000........Yen 7,500.000........10225
CPARLXX........Power Batch stand-alone CHARMm...21.3........Now........Yen22,500.000........Yen11,250.000........15340
CSUPRXX........Super stand-alone CHARMm.........21.3........Now........Yen55,000.000........Yen27,500.000........37500
CSUPRLXX.......Ltd. License Super CHARMm........21.3........Now........Yen33,000.000........Yen16,500.000........22500
CSRCXX.........CHARMm Source Code...............21.3........Now........Yen12,500.000........Yen 6,250.000........ 8520
</TABLE>
NOTE: CHARMm source code may only be purchased in addition to a
standard CHARMm object license.
<TABLE>
<CAPTION>
X-PLOR ALL PLATFORMS
- ----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XPERSXX........Personal X-PLOR..................2.11........Now........Yen 7,488,000........Yen 3,744,000........ 5105
XPROFXX........Professional X-PLOR..............2.11........Now........Yen11,000.000........Yen 5,500.000........ 7500
XPARLXX........Power X-PLOR.....................2.11........Now........Yen16,000.000........Yen 8,000.000........10900
XSUPRXX........Super X-PLOR.....................2.11........Now........Yen33,500,000........Yen16,750,000........22840
XSUPRLXX.......Ltd. License Super X-PLOR........2.11........Now........Yen19,500.000........Yen 9,750.000........13295
XSRCXX.........X-PLOR Source Code...............2.11........Now........Yen12,500.000........Yen 6,250.000........ 8250
</TABLE>
NOTE: X-PLOR source code may only be purchased in addition to a
standard X-PLOR object license.
<TABLE>
<CAPTION>
UHBD ALL PLATFORMS
- ----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UPERSXX........Personal UHBD....................2.2.........Now........Yen10,000,000........Yen 5,000,000........ 6820
UPROFXX........Professional UHBD................2.2.........Now........Yen11,250.000........Yen 5,625.000........ 7670
UPARLXX........Power UHBD.......................2.2.........Now........Yen12,500.000........Yen 6,250.000........ 8250
</TABLE>
<TABLE>
<CAPTION>
GRAF Batch ALL PLATFORMS
- ----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GRAFBXX........Alliant version.................. ..........Now........Yen10,500,000........Yen 5,250,000........ 8640
GRAFBXX........DEC version...................... ..........Now........Yen 8,750.000........Yen 4,375.000........ 7200
GRAFBXX........Convex version................... ..........Now........Yen14,000.000........Yen 7,000.000........11520
GRAFBXX........Cray version..................... ..........Now........Yen17,500.000........Yen 8,750.000........14400
</TABLE>
<TABLE>
<S> <C> <C>
Polygen/Molecular Simulations Japan Price List
January 30, 1992 Proprietary and Confidential
</TABLE>
<PAGE> 66
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING PRODUCTS PRICE LIST
HARDWARE CONFIGURATION SUMMARY
EFFECTIVE OCTOBER 01, 1991
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SILICON GRAPHICS IRIS 4D SERIES
- -----------------------------------------------------------------------------------------------------------------------------------
MACHINE CATEGORY MFLOPS MIPS MEMORY DISK(1) TAPE O/S OTHER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Indigo................ Desktop......................... xx.... xx...... 16... 432/54....... 1/4" cartridge.... 4.0.0... Note 2
4D/25 G/TG............ Personal/Entry.................. xx.... xx...... 16... 380/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/35 G/TG............ Personal/Entry.................. xx.... xx...... 16... 380/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/310 GTX/VGX........ Professional/High-End........... xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/320 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/340 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/380 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/420 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/440 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/480 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
IBM RISC SYSTEM/6000 SERIES
- -----------------------------------------------------------------------------------------------------------------------------------
MACHINE CATEGORY MFLOPS MIPS MEMORY DISK(1) TAPE O/S OTHER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series 320............ Personal/Entry.................. xx.... xx...... 16... 320/54....... 1/4" cartridge.... 3.1.5... Notes 2.3
Series 520............ Professional/Entry.............. xx.... xx...... 16... 320/54....... 1/4" cartridge.... 3.1.5... Notes 2.3
Series 530............ Personal/Entry.................. xx.... xx...... 16... 320/54....... 1/4" cartridge.... 3.1.5... Notes 2.3
Series 540............ Power/High-End.................. xx.... xx...... 16... 320/54....... 1/4" cartridge.... 3.1.5... Notes 2.3
Series 550............ Power/High-End.................. xx.... xx...... 16... 320/54....... 1/4" cartridge.... 3.1.5... Notes 2.3
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
EVANS & SUTHERLAND ESV SERIES
- -----------------------------------------------------------------------------------------------------------------------------------
MACHINE CATEGORY MFLOPS MIPS MEMORY DISK(1) TAPE O/S OTHER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ESV-5................. Entry........................... 4.0... ...... xx... xx/xx....... ......xx.... ....... xx
All others............ High-End........................ 4.0... ...... xx... xx/xx....... ......xx.... ....... xx
</TABLE>
Proprietary and Confidential Polygen/Molecular Simulations Japan Price List
January 30, 1992
<PAGE> 67
- --------------------------------------------------------------------------------
BATCH PROCESSORS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape O/S Other
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliant FX40,80.........Power/Batch.....xx......xx......xx......xx......8 mm cartridge.........2.1.02
Alliant FX2800..........Power/Batch.....xx......xx......xx......xx......8 mm cartridge.........2.1.02
Convex C-1..............Power/Batch.....xx......xx......xx......xx.......Reel-to-reel.............xx....Note 4
Convex C-2..............Power/Batch.....xx......xx......xx......xx.......Reel-to-reel.............xx
Cray X,Y-MP.............Super/Batch.....xx......xx......xx......xx.......Reel-to-reel............6.0
Cray 2..................Super/Batch.....xx......xx......xx......xx.......Reel-to-reel............6.0
DEC.....................Batch...........xx......xx......xx......xx.......Reel-to-reel.............xx....Note 4
IBM 3090 MVS............Super...........xx......xx......xx......xx.......Reel-to-reel.............xx....Note 5
IBM 3090 VM.............Super...........xx......xx......xx......xx.......Reel-to-reel.............xx....Note 5
IBM 3090 AIX............Super...........xx......xx......xx......xx.......Reel-to-reel.............xx....Note 5
</TABLE>
- -------------------------------------------------------------------------------
HARDWARE NOTES
- -------------------------------------------------------------------------------
1. Under the Disk column, the first number is the minimum total disk space
required while the second number is the minimum swap space required.
2. FORTRAN is required for the QUANTA Open Interface.
3. The following IBM RS/6000 hardware configuration is required for
QUANTA/CHARMm software: 24-bit 3D graphics, 24-bit Z-buffer, Ethernet
LAN adaptor, and the FORTRAN 2.01 run-time libraries (xlfrte 02.01).
4. CHARMm, X-PLOR, and UHBD are not supported on the Convex C-1.
5. GRAF Batch is not supported on the IBM 3090.
- ------------------------------------------------------------------------------
PART NUMBERS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Replace XX in all software part numbers with the following machine codes:
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4D All SGI 4D series except Indigo DT SGI Indigo ST Stardent Titan
ES E&S ESV RS All IBM RS/6000 series
FX Alliant C1 Convex C-1 C2 Convex C-2
CX Cray X-MP CY Cray Y-MP CR Cray 2
MV IBM 3090 MVS VM IBM 3090 VM/CMS AX IBM 3090 AIX
VS DEC VMS
</TABLE>
January 30, 1992 Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential
<PAGE> 68
CONTINUING LICENSE/MAINTENANCE
<TABLE>
<CAPTION>
Part Number Description Academic Price/S.U. Commercial Price/S.U.
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SL1SS ..........Level 1 (Standard Support)............Yen35.....................Yen220
Provides the following services:
Continuing license fee
Upgrade of existing software
Hotline support of products: Calls returned within 4 hours of receipt
SL2SS ..........Level 2 (Scientific Support) .........Yen105....................Yen265
Provides the following services:
Continuing license fee
Upgrade of existing software
Hotline support of products: Calls returned within 1 hour of receipt
Monthly status calls from senior scientific staff members
Monthly report of software problems
Scientific support for modeling problems
</TABLE>
SCIENTIFIC PROGRAMS
<TABLE>
<CAPTION>
Part Number Description Cost/Time Period
- ----------------------------------------------------------------
<S> <C> <C>
SSCON...........Scientific Consulting...........Yen175,000 per day
SPMDL...........Molecular Design Lab............Yen700,000 per week
Seat in Introductory Molecular Modeling Course
Use of software on a dedicated machine
Access to Polygen and Harvard scientists
NOTE: A minimum of two weeks is required.
</TABLE>
TRAINING PROGRAMS
<TABLE>
<CAPTION>
Part Number Description Cost/Time Period
- ------------------------------------------------------------------------
<S> <C> <C>
................Introductory Molecular Modeling.........Yen175,000/3 days
................Advanced CHARMm.........................Yen262,500/2 days
................Advanced Protein Modeling...............Yen262,500/2 days
................Advanced Polymer Modeling...............Yen262,500/2 days
</TABLE>
<TABLE>
<S> <C> <C>
Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential January 30, 1992
</TABLE>
<PAGE> 69
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING SOFTWARE PRODUCTS
POLICIES AND PROCEDURES
EFFECTIVE JANUARY 01, 1992
TITLE
All right, title and interest in and to the software licensed and any related
documentation and any copies thereof which may be made by licensee are and shall
remain the exclusive property of licensor or licensor's licensor, as to software
sublicensed by licensor to licensee; licensor and its licensors are collected
referred to as the software owners. Any third party software designated in the
applicable price list as subject to a separate license agreement is subject to
the terms of the agreement accompanying such software. Each software owner shall
have the right to enforce this agreement against licensee as to such software
owner's software.
SOFTWARE LICENSE FEES
Use of the software by licensee shall be subject to the licensee signing the
Polygen/Molecular Simulations Standard Software License Agreement.
UNBUNDLED FEE
In the instance where software is not purchased with hardware, the software list
price shall be increased by an additional amount equal to twenty percent (20%)
of such software list price (the unbundled fee).
PAYMENT TERMS
Unless otherwise arranged, Polygen/Molecular Simulations will invoice purchaser
at the time of shipment of each installment on payment terms of each on
delivery, except where open account credit is established and maintained to
Polygen/Molecular Simulations' satisfaction, in which case payment terms shall
be net 30 days from date of shipment. Purchaser shall make all payments as
provided without regard to whether purchaser has made or may make any inspection
or use of any goods delivered. Any invoiced amount which is not paid when due
shall bear interest at the rate of 2% per month or the highest rate then
permitted by law, whichever is less.
WARRANTY
The software as delivered and installed on the designated system will conform
substantially to licensor's then current published program specifications.
Licensee acknowledges, however, that the software is of such complexity that it
may have inherent or latent defects and agrees that as licensee's sole remedy
licensor will exercise its best efforts to correct documented program errors
which licensors's analysis indicates are caused by a defect in the unaltered
version of the delivered software as installed on an unaltered designated
system. Licensor does not guarantee the results of any such services or
represent or warrant that any such error will be corrected. The foregoing
warranty extends only to licensee and is not applicable to any transferee of the
software license.
LICENSE TRANSFER POLICY
All computers and software are expected to be written off over four years.
Customers will be able to transfer their current software license to a faster
computer (at the same site) and receive a credit equal to 25% of the lower of
the price actually paid or the current price for the license for each year left
in the four years since shipment to the customer by Polygen/Molecular
Simulations. To receive this credit, the customer must be cur-
<PAGE> 70
rent on maintenance.
TERMS AND CONDITIONS
Software orders must be accompanied by the software quotation with standard
quote terms and conditions and a standard software license agreement. Loaners
must be accompanied by a standard software loaner agreement. Any software
purchase or loaner which does include the above documents or which documents
deviate from standard terms must be approved in advance.
QUOTE VALIDITY
Software quotes are valid for 30 days only.
SOFTWARE LOANER PERIOD
Unless otherwise arranged; software to commercial organizations may only be
loaned for a period of 15 days: software to academic institutions may only be
loaned for a period of 30 days.
<PAGE> 71
APPENDIX B
POLYGEN (PMSI) STANDARD SOFTWARE LICENSE AGREEMENT
This Software License Agreement (the "Agreement") is made and entered
into as of _________________, 19__ by and between Polygen Corporation having a
principal place of business at 200 Fifth Avenue, Waltham, MA 02154 ("LICENSOR")
and ______________________________________________ having a principal place of
business at _____________________________________________ ("LICENSEE").
1. DEFINITIONS.
A. "Software" shall mean each computer program, in machine readable
form, furnished by LICENSOR to LICENSEE hereunder, including related supporting
materials and all updates thereto, if any.
B. "Designated System" shall mean the computer hardware identified by
the serial number(s) and located at the address set forth below.
2. GRANT OF LICENSE.
Subject to the terms and conditions of this Agreement, LICENSOR hereby
grants to LICENSEE a non-exclusive, non-transferable license to use the Software
to operate and run solely on a Designated System for the term of this Agreement.
3. REPRODUCTION.
LICENSEE may make no more than three (3) copies of each Software
program for LICENSEE's own use on the Designated System for back-up purposes
only. Except as provided in this paragraph 3, LICENSEE shall make no additional
copies of, nor allow others to copy any of the Software without LICENSOR's prior
written consent. LICENSE shall duplicate the copyright notice and any
proprietary rights legend on all Software copies hereunder.
4. TITLE.
All right, title and interest in and to the Software licensed hereunder
and any related documentation, and any copies thereof which may be made by
LICENSEE are and shall remain the exclusive property of LICENSOR or LICENSOR's
licensor, as to Software sublicensed by LICENSOR to LICENSEE hereunder (LICENSOR
and its licensors are collectively referred to as the "Software Owners"). Any
third party Software designated in the applicable
1.
<PAGE> 72
price list as subject to a separate license agreement is subject to the terms of
the agreement accompanying such Software. Each Software Owner shall have the
right to enforce this Agreement against Licensee as to such Software Owner's
Software.
5. PROTECTION OF LICENSED SOFTWARE.
The Software is acknowledged by LICENSEE to include confidential and
proprietary information and trade secrets of the Software Owners in which
LICENSEE has no rights other than as granted by this Agreement. LICENSEE
acknowledges that unauthorized copying or disclosure of the Software will cause
irreparable injury to the Software Owners and that the Software Owners shall be
entitled to, among other things, enjoin such activities. LICENSEE agrees not to
provide or otherwise make available any Software in any form without LICENSOR's
prior written consent. LICENSEE agrees that the Software is being licensed
hereunder for LICENSEE's internal use and that LICENSEE may not make the
Software available to third parties in connection with any form of time-sharing
service. LICENSEE agrees not to create source code for the Software nor to
translate the Software into any other computer or natural language, nor to
attempt to do so or provide assistance to others to do so. LICENSEE further
agrees to take appropriate action to satisfy its obligations hereunder with
respect to use, copying , modification and protection of the Software by
suitable instructions to its employees or other persons who are permitted access
to the Software, or to any documentation describing or disclosing the same.
LICENSEE shall have no liability under this paragraph 5 for disclosure
of information supplied by LICENSOR if and to the extent that: (a) LICENSEE
establishes that the information was already known to LICENSEE, without
obligation to keep it confidential, at the time of its receipt from LICENSOR, as
disclosure, (b) LICENSEE establishes that the information was received by
LICENSEE in good faith from a third party lawfully in possession thereof and
having no obligation to keep such information confidential, or (c) LICENSEE
establishes that the information was publicly known at the time of its receipt
by LICENSEE from LICENSOR or has become publicly known other than by a breach of
the Agreement or other action by LICENSEE.
6. SOFTWARE INSTALLATION/ACCEPTANCE.
Unless otherwise agreed in writing, Software installation shall take
place following execution of this Agreement upon Designated System(s) which
LICENSEE has notified LICENSOR in writing are operational and available for
installation during normal working hours on normal working days, excepting
LICENSEE or LICENSOR-observed holidays. LICENSEE shall pay to LICENSOR an
installation fee in the amount indicated in the Quotation of
2.
<PAGE> 73
which this Agreement forms a part. LICENSEE shall allow LICENSOR full access to
the installation site during Software installation and shall provide reasonable
working facilities and scratch media as required in order to effect
installation, all without charge. LICENSOR installation personnel shall subject
the Software as installed on a Designated System to LICENSOR's then current
standard published software acceptance test procedure, and LICENSEE agrees to
provide written confirmation of successful completion of such test procedure on
demand. LICENSEE's use of the Software for any purpose other than testing or
training purposes shall be deemed to constitute acceptance.
7. SOFTWARE LICENSE FEES.
Use of the Software by LICENSEE shall be subject to the payment of
Initial and Quarterly License Fees for each Software product on each Designated
System in the amounts specified on the Quotation of which this Agreement forms a
part. Initial License Fees shall be due and payable as of the date on which
LICENSEE accepts or is deemed to accept the Software ("Acceptance Date"), and
Quarterly License fees shall be due and payable commencing on the first day of
the month which is the same as or first follows the Acceptance Date, inclusive
of a pro rata amount for the period between the Acceptance Date and the first
payment date, and on the first day of every third month thereafter. All license
fees shall be due and payable in United States Dollars.
Quarterly License Fee rates shall remain in effect for four (4)
consecutive quarters. Subject to the foregoing, LICENSOR shall have the right to
increase such rates prospectively on an annual basis in a uniform manner with
respect to all LICENSEEs upon three (3) months advance written notice to take
effect with the quarter which first commences following the expiration of such
notice period.
8. TERM AND TERMINATION.
A. This Agreement is effective from the date first written above
("Commencement Date") until termination as provided herein. Upon termination,
LICENSEE shall cease all use of the Software and shall return to LICENSOR the
original(s) and any and all copies of the Software made or furnished hereunder.
B. This Agreement may be terminated by LICENSEE by written notice to
LICENSOR given no later than sixty (60) days prior to any anniversary of the
Commencement Date, to take effect as of such anniversary date.
C. This Agreement may be terminated by LICENSOR sixty (60) days
following the giving of written notice to LICENSEE upon the occurrence of the
following:
3.
<PAGE> 74
(a) Upon failure of LICENSEE to perform any of its existing or future
obligations hereunder if such breach shall continue for a period of fifteen (15)
days after receipt by LICENSEE of written notice from LICENSOR specifying such
breach;
(b) In the event (i) LICENSEE makes a general assignment for the
benefit of creditors, or transfers all or substantially all of its assets to a
receiver or a trustee in bankruptcy, (ii) a proceeding is commenced against
LICENSEE for relief under bankruptcy or similar laws and such proceeding is not
dismissed within thirty (30) days, or (iii) LICENSEE is adjudged insolvent or
bankrupt; or
(c) Upon any attempt by LICENSEE to assign this Agreement or any rights
or obligations hereunder without LICENSOR's prior written consent.
9. INDEMNITY.
LICENSOR will defend at its own expense any action against LICENSEE to
the extent it is based on a claim of direct infringement of a United States
patent, trademark or copyright by the LICENSOR Software licensed hereunder, and
pay those damages and costs finally awarded against LICENSEE in such action
which are attributable to such claim, provided LICENSEE notifies LICENSOR
promptly in writing of any such action and all prior related claims and gives
LICENSOR (at LICENSOR's expense) sole control of the defense of same and all
negotiations for its settlement or compromise. Should any such Software become,
or in LICENSOR's opinion be likely to become, the subject of a claim of
infringement, LICENSEE shall permit LICENSOR, at its option and expense, to
either: (a) procure for LICENSEE the right to continue using the Software, or
(b) replace or modify the Software to become noninfringing. Notwithstanding the
foregoing, LICENSOR shall have no liability for any claim of infringement based
upon (a) the operation or use of the Software in combination with any other
hardware or software not supplied by LICENSOR, or (b) LICENSEE's modification to
the Software if such claim could have been avoided by the absence of such
modification.
THE FOREGOING STATES THE ENTIRE LIABILITY OF LICENSOR WITH RESPECT TO
INFRINGEMENT OF ANY PROPERTY RIGHT OF A THIRD PARTY BY THE SOFTWARE OR ANY
PORTION THEREOF ALONE OR IN COMBINATION WITH ANY OTHER PRODUCT.
10. WARRANTY.
For each item of Software, LICENSOR warrants for thirty (30) days from
the date such Program is installed at LICENSEE's facilities (the "Installation
Date"), that such Software, unless modified by LICENSEE, will perform the
functions described in the
4.
<PAGE> 75
documentation provided by LICENSOR to LICENSEE when properly operated on the
Designated System and LICENSOR will undertake to correct any reported,
reproducible and repeatable error condition in accordance with LICENSOR's
then-prevailing Software Support Policies. LICENSOR does not warrant that the
operation of the Software will be uninterrupted or error-free, that all Program
errors will be corrected, that the Software will satisfy LICENSEE's
requirements, or that the Software will operate in the combinations which
LICENSEE may select for use. For any breach of the above warranties, LICENSEE's
exclusive remedy, and LICENSOR's entire liability, shall be the exercise of best
efforts by LICENSOR to correct (including suitable workarounds) the Software
errors.
11. LIMITATION OF LIABILITY.
EXCEPT FOR THE EXPRESS WARRANTY IN PARAGRAPH 10 ABOVE, LICENSOR GRANTS
NO WARRANTIES, EITHER EXPRESS OR IMPLIED, WITH REGARD TO THE SOFTWARE, EXCLUDING
HEREBY ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. THE STATED EXPRESS WARRANTY IS IN LIEU OF ALL LIABILITIES OR
OBLIGATIONS OF LICENSOR FOR DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THE
DELIVERY, USE OR PERFORMANCE OF THE SOFTWARE.
LICENSEE agrees that LICENSOR's liability hereunder for damages,
including but not limited to liability for infringement, shall not exceed the
charges paid by LICENSEE for the particular Software involved. LICENSEE further
agrees that LICENSOR will not be liable for any lost profit, or for any claim or
demand against LICENSEE by any other party, except a claim for patent, trademark
or copyright infringement as provided herein.
IN NO EVENT WILL LICENSOR BE LIABLE FOR CONSEQUENTIAL DAMAGES EVEN IF
LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
12. ASSIGNMENT.
This Agreement, including all rights and obligations hereunder, is not
assignable without the prior written consent of LICENSOR. Notwithstanding the
foregoing, upon any sale of the Designated System by LICENSEE to a third party,
LICENSEE shall require such party to enter into a License Agreement with
LICENSOR on LICENSOR's then current standard terms.
13. TAXES.
All license fees and amounts payable to LICENSOR under the terms of
this Agreement and the Quotation of which it forms a part are not of and shall
not be reduced by any tax, including, but not by way of limitation, any use,
sales, property, import, duty, export, withholding, gross receipts, or
value-added tax or
5.
<PAGE> 76
other tax or charge of similar nature imposed by any governmental authority upon
or with respect to LICENSOR or LICENSEE, this license, or the license fees
payable hereunder, excepting only a tax on LICENSOR's net business income.
LICENSEE agrees to indemnify and hold LICENSOR harmless from any such taxes and
to pay the same promptly on presentation of LICENSOR's invoice for the same.
14. GENERAL.
The provisions of the Agreement shall control over the terms of any
present or future agreement except to the extent such agreement expressly
provides otherwise.
This Agreement supersedes all prior agreements and understandings
between the parties related to the subject matter herein and is intended by the
parties as the complete and exclusive statement of the terms of this Agreement.
If any of the provisions of this Agreement are invalid under any applicable
statute or rule of law they are, to the extent they are invalid, deemed omitted,
and the remainder of this Agreement shall remain in full force and effect. This
Agreement is made in the Commonwealth of Massachusetts, and shall be construed,
and the legal relations between the parties hereto determined, in accordance
with the laws applicable to contracts made by Massachusetts residents in, and to
be performed in, Massachusetts. The parties hereto consent to personal
jurisdiction before and venue in any court of Boston, Massachusetts with respect
to any dispute arising under this Agreement. If either party fails to perform
any term of this Agreement and the other party does not enforce that term,
failure to enforce on that occasion shall not prevent enforcement on later
occasions.
15. MODIFICATION.
Any deviations from or additions to the terms of this Agreement must be
in writing and will not be valid unless confirmed in writing by duly authorized
officers of LICENSOR and LICENSEE.
16. NOTICES.
All notices, requests, and demands given to or made upon LICENSOR or
LICENSEE hereunder shall be in writing and delivered or mailed to the address
first indicated above, or to such other
6.
<PAGE> 77
address as LICENSOR or LICENSEE shall designate in writing from time to time.
POLYGEN CORPORATION ("LICENSOR")
By:___________________________
Name: ________________________
________________________
LICENSEE
By:___________________________
Name:_________________________
_________________________
7.
<PAGE> 78
SERIAL NUMBERS AND LOCATION OF DESIGNATED SYSTEM(S)
Software________________________________ Software_________________________
System Type___________________0/S_______ System Type_____________0/S______
Serial No. _____________________________ Serial No. ______________________
________________________________________ _________________________________
________________________________________ _________________________________
Software________________________________ Software_________________________
System Type_______________ 0/S__________ System Type_________0/S__________
Serial No. _____________________________ Serial No. ______________________
________________________________________ _________________________________
________________________________________ _________________________________
8.
<PAGE> 79
APPENDIX C
PRICE LIST
(attached)
28.
<PAGE> 80
APPENDIX C: PRICE LIST
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING PRODUCTS PRICE LIST
PRICING SUMMARY
JAPAN END-USER BUNDLED PRICE LIST
EFFECTIVE JANUARY 01, 1992
--------------------------------------------------
PRICES ARE VALID ONLY WHEN PURCHASED WITH HARDWARE
--------------------------------------------------
PRICES INCLUDE SOFTWARE AND DOCUMENTATION, BUT DO NOT INCLUDE
HARDWARE, INSTALLATION, TRAINING, OR CONTINUING LICENSE FEES.
<TABLE>
<CAPTION>
- -------------------------------------------------------------
SYSTEM SOFTWARE Desktop
- -------------------------------------------------------------===========================================================
Part Number Description Revision Availability Commercial Academic Ann.SU
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBEXX ........ BIOGRAF (Indigo) ................. 2.2........ Now ....... Yen5,250,000 ....... Yen2,265,000...... 4320
XGNMEXX ....... NMRgraf (INdigo) ................. 2.2........ Now ....... Yen3,500,000 ....... Yen1,750,000...... 2880
POLEXX ........ Polaris (Indigo) ................. 3.0........ Now ....... Yen2,625,000 ....... Yen1,312,500...... 2160
XGPGEXX ....... POLYGRAF (Indigo)................. 2.2........ Now ....... Yen7,000,000 ....... Yen3,500,000...... 5760
QNTXX ......... QUANTA (Indigo)................... 3.2........ Now ....... Yen3,750,000 ....... Yen1,875,000...... 3600
QINORGXX ...... Inorganic Solids Modeling......... 3.2........ Now ....... Yen3,750,000 ....... Yen1,875,000...... 2550
QPOLYXX ....... Polymer Dynamics.................. 3.2........ Now ....... Yen3,750,000 ....... Yen1,875,000...... 2550
QPROTXX ....... Protein Modeling.................. 3.2........ Now ....... Yen3,750,000 ....... Yen1,875,000...... 2550
QSTARXX ....... X-Ray Structure Analysis.......... 3.2........ Now ....... Yen3,750,000 ....... Yen1,875,000...... 2550
</TABLE>
NOTE: IF QUANTA is purchased, at least one copy of
networked CHARMm must be available for use.
<TABLE>
<CAPTION>
- -------------------------------------------------------------
SYSTEM SOFTWARE Personal
- -------------------------------------------------------------===========================================================
Part Number Description Revision Availability Commercial Academic Ann.SU
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBEXX ........ BIOGRAF (SGI/IBM)................. 2.2........ Now ....... Yen7,000,000 ....... Yen3,500,000...... 5760
XGNMEXX ....... NMRgraf (SGI/IBM)................. 2.2........ Now ....... Yen5,250,000 ....... Yen2,625,000...... 4320
POLEXX ........ Polaris (SGI)..................... 3.0........ Now ....... Yen4,375,000 ....... Yen2,187,500...... 3600
XGPGEXX ....... POLYGRAF (SGI?IBM)................ 2.2........ Now .......Yen10,500,000 ....... Yen5,250,000...... 8640
QNTXX ......... QUANTA (SGI/IBM).................. 3.2........ Now ....... Yen6,240,000 ....... Yen3,120,000...... 6000
QINORGXX ...... Inorganic Solids Modeling......... 3.2........ Now ....... Yen4,992,000 ....... Yen2,496,000...... 3400
QPOLYXX ....... Polymer Dynamics.................. 3.2........ Now ....... Yen4,992,000 ....... Yen2,496,000...... 3400
QPROTXX ....... Protein Modeling.................. 3.2........ Now ....... Yen4,992,000 ....... Yen2,496,000...... 3400
QSTARXX ....... X-Ray Structure Analysis.......... 3.2........ Now ....... Yen4,992,000 ....... Yen2,496,000...... 3400
</TABLE>
NOTE: IF QUANTA is purchased, at least one copy of
networked CHARMm must be available for use.
<TABLE>
<CAPTION>
---------------------------------------------------------
Price per Service Unit (SU)
---------------------------------------------------------
Level 1 Level 2
------- -------
<S> <C> <C>
Commercial Yen220 Yen265
Academic Yen 35 Yen105
---------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential January 30, 1992
</TABLE>
<PAGE> 81
SYSTEM SOFTWARE PROFESSIONAL POWER
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN.SU
- ----------------------------------------------------------------------------------------------------------------------
XGBHXX....... BIOGRAF (SGI/IBM)............. 2.2.......... Now......... Yen10,500,000.. Yen5,250,000.. 8640
XGNMHXX...... NMRgraf(SGI/IBM).............. 2.2.......... Now......... Yen 8,750,000.. Yen4,375,000.. 7200
POLHXX....... Polaris(Stardent/SGI)......... 3.0.......... Now......... Yen 6,125,000.. Yen3,062,500.. 5040
XGPGHXX...... POLYGRAF (SGI/IBM)............ 2.2.......... Now......... Yen15,750,000.. Yen7,875,000.. 12960
QNTXX........ QUANTA (SGI/IBM).............. 3.2.......... Now......... Yen 6,240,000.. Yen3,120,000.. 6000
QINORGXX..... Inorganic Solids Modeling..... 3.2.......... Now......... Yen 4,992,000.. Yen2,496,000.. 3400
QPOLYXX...... Polymer Dynamics.............. 3.2.......... Now......... Yen 4,992,000.. Yen2,496,000.. 3400
QPROTXX...... Protein Modeling.............. 3.2.......... Now......... Yen 4,992,000.. Yen2,496,000.. 3400
QSTARXX...... X-Ray Structure Analysis...... 3.2.......... Now......... Yen 4,992,000.. Yen2,496,000.. 3400
Note: If QUANTA is purchased, at least one copy of networked CHARMm must be available for use.
</TABLE>
QUANTA OPTIONS SGI/IBM
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN.SU
- ----------------------------------------------------------------------------------------------------------------------
QBDSXX....... Brownian Dynamics Sim......... 3.2.......... Now......... Yen2,500,000.. Yen1,250,000... 1705
Note: Purchase of Brownian Dynamics requires purchase of UHBD.
QCRYSTXX..... Crystal Modeling.............. 3.2.......... Now......... Yen2,125,000.. Yen1,062,500... 1450
QHELIXXX..... Helix Modeling................ 3.2.......... Now......... Yen2,125,000.. Yen1,062,500... 1450
QMM2XX....... MM2 Interface................. 3.2.......... Now......... Yen1,250,000.. Yen 625,000... 850
QPBEXX....... Poisson-Bolzmann Electro...... 3.2.......... Now......... Yen2,125,000.. Yen1,062,500... 1450
Note: Purchase of Poisson-Boltmann Electrostatics requires purchase of UHBD
QOPINTXX..... QUANTA Open Interface......... 3.2.......... Now......... Yen5,000,000.. Yen2,500,000... 3410
QQMIXX....... Quantum Mechanics Interface... 3.2.......... Now......... Yen2,500,000.. Yen1,250,000... 1705
QNMRSXX...... NMR Structure................. 3.2.......... Dec, 1991... Yen4,992,000.. Yen2,496,000... 2400
</TABLE>
QUANTA NMR SOFTWARE SGI/IBM
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN.SU
- ----------------------------------------------------------------------------------------------------------------------
QMADXX....... MADNMR........................ x............. Now........... Yen3,750,000... Yen1,825,000... 2555
QMADPXX...... MADNMR+....................... x............. Now........... Yen6,250,000... Yen3,125,000... 4260
QDISNOEXX.... DISCON/NOESYSIM............... x............. Now........... Yen2,500,000... Yen1,250,000... 1705
</TABLE>
----------------------------------------------------------
PRICE PER SERVICE UNIT (SU)
----------------------------------------------------------
Level 1 Level 2
Commercial Yen220 Yen265
Academic Yen 35 Yen105
----------------------------------------------------------
<PAGE> 82
CERIUS SOFTWARE SGI/IBM
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Builder Modules
CSVSXX..........Visualizer (required for all)...2.3................Now..........Y 437,500......Y 218,750.......400
CSCRXX..........Crystals........................2.3................Now..........Y1,312,500......Y 656,250......1200
CSCLRXX.........Surfaces........................2.3.............Mar., 1992......Y 437,500......Y 218,750.......400
CSINTXX.........Interfaces......................3.0.............Mar., 1992......Y 437,500......Y 218,750.......400
CSPLXX..........Polymers........................2.3................Now..........Y 437,500......Y 218,750.......400
Calculation Modules
CSOF1XX.........Open Force Field MM/MD (1)......3.0.............Mar., 1992......Y6,562,500......Y3,281,500......6000
CSOF2XX.........Open Force Field MM/MD (2)......3.0.............Mar., 1992..........TBD.............TBD..........TBD
CSSRPXX.........Sorption........................2.3................Now..........Y2,187,500......Y1,093,750......2000
CSPCKXX.........Crystal Packer..................2.3................Now..........Y1,312,500......Y 656,250......1200
CSMPXX..........MopacUI.........................2.3................Now..........Y 875,000......Y 437,500.......800
CSSMXX..........Statmech........................2.3................Now..........Y2,625,000......Y1,312,500......2400
CSDLSXX.........DLS-UI..........................2.3................Now..........Y1,093,750......Y 546,875......1000
CSDF1XX.........Diffraction I...................2.3................Now..........Y2,625,000......Y1,312,500......2400
CSDF2XX.........Diffraction II..................2.3................Now..........Y1,750,000......Y 875,000......1600
CSDF3XX.........Diffraction III.................2.3................Now..........Y1,093,750......Y 546,875......1000
CSDF4XX.........Diffraction IV..................2.3................Now..........Y2,625,000......Y1,312,500......2400
CSRTVXX.........Rietveld........................3.0.............Mar., 1992......Y1,750,000......Y 875,000......1600
CSHRXX..........HRTEM...........................2.3................Now..........Y2,625,000......Y1,312,500......2400
</TABLE>
NOTE: PRICES INCLUDE FIRST YEAR MAINTENANCE
NOTE: DLS-UI, Sorption, Diffraction I, Diffraction III, HRTEM, Surfaces,
Interfaces, Crystal Packer, and Rietveld require CERIUS Crystals.
NOTE: StatMech requires CERIUS Polymers.
NOTE: When quoting Open Force Field MM/MD, all Builder Modules should be
included in the quote.
NOTE: Open Force Field MM/MD (1) is for Desktop and Personal/Entry
machines only. Open Force Field MM/MD (2) is for Professional and
Power machine only.
AVS CHEMISTRYVIEWER ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
................ChemistryViewer alone...................................Y1,312,500......Y656,250.........720
................ChemistryViewer with AVS................................Y1,750,000......Y875,000........1440
</TABLE>
NOTE: First year maintenance is required with AVS and ChemistryViewer
- ---------------------------------------
PRICE PER SERVICE UNIT (SU)
- ---------------------------------------
<TABLE>
<CAPTION>
Level 1 Level 2
<S> <C> <C>
Commercial Y220 Y265
Academic Y 35 Y105
</TABLE>
Proprietary and Confidential Polygen/Molecular Simulations Japan Price List
January 30, 1992
<PAGE> 83
CHARMm ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDESKXX.........Desktop CHARMm...................21.3............Now.............Y 3,750,000*....Y 1,875,000*.....2550
CPERSXX.........Personal CHARMm..................21.3............Now.............Y 5,990,000*....Y 2,995,000*.....4085
CPROFXX.........Professional CHARMm..............21.3............Now.............Y10,500,000*....Y 5,250,000*.....7160
CPARLXX.........Power CHARMm.....................21.3............Now.............Y18,000,000*....Y 9,000,000*....12270
NOTE: At least one copy of networked CHARMm must be available for use. Above prices(*) effective
only at time of purchase with QUANTA and include standard discounts. For individual CHARMm
pricing, see pricing below.
NOTE: Desktop CHARMm is only available for the SGI Indigo.
CPERSXX.........Personal Stand-alone CHARMm......21.3............Now.............Y11,980,000.....Y 5,990,000......8165
CPROFXX.........Professional Stand-alone CHARMm..21.3............Now.............Y15,000,000.....Y 7,500,000.....10225
CPARLXX.........Power Batch stand-alone CHARMm...21.3............Now.............Y22,500,000.....Y11,250,000.....15340
CSUPRXX.........Super Stand-alone CHARMm.........21.3............Now.............Y55,000,000.....Y27,500,000.....37500
CSUPRLXX........Ltd. License Super CHARMm........21.3............Now.............Y33,000,000.....Y16,500,000.....22500
CSRCXX..........CHARMm Source Code...............21.3............Now.............Y12,500,000.....Y 6,250,000......8520
</TABLE>
NOTE: CHARMm source code may only be purchased in addition to a
standard CHARMm object license.
X-PLOR ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XPERSXX.........Personal X-PLOR.................2.11............Now.............Y 7,488,000.....Y 3,744,000......5105
XPROFXX.........Professional X-PLOR.............2.11............Now.............Y11,000,000.....Y 5,500,000......7500
XPARLXX.........Power X-PLOR....................2.11............Now.............Y16,000,000.....Y 8,000,000.....10900
XSUPRXX.........Super X-PLOR....................2.11............Now.............Y33,500,000.....Y16,750,000.....22840
XSUPRLXX........Ltd. License Super X-PLOR.......2.11............Now.............Y19,500,000.....Y 9,750,000.....13295
XSRCXX..........X-PLOR Source Code..............2.11............Now.............Y12,500,000.....Y 6,250,000..... 8520
</TABLE>
NOTE: X-PLOR source code may only be purchased in addition to a standard
X-PLOR object license.
UHBD ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UPERSXX.........Personal UHBD...................2.2.............Now.............Y10,000,000.....Y5,000,000......6820
UPROFXX.........Professional UHBD...............2.2.............Now.............Y11,250,000.....Y5,625,000......7670
UPARLXX.........Power UHBD......................2.2.............Now.............Y12,500,000.....Y6,250,000......8520
</TABLE>
GRAF BATCH ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GRAFBXX.........Alliant version................. .............Now.............Y10,500,000.....Y5,250,000.......8640
GRAFBXX.........DEC version..................... .............Now.............Y 8,750,000.....Y4,375,000.......7200
GRAFBXX.........Convex version.................. .............Now.............Y14,000,000.....Y7,000,000......11520
GRAFBXX.........Cray version.................... .............Now.............Y17,500,000.....Y8,750,000......14400
</TABLE>
January 30, 1992 Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential
<PAGE> 84
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING PRODUCTS PRICE LIST
HARDWARE CONFIGURATION SUMMARY
EFFECTIVE OCTOBER 01, 1991
SILICON GRAPHICS IRIS 4D SERIES
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape O/S Other
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Indigo............Desktop......................xx.....xx.......16......432/54.....1/4" cartridge.....4.0.0.....Note 2
4D/25 G/TG........Personal/Entry...............xx.....xx.......16......380/54.....1/4" cartridge.....3.3.3.....Note 2
4D/35 G/TG........Personal/Entry...............xx.....xx.......16......380/54.....1/4" cartridge.....3.3.3.....Note 2
4D/310 GTX/VGX....Professional/High-End........xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/320 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/340 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/380 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/420 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/440 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/480 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
</TABLE>
IBM RISC SYSTEM/6000 SERIES
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape O/S Other
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series 320........Personal/Entry...............xx.....xx.......16......320/54.....1/4" cartridge.....3.1.5.....Notes 2.3
Series 520........Professional/Entry...........xx.....xx.......16......320/54.....1/4" cartridge.....3.1.5.....Notes 2.3
Series 530........Professional/Entry...........xx.....xx.......16......320/54.....1/4" cartridge.....3.1.5.....Notes 2.3
Series 540........Power/High-End...............xx.....xx.......16......320/54.....1/4" cartridge.....3.1.5.....Notes 2.3
Series 550........Power/High-End...............xx.....xx.......16......320/54.....1/4" cartridge.....3.1.5.....Notes 2.3
</TABLE>
EVANS & SUTHERLAND ESV SERIES
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape O/S Other
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ESV-5.............Entry........................4.0.... .......xx......xx/xx.........xx..............xx
All others........High-End.....................4.0.... .......xx......xx/xx.........xx..............xx
</TABLE>
Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential January 30, 1992
<PAGE> 85
BATCH PROCESSORS
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape O/S Other
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliant FX40,80...Power/Batch..................xx.....xx.......xx........xx.......8mm cartridge......2.1.02
Alliant FX2800....Power/Batch..................xx.....xx.......xx........xx.......8mm cartridge......2.1.02
Convex C-1........Power/Batch..................xx.....xx.......xx........xx.......Reel-to-reel.......xx.......Note 4
Convex C-2........Power/Batch..................xx.....xx.......xx........xx.......Reel-to-reel.......xx
Cray X,Y-MP.......Super/Batch..................xx.....xx.......xx........xx.......Reel-to-reel.......6.0
Cray 2............Super/Batch..................xx.....xx.......xx........xx.......Reel-to-reel.......6.0
DEC...............Batch........................xx.....xx.......xx........xx.......Reel-to-reel.......xx.......Note 4
IBM 3090 MVS......Super........................xx.....xx.......xx........xx.......Reel-to-reel.......xx.......Note 5
IBM 3090 VM.......Super........................xx.....xx.......xx........xx.......Reel-to-reel.......xx.......Note 5
IBM 3090 AIX......Super........................xx.....xx.......xx........xx.......Reel-to-reel.......xx.......Note 5
</TABLE>
HARDWARE NOTES
1: Under the Disk column, the first number is the minimum total disk space
required while the second number is the minimum swap space required.
2: FORTRAN is required for the QUANTA Open Interface.
3: The following IBM RS/6000 hardware configuration is required for
QUANTA/CHARMm software: 24-bit 3D graphics, 24-bit Z-buffer, Ethernet LAN
adaptor, and the FORTRAN 2.01 run-time libraries (xlfrte 02.01).
4: CHARMm, X-PLOR, and UHBD are not supported on the Convex C-1.
5: GRAF Batch is not supported on the IBM 3090.
PART NUMBERS
Replace XX in all software part numbers with the following machine codes:
<TABLE>
<S> <C> <C> <C> <C> <C>
4D All SGI 4D sereis except Indigo DT SGI Indigo ST Stardent Titan
ES E&S ESV RS All IBM RS/6000 series
FX Alliant C1 Convex C-1 C2 Convex C-2
CX Cray X-MP CY Cray Y-MP CR Cray 2
MV IBM 3090 MVS VM IBM 3090 VM/CMS AX IBM 3090 AIX
VS DEC VMX
</TABLE>
Polygen/Molecular Simulations Japan Price List
January 30, 1992 Proprietary and Confidential
<PAGE> 86
Prices are valid only when purchased with hardware Page 7 of 9
CONTINUING LICENSE/MAINTENANCE
<TABLE>
<CAPTION>
Part Number Description Academic Price/S.U. Commercial Price/S.U.
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SL1SS..........Level 1 (Standard Support)......................Y 35..................Y220
Provides the following services:
Continuing license fee
Upgrade of existing software
Hotline support of products: Calls returned within 4 hours of receipt
SL2SS..........Level 2 (Scientific Support)....................Y105.................Y265
Provides the following services:
Continuing license fee
Upgrade of existing software
Hotline support of products: Calls returned within 1 hour of receipt
Monthly status calls from senior scientific staff members
Monthly report of software problems
Scientific support for modeling problems
</TABLE>
SCIENTIFIC PROGRAMS
<TABLE>
<CAPTION>
Part Number Description Cost/Time Period
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
SSCON..........Scientific Consulting....................Y175,000 per day
SPMDL..........Molecular Design Lab.....................Y700,000 per week
Seat in Introductory Molecular Modeling Course
Use of software on a dedicated machine
Access to Polygen and Harvard scientists
NOTE: A minimum of two weeks is required.
</TABLE>
TRAINING PROGRAMS
<TABLE>
<CAPTION>
Part Number Description Cost/Time Period
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
...............Introductory Molecular Modeling..........Y175,000/3 days
...............Advanced CHARMm..........................Y262,500/2 days
...............Advanced Protein Modeling................Y262,500/2 days
...............Advanced Polymer Modeling................Y262,500/2 days
</TABLE>
Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential January 30, 1992
<PAGE> 87
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING SOFTWARE PRODUCTS
POLICIES AND PROCEDURES
EFFECTIVE JANUARY 01, 1992
TITLE
All right, title and interest in and to the software licensed and any related
documentation and any copies thereof which may be made by licensee are and shall
remain the exclusive property of licensor or licensor's licensor, as to software
sublicensed by licensor to licensee; licensor and its licensors are collected
referred to as the software owners. Any third party software designated in the
applicable price list as subject to a separate license agreement is subject to
the terms of the agreement accompanying such software. Each software owner shall
have the right to enforce this agreement against licensee as to such software
owner's software.
SOFTWARE LICENSE FEES
Use of the software by licensee shall be subject to the licensee signing the
Polygen/Molecular Simulations Standard Software License Agreement.
UNBUNDLED FEE
In the instance where software is not purchased with hardware, the software list
price shall be increased by an additional amount equal to twenty percent (20%)
of such software list price (the unbundled fee).
PAYMENT TERMS
Unless otherwise arranged, Polygen/Molecular Simulations will invoice purchaser
at the time of shipment of each installment on payment terms of each on
delivery, except where open account credit is established and maintained to
Polygen/Molecular Simulations' satisfaction, in which case payment terms shall
be net 30 days from date of shipment. Purchaser shall make all payments as
provided without regard to whether purchaser has made or may make any inspection
or use of any goods delivered. Any invoiced amount which is not paid when due
shall bear interest at the rate of 2% per month or the highest rate then
permitted by law, whichever is less.
WARRANTY
The software as delivered and installed on the designated system will conform
substantially to licensor's then current published program specifications.
Licensee acknowledges, however, that the software is of such complexity that
it may have inherent or latent defects and agrees that as licensee's sole remedy
licensor will exercise its best efforts to correct documented program errors
which licensors's analysis indicates are caused by a defect in the unaltered
version of the delivered software as installed on an unaltered designated
system. Licensor does not guarantee the results of any such services or
represent or warrant that any such error will be corrected. The foregoing
warranty extends only to licensee and is not applicable to any transferee of the
software license.
LICENSE TRANSFER POLICY
All computers and software are expected to be written off over four years.
Customers will be able to transfer their current software license to a faster
computer (at the same site) and receive a credit equal to 25% of the lower of
the price actually paid or the current price for the license for each year left
in the four years since shipment to the customer by Polygen/Molecular
Simulations. To receive this credit, the customer must be cur-
<PAGE> 88
rent on maintenance.
TERMS AND CONDITIONS
Software orders must be accompanied by the software quotation with standard
quote terms and conditions and a standard software license agreement. Loaners
must be accompanied by a standard software loaner agreement. Any software
purchase or loaner which does include the above documents or which documents
deviate from standard terms must be approved in advance.
QUOTE VALIDITY
Software quotes are valid for 30 days only.
SOFTWARE LOANER PERIOD
Unless otherwise arranged, software to commercial organizations may only be
loaned for a period of 15 days: software to academic institutions may only be
loaned for a period of 30 days.
<PAGE> 89
APPENDIX D
WIRE TRANSFER (BANK) INFORMATION
Bank: Shawmut Bank, NA
One Federal Street
Boston, MA 02211
Routing No.: ABA 011000206
Account No.: 20-103-394-4
29.
<PAGE> 90
APPENDIX E
PMSI TRADEMARKS
POLYGRAF
NMRgraf
BIOGRAF
CERIUS
X-PLOR
Polaris
MADNMR
UHBD
The Company may use the foregoing Trademarks which have not been registered in
Japan. PMSI intends to file applications for registration of these Trademarks
with the assistance of the Company.
Applications for the following Trademarks are pending before the Patent Office
of Japan, and upon the approval and registration of such Trademarks in Japan,
the Company may use such Trademarks in connection with the distribution and
advertising of the Software:
CHARMm
QUANTA
30.
<PAGE> 91
Exhibit B
COMMON STOCK PURCHASE AGREEMENT
February 14, 1992
between
POLYGEN CORPORATION
and
TEIJIN LIMITED
<PAGE> 92
TABLE OF CONTENTS
Page
----
1. AUTHORIZATION AND SALE; CLOSING .......................... 1
1.1 Authorization and Sale ............................. 1
1.2 Closing and Delivery ............................... 1
2. REPRESENTATIONS AND WARRANTIES OF PMSI ................... 1
2.1 Organization .................................... 1
2.2 Subsidiaries .................................... 2
2.3 Capitalization .................................. 2
2.4 Authority Relative to this Agreement ............ 2
2.5 Shares .......................................... 3
2.6 Compliance with Law ............................. 3
2.7 No Conflicts .................................... 3
2.8 Governmental Consents ........................... 3
2.9 Financial Statements ............................ 3
2.10 Absence of Certain Changes ...................... 4
2.11 Employee Plans .................................. 5
2.12 Properties, Liens, etc. ......................... 5
2.13 Litigation ...................................... 6
2.14 Major Contracts ................................. 6
2.15 Taxes ........................................... 7
2.16 Absence of Undisclosed Liabilities .............. 7
2.17 Governmental Authorizations and Regulations ..... 7
2.18 Intellectual Property Rights .................... 7
2.19 Insurance ....................................... 7
2.20 Full Disclosure ................................. 8
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER .......... 8
3.1 Organization; Authority Relative to this
Agreement ....................................... 8
3.2 No Conflicts .................................... 8
3.3 Governmental Consents ........................... 8
3.4 General Investment Representations .............. 9
3.5 No Public Market ................................ 9
4. ADDITIONAL AGREEMENTS .................................... 9
4.1 Cooperation; Information ........................ 9
4.2 Legal Conditions ................................ 10
4.3 Expenses ........................................ 10
4.4 Additional Actions .............................. 10
i.
<PAGE> 93
5. CONDITIONS PRECEDENT ....................................... 10
5.1 Conditions of Obligations of PMSI ................. 10
5.2 Conditions of Obligations of the Purchaser ........ 11
6. TERMINATION ................................................ 11
6.1 Termination ....................................... 11
6.2 Effect of Termination ............................. 12
7. GENERAL PROVISIONS ......................................... 12
7.1 Survival of Representations, Warranties and
Agreements ........................................ 12
7.2 Notices ........................................... 12
7.3 Interpretation .................................... 12
7.4 Amendment ......................................... 12
7.5 Counterparts ...................................... 13
7.6 Miscellaneous ..................................... 13
7.7 Governing Law ..................................... 13
7.8 Dispute Resolution ................................ 13
EXHIBITS
Exhibit A: PMSI Disclosure Schedule
Exhibit B: Certificate of Incorporation of PMSI
Exhibit C: Bylaws of PMSI
Exhibit D: Amendment to the Amended and Restated Investor
Rights Agreement
Exhibit E: Opinion of Counsel
ii.
<PAGE> 94
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement ("Agreement") is made as of
February 14, 1992 between Polygen Corporation, a Delaware corporation, with its
principal office at 200 Fifth Avenue, Waltham, MA 02154 ("PMSI"), and Teijin
Limited, a corporation organized under the laws of Japan, with its principal
office at 6-7, Minamihommachi 1-chome, Chuo-ku, Osaka 541, Japan (the
"Purchaser").
1. AUTHORIZATION AND SALE; CLOSING.
1.1 Authorization and Sale. PMSI has authorized the issuance and sale
of an aggregate of Two Million Seven Hundred Sixty-Six Thousand Eight Hundred
and Twenty-Seven (2,766,827) shares (the "Shares") of its Common Stock pursuant
to this Agreement. Subject to the terms and conditions hereof, PMSI shall issue
and sell to the Purchaser, and the Purchaser shall purchase from PMSI, at the
Closing (defined below), the Shares at a purchase price of $0.8132059 per Share
for a total of Two Million Two Hundred Fifty Thousand United States Dollars
(U.S.$2,250,000) (the "Purchase Price").
1.2 Closing and Delivery. The closing of the issuance and sale of the
Shares under this Agreement (the "Closing") shall be held at 10:00 a.m. on March
6, 1992 (the "Closing Date"), at the offices of Cooley Godward Castro Huddleson
& Tatum, Palo Alto, California, U.S.A., or at such other time and place as PMSI
and the Purchaser may agree. At the Closing, subject to the terms and conditions
of this Agreement, PMSI shall deliver to the Purchaser a certificate
representing the Shares against payment of the Purchase Price by means of a
check drawn on a U.S. bank or a wire transfer to an account designated by PMSI.
2. REPRESENTATIONS AND WARRANTIES OF PMSI
Except as disclosed or excepted on the PMSI Disclosure Schedule
attached hereto as Exhibit A, PMSI represents and warrants to the Purchaser as
follows:
2.1 Organization. PMSI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has all
requisite corporate power and authority to own, operate or lease its properties
and assets and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each jurisdiction where
the failure to be so qualified would have a material adverse effect upon its
business as presently conducted. True and complete copies of PMSI's Certificate
of Incorporation and Bylaws as in effect on the date hereof are attached hereto
as Exhibits B and C, respectively.
1.
<PAGE> 95
2.2 Subsidiaries. PMSI does not presently own or control, directly or
indirectly, any equity interest in any corporation, association or business
entity. PMSI is not, directly or indirectly, a participant in any joint venture
or partnership.
2.3 Capitalization. The authorized capital stock of PMSI consists of
Eighty Million (80,000,000) shares of Common Stock, par value $.0001, Forty-Two
Million Five Hundred Seventy Thousand Three Hundred and Fourteen (42,570,314)
shares of which are currently outstanding. There are Nine Million Six Hundred
Twenty-Six Thousand Nine Hundred and Forty-Seven (9,626,947) shares of Common
Stock currently reserved for issuance upon the exercise of stock options under
PMSI's employee stock option plan (the "PMSI Plan"). All of the outstanding
shares of the capital stock of PMSI were, and any shares of PMSI Common Stock
issued upon exercise of options under the PMSI Plan, and any securities issuable
upon the exercise of outstanding warrants to purchase PMSI securities, will be,
validly issued and are fully paid, nonassessable and not subject to preemptive
rights created by statute, the Certificate of Incorporation or the Bylaws of
PMSI or any agreement to which PMSI is a party or is bound, and such capital
stock, warrants and options have been issued in full compliance with all
applicable federal and state securities laws. Except for the shares identified
above as issuable pursuant to the PMSI Plan, except for Three Hundred
Seventy-Two Thousand Four Hundred and Thirty-Nine (372,439) shares of Common
Stock issuable upon exercise of outstanding warrants and except as contemplated
by this Agreement, there are no options, warrants, calls, rights, commitments or
agreements of any character to which PMSI is a party or by which it is bound
obligating PMSI to issue, deliver or sell additional shares of the capital stock
of PMSI or obligating PMSI to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement.
2.4 Authority Relative to this Agreement. PMSI has all requisite
corporate power and authority to enter into, deliver and perform this Agreement
and to carry out its obligations under this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereunder have been duly authorized by its Board of Directors and no other
corporate proceedings on the part of PMSI are necessary to authorize this
Agreement or the transactions contemplated hereunder. This Agreement is the
valid and binding obligation of PMSI enforceable against PMSI in accordance with
its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditor's rights and by rules of law governing
specific performance, injunctive relief or other equitable remedies.
2.
<PAGE> 96
2.5 Shares. The Shares, when issued and delivered to the Purchaser in
accordance with this Agreement, will be duly and validly authorized and issued,
fully paid and nonassessable.
2.6 Compliance with Law. PMSI is in compliance in all material respects
with all laws and regulations applicable to its operations or with respect to
which compliance is a condition of engaging in its business, except for failures
to comply, which, in the aggregate, would not have a material adverse effect on
PMSI's business as presently conducted.
2.7 No Conflicts. Neither the execution, delivery and performance of
this Agreement by PMSI, the consummation of the transactions contemplated by
this Agreement, nor compliance by PMSI with any of the provisions of this
Agreement will (i) violate, conflict with or result in a breach of any terms,
conditions or provisions of the Certificate of Incorporation or the Bylaws of
PMSI or any material agreement, instrument or obligation to which PMSI is a
party or by which PMSI may be bound, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of a material lien or encumbrance on any of the
properties or assets of PMSI under any such material agreement, instrument or
obligation, except for such violations, breaches, terminations, accelerations,
losses or impositions of liens which would not, in the aggregate, have a
material adverse effect on PMSI's business as presently conducted, or (ii) to
the best of PMSI's knowledge, violate or threaten to violate any judgment,
ruling, order, writ, injunction, decree, statute, rule or regulation applicable
to PMSI or any of its properties or assets.
2.8 Governmental Consents. No consent, approval or authorization of, or
registration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality (a "Governmental Entity") is
required by or with respect to PMSI in connection with the execution and
delivery of this Agreement by PMSI or the consummation by PMSI of the
transactions contemplated hereby, except for such consents, approvals, orders,
authorizations, registrations, declarations and filings as shall have been made
or obtained prior to the Closing.
2.9 Financial Statements.
(a) PMSI has delivered to the Purchaser copies of its
unaudited balance sheet at December 31, 1991 and its unaudited income
statement for the year then ended (the financial statements referred to in this
Section 2.9(a) are hereinafter collectively referred to as the "PMSI Financial
Statements").
3.
<PAGE> 97
(b) The PMSI Financial Statements have been prepared in accordance with
generally accepted accounting principles and applied on a consistent basis
throughout the periods indicated, except as otherwise set forth in such
financial statements and the notes thereto; provided, however, that the
unaudited financial statements are subject to normal, recurring year-end audit
adjustments which will not, individually or in the aggregate, be material,
except as may be indicated in the footnotes thereto. Such Financial Statements
present fairly the financial position of PMSI as of the date thereof and the
results of operations of PMSI for the period indicated therein (subject, in the
case of unaudited statements, to normal, recurring audit adjustments). Except as
and to the extent reflected or reserved against in such balance sheet (including
the notes thereto), PMSI does not have any liabilities or obligations (absolute
or contingent) of a nature required to be or customarily reflected in a balance
sheet (or the notes thereto) prepared in accordance with generally accepted
accounting principles consistently applied.
2.10 Absence of Certain Changes. Since December 31, 1991, there has not
occurred or arisen any of the following:
(a) any change in the nature of the business, prospects, financial
condition, or manner of conducting the business of PMSI, other than changes in
the ordinary course of business, none of which has had, or may reasonably be
expected to have, a material adverse effect on PMSI's business as presently
conducted; or
(b) any damage or casualty loss (including, without limitation, any
occurrence affecting the soil or groundwater condition of any real property
presently or formerly owned, operated or leased by PMSI), whether covered by
insurance or not, having a material adverse effect on PMSI's business as
presently conducted; or
(c) any declaration, setting aside or payment of a dividend (whether in
cash, stock or property) in respect of, or repurchase or redemption of, the
capital stock of PMSI; or
(d) any actual or, to the knowledge of PMSI, threatened strike (whether
asserted or unasserted) or other labor trouble or dispute involving employees of
PMSI that has had or is having a material adverse affect on PMSI's business as
presently conducted; or
(e) any borrowing or lending of money or guarantee of any obligation by
PMSI, except in the ordinary course of business not involving any employee or
director of PMSI; or
4.
<PAGE> 98
(f) any disposition of any material properties or assets used in the
business of PMSI, except sales from inventory made in the ordinary course of
business; or
(g) any violation of or conflict with any applicable laws, statutes,
orders, rules or regulations promulgated or judgment entered by any court,
Government Entity or other competent authority which, individually or in the
aggregate, has had or could reasonably be expected to have a material adverse
effect on PMSI's business as presently conducted; or
(h) any notice of any violation, inquiry or investigation by any
Governmental Entity that has had or could reasonably be expected to have a
material adverse effect on PMSI's business as presently conducted; or
(i) any disposal or lapse of any patent, trademark, trade name or
service mark registration, copyright, copyright registration or any application
therefor; or
(j) any increase in the compensation of any of PMSI's employees,
officers or directors; or
(k) any agreement or arrangement by PMSI to do any of the things
described in this Section 2.10.
2.11 Employee Plans. PMSI does not maintain, administer or contribute
to or have any liability under any oral or written pension, profit sharing,
bonus, incentive, deferred compensation, stock purchase, stock option, group
insurance (or self-insured program) providing life, health, accident, disability
or other similar coverage, severance pay, retirement or other employee benefit
plan, agreement or arrangement other than the PMSI Plan.
2.12 Properties, Liens, etc. Except as reflected in the PMSI Financial
Statements or in the notes thereto and except for statutory mechanic's and
materialmen's liens, liens for current taxes not yet delinquent or liens or
encumbrances which do not confer upon the secured parties rights to property
which are material to PMSI, PMSI owns, free and clear of any liens, claims,
charges, options or other encumbrances, all of its tangible and intangible
property, real and personal, whether or not reflected in the PMSI Financial
Statements, except that sold or disposed of in the ordinary course of business
since December 31, 1991, and all such property acquired since such date, and
PMSI is not aware of any violation by it of any law, regulation or ordinance
(including without limitation, laws, regulations or ordinances relating to
zoning, environmental, city planning or similar matters) relating to PMSI's
properties or PMSI's business which may reasonably be expected to have a
material adverse effect on PMSI's business as presently conducted. There are no
proceedings affecting any of such properties pending or, to the best of
5.
<PAGE> 99
PMSI's knowledge, overtly threatened which may reasonably be expected to
curtail, materially and adversely, the use of such property for the purpose for
which it was acquired or the purpose for which it is used.
2.13 Litigation. There is no private or governmental litigation or
proceeding or, to the best of PMSI's knowledge, investigation or claim against
PMSI pending or, to the knowledge of PMSI, threatened which, if determined
adversely, may reasonably be expected to have a material adverse effect on
PMSI's business as presently conducted, and there are no judgments, decrees or
orders enjoining PMSI in respect of, or the effect of which is to prohibit, any
business practice or the acquisition of any property or the conduct of business
in any area which is material to its business as presently conducted.
2.14 Major Contracts. PMSI is not a party to or bound by any:
(a) Union contract or any material employment contract or arrangement
providing for future compensation with any officer, consultant, director or
employee which is not terminable by it on thirty (30) days' notice or less
without penalty or obligation to make payments related to such termination;
(b) Joint venture contract or arrangement or any similar agreement
which involves a sharing of profits with other parties;
(c) Instrument evidencing indebtedness for borrowed money by way of
direct loan, sale of debt securities, purchase money obligation, conditional
sale, guarantee, or otherwise, except for trade indebtedness incurred in the
ordinary course of business and except as disclosed in the PMSI Financial
Statements;
(d) Contract containing covenants purporting to limit PMSI's freedom to
compete in any line of business in any geographic area;
(e) Material license agreement, either as licensor or licensee
(excluding non-exclusive software licenses granted to customers or end-users in
the ordinary course of business).
All agreements, instruments, etc. listed in the PMSI Disclosure
Schedule pursuant to this Section 2.14 are valid and in full force and effect
and PMSI has not, nor to the knowledge of PMSI has any other party thereto,
breached any material provision of, or is in default in any material respect
under the terms of, any such agreement, instrument, etc., which breach or
default may reasonably be expected to have a material adverse effect on
6.
<PAGE> 100
PMSI's business as presently conducted. PMSI is not in default under any
material lease to which it is a party.
2.15 Taxes. PMSI has filed all federal, foreign and state tax returns
required to be filed, and has paid, or has made adequate provision or set up an
adequate accrual or reserve for the payment of, all taxes required to be paid in
respect of the periods for which returns are due (except in any case in an
amount not material), and in its opinion it has no material liability for taxes
in excess of the amount so paid or accruals or reserves so established. PMSI is
not delinquent in the payment of any material tax, assessment or governmental
charge and is not delinquent in the filing of any tax returns, and no material
deficiencies for any tax, assessment or governmental charge have been
threatened, claimed, proposed or assessed. PMSI's federal, foreign and state
income tax returns have never been audited by the Internal Revenue Service or
comparable state or foreign agencies. For purposes of this Agreement, the term
"tax" shall include all federal, state, local and foreign taxes and related
governmental charges.
2.16 Absence of Undisclosed Liabilities. PMSI has no material liability
or obligation, either accrued, absolute, contingent or otherwise which, either
singly or in the aggregate, exceeds One Hundred Thousand United States Dollars
(U.S.$100,000) except as reflected in the PMSI Financial Statements.
2.17 Governmental Authorizations and Regulations. All licenses,
franchises, permits and other governmental authorizations held by PMSI that are
material in connection with its business are valid and sufficient for its
business as presently conducted. PMSI's business is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity, except
for such violations that either singularly or in the aggregate do not and will
not have a material adverse effect on PMSI's business as presently conducted.
2.18 Intellectual Property Rights. PMSI has sufficient title and
ownership of, or rights as a licensee under, all patents, trademarks, service
marks, trade names, copyrights, trade secrets and information (collectively, the
"Proprietary Rights") necessary for its business as now conducted and as
proposed to be conducted without any conflict with or infringement of the rights
of others, and no other person has made any claim that PMSI is in violation of
or infringing any Proprietary Rights of any third party, which violation or
infringement could have a material adverse effect on PMSI's business as
presently conducted.
2.19 Insurance. PMSI maintains valid and enforceable insurance policies
for the assets and operations of PMSI in amounts deemed adequate by PMSI, in
each case issued by insurers
7.
<PAGE> 101
of recognized national standing. The PMSI Disclosure Schedule lists all claims
outstanding under such policies, if any, with respect to which PMSI has notified
its respective insurance carriers.
2.20 Full Disclosure. No statement by PMSI contained in this Agreement
or any written statement or certificate furnished or to be furnished to the
Purchaser pursuant hereto or in connection with the transactions contemplated
hereby (when read together) contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to PMSI as follows:
3.1 Organization; Authority Relative to this Agreement. The Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of Japan and has all requisite corporate power and authority to enter into,
deliver and perform this Agreement and to carry out its obligations under this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereunder have been duly authorized by Purchaser's
Board of Directors and no other corporate proceedings on the part of Purchaser
are necessary to authorize this Agreement or the transactions contemplated
hereunder. This Agreement is the valid and binding obligation of the Purchaser
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditor's rights and by
rules of law governing specific performance, injunctive relief or other
equitable remedies.
3.2 No Conflicts. Neither the execution, delivery and performance of
this Agreement by the Purchaser nor the consummation of the transactions
contemplated hereby will violate or result in a breach of any of the terms,
conditions or provisions of the Purchaser's Articles of Incorporation or any
material agreement, instrument or obligation to which the Purchaser is a party
or by which it is bound or violate any judgment, ruling, order, writ,
injunction, decree, statute, rule, or regulation applicable to the Purchaser.
3.3 Governmental Consents. No consent, approval or authorization of,
or registration or filing with any Governmental Entity is required by or with
respect to the Purchaser in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for
8.
<PAGE> 102
such consents, approvals, orders, authorizations, registrations, declarations
and filings as shall have been made or obtained prior to the Closing.
3.4 General Investment Representations.
(a) The Purchaser is acquiring the Shares for its own account, not as
nominee or agent, for investment and not with a view to, or for
resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act of 1933, as
amended (the "1933 Act").
(b) The Purchaser understands that (i) the Shares have not been
registered under the 1933 Act by reason of a specific exemption
therefrom, that the Shares must be held by it indefinitely, and
that the Purchaser must, therefore, bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is
registered under the 1933 Act or is exempt from such registration;
(ii) each certificate representing the Shares will be endorsed with
a legend in substantially the form specified in Section 2.3 of the
Amended and Restated Investor Rights Agreement (and may be endorsed
with any other legend that may be required by any applicable
securities law) and (iii) PMSI will instruct any transfer agent not
to register the transfer of any of the Shares unless the conditions
specified in such legend are satisfied.
(c) The Purchaser has been furnished with such materials and has been
given access to such information relating to PMSI as it and its
representatives have requested and it has been afforded the
opportunity to ask questions regarding PMSI and the Shares, all as
it has found necessary to make an informed investment decision.
(d) By reason of the Purchaser's business or financial experience, or
the business or financial experience of its advisors, it has the
capacity to protect its own interests in connection with this
transaction.
(e) The Purchaser was not formed for the specific purpose of acquiring
the Shares offered hereunder.
3.5 No Public Market. The Purchaser understands that no public market
now exists for any of the securities issued by PMSI and that there
is no assurance that a public market will ever exist for the
Shares.
4. ADDITIONAL AGREEMENTS.
4.1 Cooperation; Information. PMSI and the Purchaser shall cooperate
in good faith toward the end that the transactions con-
9.
<PAGE> 103
templated in this Agreement shall be consummated in accordance with this
Agreement.
4.2 Legal Conditions. PMSI and the Purchaser will take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on it with respect to the transactions contemplated in this Agreement
and will promptly cooperate with and furnish information to the other party in
connection with any such requirements imposed upon the other party in connection
with the transactions contemplated in this Agreement. Each party to this
Agreement will take all reasonable actions to obtain (and to cooperate with the
other party in obtaining) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity, or other third party, required to be
obtained or made by such party or the other party in connection with the
transactions contemplated in this Agreement.
4.3 Expenses. Each party shall bear its own costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby
including, without limitation, legal and accounting fees.
4.4 Additional Actions. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all reasonable action and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement.
5. CONDITIONS PRECEDENT.
5.1 Conditions of Obligations of PMSI. The obligations of PMSI under
this Agreement are subject to the satisfaction on or prior to the Closing Date
of the following conditions, unless waived by PMSI:
(a) Government Approvals. All authorizations, consents, orders
or approvals of, or declarations or filings with any Governmental Entity
necessary for the consummation of the transactions contemplated by this
Agreement shall have been filed, occurred or been obtained.
(b) Representations and Warranties. The representations and
warranties of the Purchaser set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date.
10.
<PAGE> 104
(c) Performance of Obligations of the Purchaser. The Purchaser
shall have performed in all material respects all obligations required to be
performed by it under this Agreement prior to the Closing Date.
(d) Investor Rights Agreement. The Purchaser shall have
executed and delivered to PMSI the Amendment to the Amended and Restated
Investor Rights Agreement attached hereto as Exhibit D.
5.2 Conditions of Obligations of the Purchaser. The obligations of the
Purchaser pursuant to this Agreement are subject to the satisfaction on or prior
to the Closing Date of the following conditions, unless waived by the Purchaser:
(a) Government Approvals. All authorizations, consents, orders
or approvals of, or declarations or filings with any Governmental Entity
necessary for the consummation of the transactions contemplated by this
Agreement shall have been filed, occurred or been obtained.
(b) Representations and Warranties. The representations and
warranties of PMSI set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date.
(c) Performance of Obligations of PMSI. PMSI shall have
performed all obligations required to be performed by it under this Agreement
prior to the Closing Date.
(d) Investor Rights Agreement. PMSI and not less than sixty
percent (60%) of PMSI's stockholders who are parties to the Amended and Restated
Investor Rights Agreement shall have executed and delivered to the Purchaser the
Amendment to the Amended and Restated Investor Rights Agreement attached hereto
as Exhibit D.
(e) Opinion of Counsel. PMSI shall have delivered to the
Purchaser the written opinion of PMSI's counsel, Cooley Godward Castro Huddleson
& Tatum, in the form attached hereto as Exhibit E, dated as of the Closing Date.
6. TERMINATION.
6.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of the Purchaser and PMSI; or
(b) by either party if the Closing has not taken place by June
30, 1992.
11.
<PAGE> 105
6.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 6.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of any party or their
respective officers or directors except that nothing set forth herein shall
relieve a party hereto from liability for its breach of this Agreement.
7. GENERAL PROVISIONS.
7.1 Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any related
instrument shall survive the Closing.
7.2 Notices. All notices and other communications hereunder shall be in
writing in the English language and shall be deemed to have been given (i) ten
(10) days after being sent by registered or certified airmail, postage prepaid,
(ii) three (3) business days after being sent by commercial overnight courier,
or (iii) two (2) business days after being transmitted by confirmed telecopy to
the parties at the addresses set forth below (or at such other address for a
party as shall be specified by like notice):
(a) if to PMSI, to:
Polygen Corporation
200 Fifth Avenue
Waltham, Massachusetts 02154
U.S.A.
Attention: Michael J. Savage, President
(b) if to the Purchaser, to:
Teijin Limited
Iino Building
1-1, Uchisaiwai-cho 2-chome
Chiyoda-ku
Tokyo 100, Japan
Attention: Takehisa Tokunaga, Manager,
Information System Development
Department
7.3 Interpretation. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
7.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
12.
<PAGE> 106
7.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed and
delivered by each of the parties, it being understood that all parties need not
sign the same counterpart.
7.6 Miscellaneous. This Agreement and the documents and instruments and
other agreements among the parties hereto (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof; (b) are not intended to confer upon
any other person any rights or remedies hereunder; and (c) shall not be assigned
by operation of law or otherwise except as otherwise specifically provided
herein.
7.7 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Delaware as applied to contracts entered into and
performed entirely within Delaware; provided, however, that the provisions of
this Agreement relating to dispute resolution, as set forth in Section 7.8
below, shall be governed exclusively by the provisions of the United States
Arbitration Act (9 U.S.C. Section 1 et. seq.) notwithstanding any different or
contrary provision of state law.
7.8 Dispute Resolution. If a dispute arises between the parties hereto
arising out of or in relation to this Agreement, the parties shall use all
reasonable efforts to resolve the dispute through good faith discussions. The
senior management of each of the Purchaser and PMSI commits itself to respond
promptly to any such dispute. In the event that the Purchaser and PMSI are
unable, after exerting all reasonable efforts, to resolve the said dispute, the
said dispute shall be finally settled through binding arbitration on the
following basis:
(a) The arbitration shall be conducted by a panel of three (3)
arbitrators under the International Arbitration Rules of the American
Arbitration Association then in force, by which each of the Purchaser and PMSI
agrees to be bound. Within thirty (30) days after notice of arbitration has been
given, each of the Purchaser and PMSI shall appoint one (1) arbitrator. The
arbitrators appointed by the parties shall then appoint a third arbitrator who
shall serve as the presiding arbitrator.
(b) If demand for arbitration is made by the Purchaser, the
place of arbitration shall be Boston, Massachusetts, U.S.A., and if demand for
arbitration is made by PMSI, the place of arbitration shall be Tokyo, Japan.
(c) The language to be used in the arbitration shall be
English.
13.
<PAGE> 107
(d) Any arbitrator may be of any nationality, and need not be a lawyer
or hold any other professional status or membership.
(e) The arbitral award shall be rendered in writing, shall state the
reasons for the award, and shall be final and binding upon the parties hereto.
In no event shall the arbitral award include a sum of punitive damages.
(f) Judgment upon any award may be entered by any court of competent
jurisdiction, or application may be made to such a court for judicial acceptance
of the award and any appropriate order including enforcement.
(g) Each of the Purchaser and PMSI shall bear its own expenses and
attorneys' fees in connection with the arbitration.
IN WITNESS WHEREOF, PMSI and the Purchaser have signed this Agreement
or caused this Agreement to be signed by their respective agents thereunto duly
authorized, all as of the date first written above.
POLYGEN CORPORATION
By:_________________________
Michael J. Savage, President
TEIJIN LIMITED
By:________________________
Name: Hiroshi Itagaki
Title: President and
Chief Executive Officer
14.
<PAGE> 108
EXHIBIT B
Exhibit 1
to the Agreement
of Merger
CERTIFICATE OF INCORPORATION OF
POLYGEN CORPORATION
ARTICLE I
The name or this corporation is Polygen Corporation.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
This corporation is authorized to issue one class of stock to be
designated "Common Stock". The total number of shares which the corporation is
authorized to issue is eighty million (80,000,000) shares, par value $0.0001 per
share.
ARTICLE V
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the Bylaws of the corporation.
ARTICLE VI
The number of directors of the corporation shall be fixed from time to
time by a bylaw or amendment thereof duly adopted by the Board of Directors or
by the stockholders.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws
of the corporation shall so provide.
<PAGE> 109
ARTICLE VIII
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, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporation action
further eliminating or limiting the personal liability of directors then the
liability of a director of the corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law as so amended.
Any repeal or modification of the foregoing provisions of this Article
VIII by the stockholders of the corporation shall not adversely affect any right
or protection of a director of the corporation existing at the time of such
repeal or modification.
ARTICLE IX
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 stockholders
herein are granted subject to this reservation.
ARTICLE X
The name and address of the sole incorporator of Polygen Merger
Corporation (now known as Polygen Corporation) is as follows:
Peter F. Stone
Cooley, Godward, Castro,
Huddleson & Tatum
Five Palo Alto Square
Suite 400
Palo Alto, California 94306
2.
<PAGE> 110
EXHIBIT C
AMENDED BYLAWS OF
POLYGEN CORPORATION
(as amended as of January 22, 1992)
<PAGE> 111
TABLE OF CONTENTS
Page
----
ARTICLE I Offices ................................................ 1
Section 1. Registered Office ........................... 1
Section 2. Other Offices ............................... 1
ARTICLE II Corporate Seal ........................................ 1
Section 3. Corporate Seal .............................. 1
ARTICLE III Stockholders' Meetings ............................... 1
Section 4. Place of Meetings .......................... 1
Section 5. Annual Meeting ............................. 2
Section 6. Special Meetings ........................... 2
Section 7. Notice of Meetings ......................... 2
Section 8. Quorum ..................................... 2
Section 9. Adjournment and Notice of Adjourned
Meetings ................................... 3
Section 10. Voting Rights .............................. 3
Section 11. Joint Owners of Stock ...................... 3
Section 12. List of Stockholders ....................... 4
Section 13. Action without Meeting ..................... 4
Section 14. Organization ............................... 5
ARTICLE IV Directors ............................................. 5
Section 15. Number and Term of Office ................... 5
Section 16. Powers ...................................... 5
Section 17. Vacancies ................................... 6
Section 18. Resignation ................................. 6
Section 19. Removal ..................................... 6
Section 20. Meetings .................................... 6
(a) Annual Meetings ............................... 6
(b) Regular Meetings .............................. 7
(c) Special Meetings .............................. 7
(d) Telephone Meetings ............................ 7
(e) Notice of Meetings ............................ 7
(f) Waiver of Notice .............................. 7
Section 21. Quorum and Voting .......................... 8
(a) Quorum ........................................ 8
(b) Majority Vote ................................. 8
Section 22. Action without Meeting ..................... 8
Section 23. Fees and Compensation ...................... 8
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Section 24. Committees ................................... 8
(a) Executive Committee ...................... 8
(b) Other Committees ......................... 9
(c) Term ..................................... 9
(d) Meetings ................................. 9
Section 25. Organization ................................. 10
ARTICLE V Officers ................................................. 10
Section 26. Officers Designated .......................... 10
Section 27. Tenure and Duties of Officers ................ 11
(a) General ...................................... 11
(b) Duties of Chairman of the Board of Directors.. 11
(c) Duties of President .......................... 11
(d) Duties of Vice Presidents .................... 11
(e) Duties of Secretary .......................... 12
(f) Duties of Treasurer .......................... 12
Section 28. Resignations ................................. 12
Section 29. Removal ...................................... 13
ARTICLE VI Execution of Corporate Instruments and Voting
of Securities Owned by the Corporation .................... 13
Section 30. Execution of Corporate Instruments ........... 13
Section 31. Voting of Securities Owned by the
Corporation ................................. 13
ARTICLE VII Shares of Stock ........................................ 14
Section 32. Form and Execution of Certificates ........... 14
Section 33. Lost Certificates ............................ 14
Section 34. Transfers .................................... 14
Section 35. Fixing Record Dates .......................... 15
Section 36. Registered Stockholders ...................... 15
ARTICLE VIII Other Securities of the Corporation ................... 15
Section 37. Execution of Other Securities ................ 15
ARTICLE IX Dividends ............................................... 16
Section 38. Declaration of Dividends ..................... 16
Section 39. Dividend Reserve ............................. 16
ARTICLE X Fiscal Year .............................................. 17
Section 40. Fiscal Year .................................. 17
ARTICLE XI Indemnification of Officers,
Directors, Employees and Agents ........................... 17
Section 42. Indemnification in Derivative Actions ....... 17
Section 43. Indemnification upon Successful Defense ..... 18
Section 45. Authority to Advance Expenses ............... 18
Section 46. Provisions Nonexclusive ..................... 19
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Section 47. Authority to Insure .................................. 19
Section 48. Definition of Corporation ............................ 19
Section 49. Severability ......................................... 19
ARTICLE XII Notices ............................................... 20
Section 50. Notices ..................................... 20
(a) Notice to Stockholders .......................... 20
(b) Notice to Directors ............................. 20
(C) Address Unknown ................................. 20
(d) Affidavit of Mailing ............................ 20
(e) Time Notices Deemed Given ....................... 20
(f) Methods of Notice ............................... 21
(g) Failure to Receive Notice ....................... 21
(h) Notice to Person with Whom Communication Is
Unlawful ........................................ 21
ARTICLE XIII Amendments ........................................... 21
Section 51. Amendments .................................. 21
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BYLAWS
OF
POLYGEN CORPORATION
(a Delaware corporation)
(as amended as of January 22, 1992)
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the corporation
in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.
Section 2. Other Offices. The corporation shall also have and maintain
an office or principal place of business in Waltham, Massachusetts, at such
place as may be fixed by the Board of Directors, and may also have offices at
such other places, both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
Corporate Seal
Section 3. Corporate Seal. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
Stockholders' Meetings
Section 4. Place of Meetings. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
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Section 5. Annual Meeting. The annual meeting of the stockholders of
the corporation for the purpose of election of Directors and for such other
business as may lawfully come before it shall be held on such date and at such
time as may be designated from time to time by the Board of Directors.
Section 6. Special Meetings. Special meetings of the stockholders of
the corporation may be called, for any purpose or purposes, by the President or
the Board of Directors at any time. Upon written request of any stockholder or
stockholders holding in the aggregate twenty percent (20%) of the voting power
of all stockholders delivered in person or sent by registered mail to the
President or Secretary, the Secretary shall call a special meeting of
stockholders to be held at the office of the corporation required to be
maintained pursuant to Section 2 hereof at such time as the Secretary may fix,
such meeting to be held not fewer than ten (10) nor more than sixty (60) days
after the receipt of such request, and if the Secretary shall neglect or refuse
to call such meeting, within seven (7) days after the receipt of such request,
the stockholder making such request may do so.
Section 7. Notice of Meetings. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not fewer than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
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. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
Section 8. Quorum. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. Any shares, the voting of
which at said meeting has been enjoined, or which for any reason cannot be
lawfully voted at such meeting, shall not be
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counted to determine a quorum at such meeting. In the absence of a quorum any
meeting of stockholders may be adjourned, from time to time, by vote of the
holders of a majority of the shares represented thereat, but no other business
shall be transacted at such meeting. The stockholders present at a duly called
or convened meeting, at which a quorum is present, may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. Except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws, all action taken by the
holders of a majority of the voting power represented at any meeting at which a
quorum is present shall be valid and binding upon the corporation.
Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time by
the vote of a majority of the shares, the holders of which are present either in
person or by proxy. When a meeting is adjourned to another time or place, 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 which 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.
Section 10. Voting Rights. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote or execute consents shall have the right to do so either
in person or by an agent or agents authorized by a written proxy executed by
such person or his duly authorized agent, which proxy shall be filed with the
Secretary at or before the meeting at which it is to be used. An agent so
appointed need not be a stockholder. No proxy shall be voted on after three (3)
years from its date of creation unless the proxy provides for a longer period.
All elections of Directors shall be by written ballot, unless otherwise provided
in the Certificate of Incorporation.
Section 11. Joint Owners of Stock. If shares or other securities having
voting power stand of record in the names of
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two (2) or more persons, whether fiduciaries, members of a partnership, joint
tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2)
or more persons have the same fiduciary relationship respecting the same shares,
unless the Secretary is given written notice to the contrary and is furnished
with a copy of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to voting shall
have the following effect: (a) if only one (1) votes, his act binds all; (b) if
more than one (1) votes, the act of the majority so voting binds all; (c) if
more than one (1) votes, but the vote is evenly split on any particular matter,
each faction may vote the securities in question proportionally, or may apply to
the Delaware Court of Chancery for relief as provided in Section 217(b) of the
General Corporation Law of Delaware. If the instrument filed with the Secretary
shows that any such tenancy is held in unequal interests, a majority or
even-split for the purpose of this subsection (c) shall be a majority or
even-split in interest.
Section 12. List of Stockholders. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said 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
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 13. Action without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action required by statute to be taken at any
annual or special meeting of the stockholders, or any action which may be taken
at any annual or special meeting of the 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, 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
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consent shall be given to those stockholders who have not consented in writing.
Section 14. Organization. At every meeting of stockholders, the
chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or, if the President is absent, the most senior Vice
President present, or in the absence of any such officer, a chairman of the
meeting chosen by a majority in interest of the stockholders entitled to Vote,
present in person or by proxy, shall act as chairman. The Secretary, or, in his
absence, an Assistant Secretary directed to do so by the President, shall act as
secretary of the meeting.
ARTICLE IV
Directors
Section 15. Number and Term of Office. The number of Directors which
shall constitute the whole of the Board of Directors shall be not fewer than two
(2) nor more than ten (10). The precise number of Directors shall be fixed by
the Board of Directors and the Board may change such number from time to time
within the limits set forth in this Section 15; provided, however, that a
resolution of the Board reducing the number of Directors shall not affect the
tenure of any Director then in office, each of whom shall continue to serve
until the earliest of the expiration of his term, his resignation or his removal
in the manner provided in these Bylaws. Except as provided in Section 17, the
Directors shall be elected by the stockholders at their annual meeting in each
year and shall hold office until the next annual meeting and until their
successors shall be duly elected and qualified. Directors need not be
stockholders unless so required by the Certificate of Incorporation. If for any
cause, the Directors shall not have been elected at an annual meeting, they may
be elected as soon thereafter as convenient at a special meeting of the
stockholders called for that purpose in the manner provided in these Bylaws.
Section 16. Powers. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation. The Board of Directors may delegate the management of the
day-to-day operation of the business of the Corporation to a management company
or other person, provided that the business and affairs
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of the corporation shall be managed and all corporate powers shall be exercised
under the ultimate direction of the Board of Directors .
Section 17. Vacancies. Unless otherwise provided in the Certificate of
Incorporation, vacancies and newly created directorships resulting from any
increase in the authorized number of Directors may be filled by a majority of
the Directors then in office, although less than a quorum, or by a sole
remaining Director, and each Director so elected shall hold office for the
unexpired portion of the term of the Director whose place shall be vacant and
until his successor shall have been duly elected and qualified. A vacancy in the
Board of Directors shall be deemed to exist under this Section 17 in the case of
the death, removal or resignation of any Director, or if the stockholders fail
at any meeting of stockholders at which Directors are to be elected (including
any meeting referred to in Section 19 below) to elect the number of Directors
then constituting the whole Board of Directors.
Section 18. Resignation. Any Director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. 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 for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
Section 19. Removal. At a special meeting of stockholders called for
the purpose in the manner hereinabove provided, the Board of Directors, or any
individual Director, may be removed from office, with or without cause, and a
new Director or Directors elected by a vote of stockholders holding a majority
of the outstanding shares entitled to vote at an election of Directors .
Section 20. Meetings.
(a) Annual Meetings. The annual meeting of the Board of
Directors shall be held immediately after the annual
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meeting of stockholders and at the place where such meeting is held. No notice
of an annual meeting of the Board of Directors shall be necessary and such
meeting shall be held for the purpose of electing officers and transacting such
other business as may lawfully come before it.
(b) Regular Meetings. Except as hereinafter otherwise provided, regular
meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the State
of Delaware which has been designated by resolution of the Board of Directors or
the written consent of all Directors.
(c) Special Meetings. Unless otherwise restricted by the Certificate of
Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
President or a majority of the Directors.
(d) Telephone Meetings. Any member of the Board of Directors, or of any
committee thereof, may participate in a meeting by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in a meeting by such means
shall constitute presence in person at such meeting.
(e) Notice of Meetings. Written notice of the time and place of all
regular and special meetings of the Board of Directors shall be given at least
one (1) day before the date of the meeting. Notice of any meeting may be waived
in writing at any time before or after the meeting and will be waived by any
Director by attendance thereat, except when the Director attends the 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.
(f) Waiver of Notice. The transaction of all business at any meeting of
the Board of Directors, or any committee thereof, however called or noticed, or
wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the Directors not present shall sign a written waiver of
notice, or a consent to holding such meeting, or an approval of the minutes
thereof. All such
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waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Section 21. Quorum and Voting.
(a) Quorum. Unless the Certificate of Incorporation requires a greater
number, a quorum of the Board of Directors shall consist of a majority of the
exact number of Directors fixed from time to time in accordance with Section 15
of these Bylaws, but not fewer than one (1); provided, however, at any meeting
whether a quorum be present or otherwise, a majority of the Directors present
may adjourn from time to time until the time fixed for the next regular meeting
of the Board of Directors, without notice other than by announcement at the
meeting.
(b) Majority Vote. At each meeting of the Board of Directors at which a
quorum is present all questions and business shall be determined by a vote of a
majority of the Directors present, unless a different vote be required by law,
the Certificate of Incorporation or these Bylaws.
Section 22. Action without 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 of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 23. Fees and Compensation. Directors shall not receive any
stated salary for their services as Directors, but by resolution of the Board of
Directors a fixed fee, with or without expense of attendance, may be allowed for
attendance at each meeting and at each meeting of any Committee of the Board of
Directors. Nothing herein contained shall be construed to preclude any Director
from serving the corporation in any other capacity as an officer, agent,
employee, or otherwise and receiving compensation therefor.
Section 24. Committees.
(a) Executive Committee. The Board of Directors may by
resolution passed by a majority of the whole Board of Directors, appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and
specifically
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granted by the Board of Directors, shall have and may exercise when the Board of
Directors is not in session all powers of the Board of Directors in the
management of the business and affairs of the corporation, including, without
limitation, the power and authority to declare a dividend or to authorize the
issuance of stock, except such committee shall not have the power or authority
to amend the Certificate of Incorporation, to adopt an agreement of merger or
consolidation, to recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, to recommend
to the stockholders of the corporation a dissolution of the corporation or a
revocation of a dissolution or to amend these Bylaws.
(b) Other Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board of Directors, from time to time appoint such
other committees as may be permitted by law. Such other committees appointed by
the Board of Directors shall consist of one (1) or more members of the Board of
Directors, and shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such committees, but in no
event shall such committees have the powers denied to the Executive Committee in
these Bylaws.
(c) Term. The members of all committees of the Board of Directors shall
serve a term coexistent with that of the Board of Directors which shall have
appointed such committee. The Board of Directors, subject to the provisions of
subsections (a) or (b) of this Section 24, may at any time increase or decrease
the number of members of a committee or terminate the existence of a committee.
The membership of a committee member shall terminate on the date of his death or
voluntary resignation. The Board of Directors may at any time for any reason
remove any individual committee member and the Board of Directors may fill any
committee vacancy created by death, resignation, removal or increase in the
number of members of the committee. The Board of Directors 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, and, in addition, in the
absence or disqualification of any 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.
(d) Meetings. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive
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Committee or any other committee appointed pursuant to this Section 24 shall be
held at such times and places as are determined by the Board of Directors, or by
any such committee, and when notice thereof has been given to each member of
such committee, no further notice of such regular meetings need be given
thereafter. Special meetings of any such committee may be held at the principal
office of the corporation required to be maintained pursuant to Section 2
hereof, or at any place which has been designated from time to time by
resolution of such committee or by written consent of all members thereof, and
may be called by any Director who is a member of such committee, upon written
notice to the members of such committee of the time and place of such special
meeting given in the manner provided for the giving of written notice to members
of the Board of Directors of the time and place of special meetings of the Board
of Directors. Notice of any special meeting of any committee may be waived in
writing at any time before or after the meeting and will be waived by any
Director by attendance thereat, except when the Director attends such special
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. A majority of the authorized number of members of any such committee
shall constitute a quorum for the transaction of business, and the act of a
majority of those present at any meeting at which a quorum is present shall be
the act of such committee.
Section 25. Organization. At every meeting of the Directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the Directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
ARTICLE V
Officers
Section 26. Officers Designated. The officers of the corporation shall
be the Chairman of the Board of Directors, the President, one or more Vice
Presidents, the Secretary and the Treasurer, all of whom shall be elected at the
annual meeting of the Board of Directors. The order of the seniority of the Vice
Presidents shall be in the order of their nomination, unless otherwise
determined by the Board of Directors. The Board of
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Directors may also appoint one or more Assistant Secretaries, Assistant
Treasurers, and such other officers and agents with such powers and duties as it
shall deem necessary. The Board of Directors may assign such additional titles
to one or more of the officers as it shall deem appropriate. Any one person may
hold any number of offices of the corporation at any one time unless
specifically prohibited therefrom by law. The salaries and other compensation of
the officers of the corporation shall be fixed by or in the manner designated by
the Board of Directors.
Section 27. Tenure and Duties of Officers.
(a) General. All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors.
(b) Duties of Chairman of the Board of Directors. The Chairman of the
Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time.
(c) Duties of President. The President shall preside at all meetings of
the stockholders and at all meetings of the Board of Directors, unless the
Chairman of the Board of Directors has been appointed and is present. 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 officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
(d) Duties of Vice Presidents. The Vice Presidents, in the order of
their seniority, may assume and perform the duties of the President in the
absence or disability of the President or whenever the office of President is
vacant. The Vice Presidents shall perform other duties commonly incident to
their office and shall also perform such other duties and have such other powers
as the Board of Directors or the President shall designate from time to time.
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(e) Duties of Secretary. The Secretary shall extend all
meetings of the stockholders and of the Board of Directors, and shall record all
acts and proceedings thereof in the minute book of the corporation. The
Secretary shall give notice in conformity with these Bylaws of all meetings of
the stockholders, and of all meetings of the board of directors and any
committee thereof requiring notice. The secretary shall perform all other duties
given him in these Bylaws and other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time. The President may direct any
Assistant Secretary in the absence or disability of the Secretary, and each
Assistant Secretary shall perform the duties of the Secretary to assume and
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time.
(f) Duties of Treasurer. The Treasurer shall keep or cause to
be kept the books of account of the corporation in a thorough and proper manner,
and shall render statements of the financial affairs of the corporation in such
form and as often as required by the Board of Directors or the President. The
Treasurer, subject to the order of the Board of Directors, shall have the
custody of all funds and securities of the corporation. The Treasurer shall
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time. The President may direct any
Assistant Treasurer to assume and perform the duties of the Treasurer in the
absence or disability of the Treasurer, and each Assistant Treasurer shall
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time.
Section 28. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective.
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Section 29. Removal. Any officer may be removed from office at any
time, either with or without cause, by the vote or written consent of a majority
of the Directors in office at the time, or by any committee or superior officers
upon whom such power of removal may have been conferred by the Board of
Directors.
ARTICLE VI
Execution of Corporate Instruments and Voting
of Securities Owned by the Corporation
Section 30. Execution of Corporate Instruments. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Treasurer or any Assistant Secretary or Assistant Treasurer. All
other instruments and documents requiring the corporate signature, but not
requiring the corporate seal, may be executed as aforesaid or in such other
manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositories on funds to
the credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Section 31. Voting of Securities Owned by the Corporation. All stock
and other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the
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absence of such authorization, by the Chairman of the Board of Directors, the
President, or any Vice President.
ARTICLE VII
Shares of Stock
Section 32. Form and Execution of Certificates. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Where such certificate is countersigned by a transfer agent
other than the corporation or its employee, or by a registrar other than the
corporation or its employee, any other signature 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 shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the designations,
preferences, limitations, restrictions on transfer and relative rights of the
shares authorized to be issued.
Section 33. Lost Certificates. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
Section 34. Transfers. Transfer of record of shares of stock of the
corporation shall be made only upon its books by the holders thereof, in person
or by attorney duly authorized,
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and upon the surrender of a properly endorsed certificate or certificates for a
like number of shares.
Section 35. Fixing Record Dates. 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 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 fewer than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. If no record date is fixed: (a) 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; (b) 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; and
(c) 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.
Section 36. 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, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VIII
Other Securities of the Corporation
Section 37. Execution of Other Securities. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates,
may be signed by the Chairman of
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the Board of Directors, the President or any Vice President, or such other
person as may be authorized by the Board of Directors, and the corporate seal
impressed thereon or a facsimile of such seal imprinted thereon and attested by
the signature of the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer; provided, however, that where any such bond, debenture or
other corporate security shall be authenticated by the manual signature of a
trustee under an indenture pursuant to which such bond, debenture or other
corporate security shall be issued, the signature of the persons signing and
attesting the corporate seal on such bond, debenture or other corporate security
may be the imprinted facsimile of the signatures of such persons. Interest
coupons appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
Dividends
Section 38. Declaration of Dividends. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to law
at any regular or special meeting. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation.
Section 39. Dividend Reserve. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the
16.
<PAGE> 130
Board of Directors shall think conducive to the interests of the corporation,
and the Board of Directors may modify or abolish any such reserve in the manner
in which it was created.
ARTICLE X
Fiscal Year
Section 40. Fiscal Year. The fiscal year of the corporation shall
be fixed by resolution of the Board of Directors.
ARTICLE XI
Indemnification of Officers,
Directors, Employees and Agents
Section 41. General Right to Indemnification. 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 he is or was a Director, officer, employee or agent of
the corporation, or is or was serving at the request 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, shall be indemnified by the corporation against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he 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 his
conduct was unlawful. Each such person shall be indemnified to the fullest
extent permitted by Delaware law. 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 he 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 reasonable cause to
believe that his conduct was unlawful.
Section 42. Indemnification in Derivative Actions. 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
17.
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or in the right of the corporation to procure a judgment in its favor by reason
of the fact that he 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 shall be indemnified by the corporation
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and 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 for negligence or
misconduct in the performance of his duty 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.
Section 43. Indemnification upon 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 41 and 42 above, or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 44. Determination of Right to Indemnification. Any
indemnification under Sections 41 and 42 (unless ordered by a court) shall be
made by the corporation only as authorized in the specific case upon a
determination that indemnification of the Director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Sections 41 and 42. Such determination shall be made (a) by
the Board of Directors by a majority vote of a quorum consisting of Directors
who were not parties to such action, suit or proceeding, or (b) if such a quorum
is not obtainable, or even if obtainable a quorum of disinterested Directors so
directs, by independent legal counsel in a written opinion, or (c) by a majority
vote of a quorum of the stockholders.
Section 45. Authority to Advance Expenses. Expenses incurred in
defending a civil or criminal action, suit or proceeding may be paid by the
corporation in advance of the final
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disposition of such action, suit or proceeding as authorized by the Board of
Directors in the specific case upon receipt of any undertaking by or on behalf
of the Director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Article.
Section 46. Provisions Nonexclusive. The indemnification provided by
this Article shall not be deemed exclusive of any other rights to which a person
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such office
and shall 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.
Section 47. Authority to Insure. The corporation is authorized 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 him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this Article.
Section 48. Definition of Corporation. For the purposes of this Article
XI, references to "the corporation" include 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 authority
to indemnify its directors, officers and employees or agents, so that any person
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,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article XI with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
Section 49. Severability. The invalidity or unenforceability of any
provision of this Article XI shall not
19.
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affect the validity or enforceability of the remaining provisions of this
Article.
ARTICLE XII
Notices
Section 50. Notices.
(a) Notice to Stockholders. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
stock record of the corporation or its transfer agent.
(b) Notice to Directors. Any notice required to be given to
any Director may be given by the method stated in subsection (a), or by
telegram, except that such notice other than one which is delivered personally
shall be sent to such address as such Director shall have filed in writing with
the Secretary, or, in the absence of such filing, to the last known post office
address of such Director.
(c) Address Unknown. If no address of a stockholder or
Director to be known, notice may be sent to the office of the corporation
required to be maintained pursuant to Section 2 hereof.
(d) Affidavit of Mailing. An affidavit of mailing, executed by
a duly authorized and competent employee of the corporation or its transfer
agent appointed with respect to the class of stock affected, specifying the name
and address or the names and addresses of the stockholder or stockholders, or
Director or Directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall be conclusive evidence of the
statements therein contained.
(e) Time Notices Deemed Given. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing and
all notices given by telegram shall be deemed to have been given as at the
sending time recorded by the telegraph company transmitting the notices.
20.
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(f) Methods of Notice. It shall not be necessary that the same
method of giving notice be employed in respect of all Directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(g) Failure to Receive Notice. The period or limitation of
time within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any Director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
to him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such Director to receive such
notice.
(h) Notice to Person with Whom Communication Is Unlawful.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.
ARTICLE XIII
Amendments
Section 51. Amendments. These Bylaws may be repealed, altered or
amended or new Bylaws adopted by the stockholders. The Board of Directors shall
also have the authority, if such authority is conferred upon the Board of
Directors by the Certificate of Incorporation, to repeal, alter or amend these
Bylaws or adopt new Bylaws (including, without limitation, the amendment of any
new Bylaw setting forth the number of Directors who shall constitute the whole
Board of Directors) subject to the power of the stockholders to change or repeal
such Bylaws and provided that the Board of Directors shall not make or alter any
21.
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Bylaws fixing the qualifications, classifications, term of office or
compensation of Directors.
22.
<PAGE> 136
EXHIBIT D
AMENDMENT TO AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amendment to Amended and Restated Investor Rights Agreement (the
"Amendment") is made pursuant to Paragraph 3.3 of the Amended and Restated
Investor Rights Agreement dated as of October 18, 1991 (the "Agreement") by and
among POLYGEN CORPORATION, a Delaware corporation (the "Company") and various
investors in the Company as listed on Exhibit A and B to the Agreement. All
terms capitalized herein shall have the meanings ascribed to them in the
Agreement. The undersigned securityholders hereby agree as of February ___, 1992
as follows:
RECITALS
WHEREAS, on October 18, 1991, certain of the securityholders listed
below (the "Securityholders") and the Company entered into the Agreement to
provide for certain registration, information and other rights set forth therein
for such Securityholders;
WHEREAS, Section 1.16 of the Agreement provides for an
agreement for the election of the Company's Board of Directors;
WHEREAS, recently the Board of Directors of the Company approved an
amendment to Section 1.16 of the Agreement to provide for an agreement with
respect to Board of Directors' representation;
WHEREAS, the Company and the undersigned Securityholders desire that
such Section 1.16 be amended as set forth herein;
WHEREAS, the Board of Directors also recently approved the sale of
certain shares of the Company's Common Stock to Teijin Limited pursuant to that
certain Common Stock Purchase Agreement dated on or about February ___, 1992
(the "Purchase Agreement") ;
WHEREAS, in connection with the issuance and sale of such shares, the
Company, Teijin Limited and the undersigned Securityholders desire that Teijin
Limited be granted the rights
<PAGE> 137
as well as the obligations of a Securityholder as set forth in the Agreement;
WHEREAS, the Amendment to the Agreement requires the approval of the
Company and the Holders of at least 60% of the Registrable Securities.
NOW, THEREFORE, BE IT RESOLVED, for good and valuable consideration,
receipt of which is hereby acknowledged, the Company, Teijin Limited and the
undersigned Securityholders hereby agree that the Agreement shall be amended by
this Amendment as follows:
1. Section 1.16 of the Agreement shall be deleted in its entirety and
shall read as follows:
"1.16 Board of Directors. Each of the undersigned Investors
agrees until December 31, 1992 to vote its shares of capital stock in
favor of (a) each of the nine members of the Board of Directors of the
Company (as constituted immediately after the consummation of the
Merger, or any successor Director to any of such nine Directors, if
any, if such Director shall have been selected by the Board of
Directors to fill a vacancy on the Board of Directors after a
Director's death or resignation) and (b) the tenth member of the Board
of Directors elected by the Board of Directors to fill the newly
created vacancy as of January 22, 1992 (or any successor to such
Director, if such Director shall have been selected by the Board of
Directors to fill a vacancy on the Board after such Director's
resignation or death.)"
2. Upon the issuance of the shares of Common Stock of the Company to
Teijin Limited pursuant to the Purchase Agreement, Teijin Limited shall be
deemed to be a party to the Agreement as if an original signatory thereto and
shall be entitled to all of the rights and agrees to be bound by all of the
obligations of an "Investor," a "Holder," a "Holder of Registrable Securities"
and a "Holder of Restricted Securities," as each such term is defined in the
Agreement.
3. Notwithstanding the foregoing, Teijin Limited shall not be subject
in any way to the terms of the Merger Agreement and Section 2.1 of the Agreement
shall apply to Teijin Limited as if it read as follows:
2.
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2.1 Restrictions on Transferability. The shares of Common
Stock of the Company held by the Holders (as hereinafter defined) shall
not be transferable, except upon the conditions specified in this
Section 2, which conditions are intended to ensure compliance with the
provisions of the Securities Act, or, in the case of Section 2.15
hereof, to assist in an orderly distribution, as the case may be. Each
holder will cause any proposed transferee of Restricted Securities (as
hereinafter defined) held by that holder to agree to take and hold
those securities subject to the provisions and upon the conditions
specified in this Section 2.
4. The paragraph entitled "Registrable Securities" of Section 2.2 of
the Agreement shall be deleted in its entirety and shall read as follows:
""Registrable Securities" shall mean (i) shares of the
Company's Common Stock issued upon the automatic conversion of shares
of each of the Series A, Series B, Series C and Series D Preferred
Stock of the Company pursuant to an amendment to the Company's
Certificate of Incorporation concurrently with the consummation of the
Merger; (ii) shares of the Company's Common Stock issued to MSI common
stockholders pursuant to the Merger Agreement; (iii) shares of the
Company's Common Stock issuable upon the exercise of the Company's
Common Stock purchase warrants issued to Technology Funding Secured
Investors II ("TFSI"); (iv) shares of the Company's Common Stock issued
to Teijin Limited pursuant to the Purchase Agreement; (v) shares of the
Company's Common Stock issuable upon the exercise of common stock
options and common stock purchase warrants issued by MSI to and held by
the former MSI optionholders and MSI warrantholders assumed by the
Company in connection with the Merger; and (vi) any shares of the
Company's Common Stock issued in respect of the Common Stock set forth
in clauses (i) - (v) immediately above pursuant to any stock split,
stock dividend, recapitalization or similar event."
5. Except as otherwise amended herein, the other terms and provisions
of the Agreement shall remain in full force and effect.
6. This Amendment may be executed in any number of counterparts, each
of which may be executed by less that all of
3.
<PAGE> 139
the parties hereto and each of which shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
as of the date first above written.
POLYGEN CORPORATION
By: ___________________
Name: ___________________
Title:___________________
SECURITYHOLDER
By: _____________________
Print Name: _____________
TEIJIN LIMITED
By: _____________________
Name: ________________
Title: __________________
4.
<PAGE> 140
EXHIBIT E
(On Cooley Godward letterhead)
February __, 1992
[to be dated as of the Closing]
Teijin Limited
6-7, Minamihommachi 1-chome
Chuo-ku, Osaka 541
Japan
Ladies and Gentlemen:
We have acted as counsel for Polygen Corporation, a Delaware corporation (the
"Company"), in connection with the issuance and sale of Two Million Seven
Hundred Sixty-Six Thousand Eight Hundred and Twenty-Seven (2,766,827) shares of
the Company's Common Stock ("Shares"), to Teijin Limited (the "Purchaser") under
the Common Stock Purchase Agreement dated as of February __, 1992 (the "Purchase
Agreement") and the Amendment to the Amended and Restated Investor Rights
Agreement attached thereto as Exhibit D (collectively, the "Agreements"). We are
rendering this opinion pursuant to Section 5.2(e) of the Purchase Agreement.
Except as otherwise defined herein, capitalized terms used but not defined
herein have the respective meanings given to them in the Purchase Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Purchase Agreement by the various parties and originals or
copies certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we render
an opinion "to the best of our knowledge" or concerning an item "known to us" or
our opinion otherwise refers to our knowledge, it is based solely upon (i) an
inquiry of attorneys within this firm who perform legal services for the
Company, (ii) receipt of a certificate executed by an officer of the Company
covering such matters, and (iii) such other investigation, if any, that we
specifically set forth herein.
In rendering this opinion, we have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us
<PAGE> 141
Teijin Limited
Page 2
as originals; the conformity to originals of all documents submitted to us as
copies; the accuracy, completeness and authenticity of certificates of public
officials; and the due authorization, execution and delivery of all documents
(except the due authorization, execution and delivery by the Company of the
Agreements), where authorization, execution and delivery are prerequisites to
the effectiveness of such documents. We have also assumed: that all individuals
executing and delivering documents had the legal capacity to so execute and
deliver; that you have received all documents you were to receive under the
Agreements; that the Agreements are obligations binding upon you; if you are a
corporation or other entity, that you have filed any required California
franchise or income tax returns and have paid any required California franchise
or income taxes; and that there are no extrinsic agreements or understandings
among the parties to the Agreements that would modify or interpret the terms of
the Agreements or the respective rights or obligations of the parties
thereunder.
Our opinion is expressed only with respect to the federal laws of the United
States of America, the laws of the State of California and the General
Corporation Law of the State of Delaware. We express no opinion as to whether
the laws of any particular jurisdiction apply, and no opinion to the extent that
the laws of any jurisdiction other than those identified above are applicable to
the subject matter hereof. We are not rendering any opinion as to compliance
with any antifraud law, rule or regulation relating to securities, or to the
sale or issuance thereof.
With regard to our opinion in paragraph 3 below, we have relied on the opinion
of Brobeck, Phleger & Harrison, dated October 18, 1991, as to capitalization of
the Company as of the closing of the Company's merger with Molecular Simulations
Incorporated effective as of October 18, 1991.
With regard to the second sentence of our opinion in paragraph 3 below, we have
examined and relied upon a certificate executed by an officer of the Company, to
the effect that the consideration for all outstanding shares of capital stock of
the Company was received by the Company in accordance with the provisions of the
applicable Board of Directors resolutions and any plan or agreement relating to
the issuance of such shares, and we have undertaken no independent verification
with respect thereto.
<PAGE> 142
Teijin Limited
Page 3
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, and subject to the exceptions set forth in the PMSI Disclosure
Schedule from the Company to the Purchaser dated February ___, 1992, we are of
the opinion that:
1. The Company has been duly incorporated and is a validly existing corporation
in good standing under the laws of the State of Delaware, has the requisite
corporate power to own, operate and lease its properties and assets and to
conduct its business as it is currently being conducted and, to the best of our
knowledge, is qualified as a foreign corporation to do business and is in good
standing in each jurisdiction in the United States in which the ownership of its
properties or the conduct of its business requires such qualification and where
any statutory fines or penalties or any corporate disability imposed for the
failure to qualify would materially and adversely affect the Company, its
assets, financial condition or operations.
2. The Agreements have been duly and validly authorized, executed and delivered
by the Company and constitute valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as rights to indemnity may be limited by applicable laws and except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting creditors' rights, and
subject to general equity principles and to limitations on availability of
equitable relief, including specific performance.
3. The Company's authorized capital stock consists of Eighty Million
(80,000,000) common shares of which (excluding the Shares to be issued at the
Closing) Forty-Two Million Five Hundred Seventy Thousand Three Hundred and
Fourteen (42,570,314) shares are issued and outstanding. The outstanding shares
have been duly authorized and validly issued and are fully paid and
nonassessable. The Shares have been duly authorized, and upon issuance and
delivery against payment therefor in accordance with the terms of the Purchase
Agreement, the Shares will be validly issued, outstanding, fully paid and
nonassessable. To the best of our knowledge, there are no options, warrants,
conversion privileges, preemptive rights or other rights presently
<PAGE> 143
Teijin Limited
Page 4
outstanding to purchase any of the authorized but unissued capital stock of the
Company, other than rights created in connection with the transactions
contemplated by the Agreements, shares reserved for issuance under the PMSI
Plan, and up to an additional Three Hundred Seventy-Two Thousand Four Hundred
and Thirty-Nine (372,439) shares of common stock under reserve for issuance upon
exercise of outstanding warrants.
4. To the best of our knowledge, there is no action, proceeding or investigation
pending or overtly threatened against the Company before any court or
administrative agency that questions the validity of the Agreements or might
result, either individually or in the aggregate, in any material adverse change
in the assets, financial condition, or operations of the Company.
5. All consents, approvals, authorizations, or orders of, and filings,
registrations, and qualifications with any regulatory authority or governmental
body in the United States required for the consummation by the Company of the
transactions contemplated by the Agreements, have been made or obtained, except
for the filing of a Notice of Transaction Pursuant To Section 25102(f) of the
California Corporate Securities Law of 1968.
6. The offer and sale of the Shares is exempt from the registration requirements
of the Securities Act of 1933, as amended.
This opinion is intended solely for your benefit and is not to be made available
to or be relied upon by any other person, firm, or entity without our prior
written consent.
Very truly yours,
COOLEY GODWARD CASTRO
HUDDLESON & TATUM
By _____________________
James C. Kitch
<PAGE> 144
Exhibit C
CORPORATE LICENSE AGREEMENT
February 14, 1992
between
POLYGEN CORPORATION
and
TEIJIN LIMITED
<PAGE> 145
TABLE OF CONTENTS
Page
1. PROGRAM LICENSE . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Rights Granted . . . . . . . . . . . . . . . . . . . . 1
1.2. Documentation. . . . . . . . . . . . . . . . . . . . . 2
1.3. Shipment of Existing Programs. . . . . . . . . . . . . 2
2. SUPPORT SERVICES. . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Technical Support Services . . . . . . . . . . . . . . 2
2.2. Maintenance Fees . . . . . . . . . . . . . . . . . . . 3
2.3. Incidental Expenses. . . . . . . . . . . . . . . . . . 3
3. EFFECTIVE DATE; TERM AND TERMINATION. . . . . . . . . . . . . . 3
3.1. Effective Date . . . . . . . . . . . . . . . . . . . . 3
3.2. Term . . . . . . . . . . . .. . . . . . . . . . .. . . 3
3.3. Termination . . . . . . . . . . . . . . .. . . . . . . 3
3.4. Return of Programs Upon Termination of License . . . . 4
3.5. Retention of Programs Upon Termination of Joint
Venture. . . . . . . . . . . . . . . . . . . . . . . . 4
4. WARRANTIES, REMEDIES, LIMITATION OF LIABILITY . . . . . . . . . 5
4.1. Infringement Indemnity . . . . . . . . . . . . . . . . 5
4.2. Warranties, Exclusive Remedies and Disclaimers . . . . 5
4.3. Limitation of Liability. . . . . . . . . . . . . . . . 6
5. PAYMENT PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 7
5.1. License Fee. . . . . . . . . . . . . . . . . . . . . . 7
5.2. Invoicing and Payment of Technical Support and
Other Fees . . . . . . . . . . . . . . . . . . . . . . 7
5.3. Taxes . . . . . . . . . . . . . . . .. . . . . . . . . 7
6. STRATEGIC TECHNOLOGY PARTNERSHIP. . . . . . . . . . . . . . . . 8
6.1. Beta Releases. . . . . . . . . . . . . . . . . . . . . 8
6.2. Evaluation and Feedback. . . . . . . . . . . . . . . . 8
6.3. Product Development Coordination . . . . . . . . . . . 8
6.4. Independent Contractors. . . . . . . . . . . . . . . . 9
7. GENERAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1. Nondisclosure and Non-Use. . . . . . . . . . . . . . . 9
7.2. Governing Law; Official Language . . . . . . . . . . . 10
7.3. Dispute Resolution . . . . . . . . . . . . . . . . . . 10
7.4. Notice . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5. Severability and Waiver. . . . . . . . . . . . . . . . 12
i.
<PAGE> 146
7.6. Export Administration . . . . . . . . . . . . . . . . 12
7.7. Entire Agreement. . . . . . . . . . . . . . . . . . . 12
7.8. Nonassignability and Binding Effect . . . . . . . . . 12
7.9. Force Majeure . . . . . . . . . . . . . . . . . . . . 13
7.10. Survival. . . . . . . . . . . . . . . . . . . . . . . 13
7.11. Parties Advised by Counsel - No Interpretation
Against Drafter . . . . . . . . . . . . . . . . . . . 13
Appendices
Appendix A PMSI Japanese Price List
ii.
<PAGE> 147
CORPORATE LICENSE AGREEMENT
This CORPORATE LICENSE AGREEMENT ("Agreement") is made as of this 14th
day of February, 1992, by and between Polygen Corporation (doing business as
Polygen Molecular Simulations Incorporated), a Delaware corporation, having its
principal place of business at 200 Fifth Avenue, Waltham, Massachusetts 02154,
U.S.A. ("PMSI"), and Teijin Limited, a corporation organized under the laws of
Japan, having its principal place of business at 6-7, Minamihommachi 1-chome,
Chuo-ku, Osaka 541, Japan ("Teijin").
Under the following terms of this Agreement, Teijin will receive a
license from PMSI for all proprietary computational chemistry software programs
of PMSI, in object code form only, presently marketed by PMSI or PMSI's
subsidiaries that are described in PMSI's current Japanese price list (the
"Price List") attached hereto as Appendix A (the "Existing Programs") and any
new computational chemistry software programs that may be marketed by PMSI or
PMSI's subsidiaries and distributed in Japan by Teijin Molecular Simulations
Incorporated (the "JV Company") pursuant to that certain Distributorship
Agreement dated as of ______________, 1992 to be entered into by and between
PMSI and the JV Company, together with new versions, revisions, updates,
maintenance releases and the like to such programs as may be made available from
time to time by PMSI (the Existing Programs, new programs, new versions,
revisions, updates and maintenance releases are hereinafter collectively
referred to as the "Programs"). For the purposes of this Agreement, the term
"Subsidiary" or "Subsidiaries" shall mean any corporation, company or other
corporate entity in Japan or any other country in the world whose voting stock
is, at any time during the term of this Agreement, fifty percent (50%) or more
directly owned by Teijin, and the term "Authorized Subsidiary" or "Authorized
Subsidiaries" shall mean a Subsidiary that has been authorized by Teijin in
writing to use the Programs as specified in this Agreement.
1. PROGRAM LICENSE
1.1. Rights Granted.
(a) PMSI hereby grants to Teijin a non-exclusive and, except
as expressly permitted hereunder, non-transferable corporate license to use, and
to authorize each of its Subsidiaries to use, the Programs solely for Teijin's
and each Subsidiary's own respective internal operations. The parties
acknowledge and agree, however, that the grant of licenses to Subsidiaries
located outside of Japan is and shall be conditioned upon prior written notice
by Teijin to PMSI and the payment of maintenance
1.
<PAGE> 148
fees for such Programs by Teijin or its Authorized Subsidiaries to PMSI or
PMSI's agents in such locations.
(b) As soon as practicable after the execution of this
Agreement, Teijin shall furnish PMSI with a list in the English language of all
its Authorized Subsidiaries, and Teijin agrees to provide PMSI with updates of
such list from time to time, upon PMSI's request. Teijin agrees to cause each of
its Authorized Subsidiaries to fully abide by all the terms, conditions,
obligations and agreements imposed on or undertaken by Teijin under this
Agreement which apply to its Authorized Subsidiaries, including but not limited
to those set forth in this Section 1, and Sections 3.4, 4.1, 5.2, 5.3, 6.3, 7.1,
7.2, 7.3, 7.6, and 7.8 hereof. Teijin hereby agrees to indemnify and hold PMSI
harmless from any breach by its Authorized Subsidiaries of the foregoing
Sections.
(c) Teijin agrees not to engage in, nor to cause or permit any
Subsidiary or any other party to engage in, the reverse engineering,
disassembly, decompilation or any similar manipulation of the Programs.
(d) By operation of and performance under this Agreement,
Teijin and its Authorized Subsidiaries acquire only the right to use the
Programs as specified herein and do not acquire any rights of ownership. All
rights, title and interest in the Programs shall at all times remain the
property of PMSI or PMSI's licensors .
1.2. Documentation. PMSI will provide Teijin with one (1) copy of the
applicable Program user's manual plus any documentation normally shipped to
customers of PMSI for each CPU on which the Program is installed.
1.3. Shipment of Existing Programs. PMSI shall use its best efforts to
ship to Teijin the "MSI Programs" identified on the Price List attached hereto
as Appendix A on or before April 15, 1992, and the "Polygen Programs" identified
on said Price List on or before July 15, 1992. PMSI shall invoice Teijin for
such Existing Programs upon shipment of the same, and Teijin agrees to pay PMSI
the license fee set forth in Section 5.1 hereof upon shipment and in the manner
set forth in Section 5.1 hereof.
2. SUPPORT SERVICES
2.1. Technical Support Services. The JV Company will, on behalf of
PMSI, provide Teijin and its Authorized Subsidiaries in Japan with technical
support services, subject to the payment to the JV Company of the maintenance
fees described in Section 2.2 below and otherwise in accordance with the terms
of the JV Company's standard form of software maintenance agreement then in
effect (the "Software Maintenance Agreement"). Technical support
2.
<PAGE> 149
for Authorized Subsidiaries located outside of Japan shall be contracted
directly with PMSI or PMSI's local representative at the prevailing commercial
rate.
2.2. Maintenance Fees. For the technical support services to be
rendered in Japan by the JV Company to Teijin, Teijin agrees to pay the JV
Company such maintenance fees as would normally be charged under the JV
Company's Software Maintenance Agreement for a comparable usage of the Programs
in Japan, or such other amount as may be negotiated and agreed upon between
Teijin and the JV Company and approved by PMSI in writing.
2.3. Incidental Expenses. The JV Company shall be reimbursed by Teijin
for all reasonable travel, out-of-pocket and related expenses incurred by the JV
Company for all on-site services requested by Teijin or any Authorized
Subsidiary. All such amounts shall be invoiced and paid to the JV Company in
accordance with the terms of the applicable Software Maintenance Agreement in
effect between Teijin and the JV Company.
3. EFFECTIVE DATE; TERM AND TERMINATION
3.1. Effective Date. This Agreement shall become effective on the later
to occur of: (a) the date of first shipment of any of the Existing Programs by
PMSI, or (ii) the date on which Japanese governmental clearance (whether in the
form of an approval, notification or otherwise) is obtained with respect to
Japanese foreign exchange and trade control regulations (the Effective Date").
3.2. Term. The term of this Agreement and each license granted under
this Agreement shall commence on the Effective Date and be perpetual unless and
until terminated as provided in Section 3.3 hereof.
3.3. Termination.
(a) Either party may terminate this Agreement or any license
granted under this Agreement in writing for any material breach of this
Agreement by the other which is not cured within sixty (60) days following
notice from the non-breaching party to the breaching party specifying such
breach. Such termination shall be effective at the end of such sixty (60) days.
Except as expressly provided herein, the parties acknowledge and agree that
Teijin's failure to pay the maintenance fees specified in Section 2.2 above
shall not be deemed to be material breach of this Agreement. The parties further
agree that if Teijin fails to pay such maintenance fees (i) the JV Company shall
no longer be obligated to provide technical support services to Teijin, and (ii)
Teijin shall no longer be entitled to receive any new versions, revisions,
updates or maintenance releases of any Programs or any new programs marketed by
PMSI or PMSI's
3.
<PAGE> 150
subsidiaries. The parties furthermore agree that in the event Teijin or an
Authorized Subsidiary fails to pay maintenance fees to PMSI or PMSI's agent with
respect to licenses granted outside of Japan to said Authorized Subsidiary, as
required under Section 1.1(a) above, and does not cure such failure within the
sixty (60)-day period set forth above, such license and Teijin's right to grant
any further licenses outside of Japan to said Authorized Subsidiary shall
terminate, but such termination shall have no effect upon licenses granted to
Teijin and its Authorized Subsidiaries in the Territory.
(b) Termination of this Agreement shall be without prejudice
to or limitation on any other remedies or any accrued obligations of either
party.
3.4. Return of Programs Upon Termination of License. If a license
granted under this Agreement is terminated, Teijin shall, and Teijin shall cause
each Authorized Subsidiary to, (a) immediately cease using the applicable
Programs, and (b) certify in writing to PMSI within sixty (60) days after such
termination that it has either destroyed, permanently erased or returned to PMSI
the Programs, all related documentation and all copies. This requirement applies
to copies in all forms, partial and complete, in all types of media and computer
memory and storage, and whether or not modified or merged into other programs or
materials.
3.5. Retention of Programs Upon Termination of Joint Venture.
Notwithstanding the provisions of Section 3.4 hereof, in the event that the
joint venture between PMSI and Teijin is terminated and the JV Company is
dissolved or otherwise ceases to be jointly owned by PMSI and Teijin, Teijin may
elect to retain the use of Programs on any or all of the CPUs on which the
Programs have been installed as of the date of termination of the joint venture.
Teijin shall notify PMSI of its election in writing, specifying the CPUs
involved, within thirty (30) days following the termination of the joint
venture. For the sake of clarification, the parties acknowledge and agree that
in the event Teijin elects not to retain PMSI or its designee to provide
technical support services for the retained Programs at PMSI's then-prevailing
standard commercial maintenance rate, Teijin shall no longer be entitled to
receive any new versions, revisions, updates or maintenance releases of any
Programs or any new programs marketed by PMSI or PMSI's subsidiaries.
4.
<PAGE> 151
4. WARRANTIES, REMEDIES, LIMITATION OF LIABILITY
4.1. Infringement Indemnity.
(a) PMSI will defend Teijin and its Authorized Subsidiaries
against a claim that the Existing Programs furnished and used within the scope
of this Agreement infringe any third party patent or copyright or other
intellectual property right ("Claim"), and PMSI will indemnify Teijin and its
Authorized Subsidiaries for any damages finally awarded or any final settlement
amount paid based upon a Claim, provided that: (i) Teijin or an Authorized
Subsidiary notifies PMSI in writing of the details of a Claim within thirty (30)
days after its occurrence, (ii) PMSI has sole control of the defense and all
related settlement negotiations, and (iii) Teijin and its Authorized
Subsidiaries provide PMSI (at PMSI's expense for reasonable out-of-pocket-
expenses) with the assistance, information and authority necessary to perform
the above.
(b) Notwithstanding any other provision of this Agreement,
PMSI shall have no liability for any Claim based on: (i) a modification by
Teijin or any Authorized Subsidiary of the Existing Programs, (ii) use of a
superseded or altered release of the Existing Programs if such Claim would have
been avoided by use of current or unaltered releases of the Existing Programs
that PMSI provides hereunder, or (iii) the combination, operation or use of any
of the Existing Programs furnished under this Agreement with programs or data
not furnished by PMSI if such Claim would have been avoided by use of the
Existing Programs without such programs or data.
(c) In the event the Existing Programs are held or are
believed by PMSI to infringe, PMSI shall have the option, at its expense, to (i)
modify the Existing Programs to be non-infringing, (ii) obtain for Teijin a
license to continue using the Existing Programs, (iii) substitute the Existing
Programs with other software reasonably suitable to Teijin, or (iv) terminate
the license for the infringing Existing Programs and refund a pro-rata portion
of the license fees paid for those Existing Programs, determined by amortizing
the license fees set forth in the Price List and paid for such infringing
Existing Programs on a straight-line basis over a five-year period from the
Effective Date of this Agreement. This Section 4.1 states Teijin's and each
Authorized Subsidiary's exclusive remedy and PMSI's entire liability for any
infringement.
4.2. Warranties, Exclusive Remedies and Disclaimers.
(a) Warranties. For each Program, PMSI warrants for thirty
(30) days from the date such Program is installed at Teijin's or an Authorized
Subsidiary's facilities, as the case may be (the "Installation Date"), that such
Program, unless modi-
5.
<PAGE> 152
fied by Teijin or an Authorized Subsidiary, will perform the functions described
in the documentation provided by PMSI under Section 1.2 when properly operated
on the designated hardware and operating system and PMSI will undertake to
correct any reported, reproducible and repeatable error condition in accordance
with PMSI's then-prevailing Software Support Policies. PMSI does not warrant
that the operation of the Programs will be uninterrupted or error-free, that all
Program errors will be corrected, that the Programs will satisfy Teijin's or any
Authorized Subsidiary's requirements, or that the Programs will operate in the
combinations which Teijin or any Authorized Subsidiary may select for use. For
any breach of the above warranties, Teijin's and each Authorized Subsidiary's
exclusive remedy, and PMSI's entire liability, shall be the exercise of best
efforts by PMSI to correct (including suitable workarounds) the Program errors.
(b) Limitations on Warranties. THE WARRANTIES ABOVE ARE
EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED,
INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT. The warranties above shall apply only if PMSI's
examination discloses to PMSI's satisfaction that alleged defects actually exist
and were not caused by Teijin's or any Authorized Subsidiary's misuse,
unauthorized modifications, neglect, improper installation or testing, attempts
to repair, or the like, or by accident, fire, power surge or failure, or other
hazard. Repair or replacement of a part, code or other item does not extend the
warranty period beyond the initial warranty period which shall begin on the
respective Installation Date.
4.3. Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES UNDER THIS
AGREEMENT, INCLUDING LOSS OF PROFITS, REVENUE, DATA, OR USE, INCURRED BY EITHER
PARTY OR ANY SUBSIDIARY OR OTHER THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT
OR TORT OR BASED ON A WARRANTY, WHETHER OR NOT THE OTHER PARTY OR ANY OTHER
PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. PMSI'S LIABILITY FOR
DAMAGES UNDER THIS AGREEMENT SHALL IN NO EVENT EXCEED THE AMOUNT OF FEES PAID BY
TEIJIN UNDER THIS AGREEMENT, AND IF SUCH DAMAGES RESULT FROM TEIJIN'S AND/OR ANY
AUTHORIZED SUBSIDIARY'S USE OF THE PROGRAMS, SUCH LIABILITY SHALL BE LIMITED TO
A REFUND OF A PRO-RATA PORTION OF THE LICENSE FEES PAID HEREUNDER, DETERMINED BY
AMORTIZING THE LICENSE FEES PAID HEREUNDER ON A STRAIGHT-LINE BASIS OVER A
FIVE-YEAR PERIOD FROM THE EFFECTIVE DATE OF THIS AGREEMENT. SOME STATES AND
JURISDICTIONS OUTSIDE OF THE UNITED STATES DO NOT ALLOW THE LIMITATION OR
EXCLUSION OF IMPLIED WARRANTIES, OR LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL
DAMAGES, SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY. TEIJIN ACKNOWLEDGES
THAT THE ALLOCATION OF RISKS AND BENEFITS UNDER THIS AGREEMENT ARE BASED ON, AND
THE LICENSE FEES UNDER THIS AGREEMENT WOULD BE GREATER IN THE ABSENCE OF, THE
LIMITATIONS DESCRIBED ABOVE.
6.
<PAGE> 153
5. PAYMENT PROVISIONS
5.1. License Fee. In consideration of the licenses and rights granted
to Teijin and its Authorized Subsidiaries under this Agreement, Teijin agrees to
pay PMSI the sum of [*] by wire transfer to the bank account designated by PMSI;
Teijin shall pay [*] of such amount upon the shipment of the "MSI Programs" to
Teijin pursuant to Section 1.3 hereof, and the balance [*] upon the shipment of
the "Polygen Programs" to Teijin pursuant to Section 1.3 hereof.
5.2. Invoicing and Payment of Technical Support and Other Fees. Except
as otherwise provided in the applicable Software Maintenance Agreement, invoices
for the payment of maintenance fees, technical support and all other applicable
charges, reimbursed expenses, and the like shall be payable in full in Japa-
nese yen to the JV Company within (30) days of Teijin's receipt of the invoice
for same. All amounts shall be paid to the JV Company at a place of its choosing
as specified on the invoice. All overdue amounts shall bear interest at the rate
of two percent (2%) per month or the maximum legal rate, if less; provided that
nothing herein shall limit PMSI's right to terminate this Agreement under
Section 3.3 hereof; provided, further, that, except as provided in Section
3.3(a) above, Teijin's failure to pay the maintenance fees specified in Section
2.2 shall not, in and of itself, entitle PMSI to terminate this Agreement or the
licenses hereunder.
5.3. Taxes. The fees and amounts described or listed in this Agreement
or the Price List do not include, and Teijin shall be responsible for, any
taxes, documentary stamps or duties, whether withholding or otherwise, or any
similar assessments that may be applicable under the laws of Japan or any other
applicable law. If PMSI is required to pay sales, use, property, transfer,
value-added, or other federal, state, national, local or foreign taxes or duties
based on the licenses granted under this Agreement, the services provided under
this Agreement, or on Teijin's or its Authorized Subsidiaries' use of the
Programs, then such taxes and duties shall be billed to and paid by Teijin. This
provision shall not apply to taxes based on PMSI's net income. Notwithstanding
the foregoing, Japanese income tax may be withheld by Teijin from the license
fee payable to PMSI pursuant to Section 5.1 hereof, so long as such withholding
is required by Japanese law. Teijin shall provide PMSI with copies of tax
receipts or other documents evidencing that such taxes withheld have been paid
to the Japanese tax authorities. Such evidence shall be forwarded to PMSI no
later than thirty (30) days after such taxes have been paid.
7.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 154
6. STRATEGIC TECHNOLOGY PARTNERSHIP
6.1. Beta Releases. The parties acknowledge that this Agreement shall
serve as the basis of a strategic technology partnership between Teijin and
PMSI, for as long as the JV Company continues to be jointly owned by Teijin and
PMSI, whereby Teijin shall receive beta releases from PMSI regarding future
products of PMSI at the same time as such releases are made available to other
strategic technology partners of PMSI. PMSI agrees to provide such beta releases
to Teijin as described in the preceding sentence, and agrees that no end user in
Japan shall receive software products from PMSI earlier than the same is
received by Teijin (if Teijin so elects to receive such software products).
6.2. Evaluation and Feedback. In return for receipt of such beta
releases from PMSI, Teijin agrees to evaluate and provide written feedback to
PMSI on the performance and functionability of such beta releases. All beta
releases and other related information provided to Teijin pursuant to this
Section 6 shall be subject to the confidentiality provisions of Section 7.1
hereof.
6.3. Product Development Coordination. Teijin agrees that, for as long
as the JV Company continues to be jointly owned by Teijin and PMSI, it will
coordinate its product development activities in the field of computational
chemistry with PMSI such that:
(a) Teijin and its Subsidiaries will not, for as long as the
JV Company is in existence, engage in the development, licensing, or sale of any
product (except for "SetPro" which is currently under development and "Materia"
which is currently being sold) that Competes (as such term is defined below)
with the Programs or any other software product under development or planned to
be developed by PMSI and/or PMSI's subsidiaries which are disclosed to Teijin in
writing in sufficient detail to enable Teijin to comply with the provisions of
this Section 6.3(a). For the purposes of this Agreement, two products shall be
considered to "Compete" with one another if the sale of one product would
substantially substitute for the sale of the other product to such customer.
Without limiting the obligations of the parties hereunder, Teijin and PMSI shall
consult with each other on a yearly basis to determine which products are
competitive products; and
(b) In the event that Teijin and/or any of its Subsidiaries
intends to develop or develops a computational chemistry product (including, if
appropriate, "SetPro") which could be reasonably interfaced, built upon or
otherwise combined with software platforms or products of PMSI or those of
PMSI's subsidiaries, Teijin and/or the Subsidiary in question shall
8.
<PAGE> 155
notify PMSI in writing and shall develop such product, in consultation with
PMSI, to integrate or otherwise be compatible with PMSI's and PMSI's
subsidiaries' software platforms or products .
(c) PMSI grants to Teijin the royalty-free right to use
chemistry backplane and other similar software platforms of PMSI for Teijin to
develop products in accordance with Section 6.3(b) above for sublicense and
distribution through the JV Company and PMSI, and PMSI further grants Teijin the
right to use, but not to sublicense or distribute, products of PMSI developed or
to be developed on chemistry backplane or other similar software platforms of
PMSI in connection therewith.
In the event that the joint venture between PMSI and Teijin is
terminated and the JV Company is dissolved or otherwise ceases to be jointly
owned by PMSI and Teijin, the respective obligations of PMSI and Teijin and
grant of rights to Teijin under Sections 6.1, 6.2 above and this Section 6.3
shall terminate.
6.4. Independent Contractors. Notwithstanding the foregoing, the
relationship of the parties hereto is that of independent contractors and
nothing contained in this Section or Agreement shall be deemed to create a
partnership or agency relationship between them.
7. GENERAL TERMS
7.1. Nondisclosure and Non-Use. Without the prior written consent of
the supplying party, no receiving party, its officers, agents or employees (and
in the case of Teijin, its Authorized Subsidiaries' officers, agents and
employees) shall, in the case of Confidential Information (as defined below) of
a business nature, both during the term of this Agreement and for a period of
three (3) years after termination of this Agreement and of all licenses granted
hereunder for any reason, and in the case of all Confidential Information of a
technical nature, both during the term of this Agreement and for a period of ten
(10) years after termination of this Agreement for any reason, in any manner
whatsoever disclose or communicate such information to a third party, except as
legally required by any governmental or judicial agency, and each party agrees
to keep such Confidential Information strictly confidential. For the purpose of
this Agreement, the term "Confidential Information" shall mean and include any
and all financial and other business information of either party, the Programs,
the documentation related to the Programs, information related to the Programs
(including but not limited to technical information such as design
specifications, instructions and know-how), acquired either directly or
indirectly by either party hereunder; provided, however, that all such
Confidential Information shall be clearly marked as
9.
<PAGE> 156
"confidential" and the term "Confidential Information" shall not include any
information which:
(a) has become or entered the public domain through no fault
of the receiving party; or
(b) was in the demonstrable possession of the receiving party
prior to or at the time of receipt hereunder; or
(c) was or has been obtained lawfully from a third party; or
(d) has been independently developed by the receiving party
without violation of its obligations under this Agreement, and which independent
development is properly documented by such party.
Each party agrees that it shall not use any Confidential Information obtained
from the other for any purpose whatsoever except in a manner expressly provided
for in this Agreement. Teijin agrees to cause each of its Authorized
Subsidiaries to perform the acts required under and to otherwise abide by the
terms and conditions of this Section 7.1.
7.2. Governing Law; Official Language. This Agreement is made in
accordance with and shall be governed and construed under the laws of the State
of Massachusetts, U.S.A., as applied to agreements executed and performed
entirely in Massachusetts by Massachusetts residents and in no event shall this
Agreement be governed by the United Nations Convention on Contracts for the
International Sale of Goods; provided, however, that the provisions of this
Agreement relating to dispute resolution, as set forth in Section 7.3 below,
shall be governed exclusively by the provisions of the United States Arbitration
Act (9 U.S.C. Section 1 et. seq.) notwithstanding any different or contrary
provision of state law. The official text of this Agreement and any Appendix or
any notice given or accounts or statements required by this Agreement shall be
in English. In the event of any dispute concerning the construction or meaning
of this Agreement, reference shall be made only to this Agreement as written in
English and not to any other translation into any other language.
7.3. Dispute Resolution. If a dispute arises between the parties hereto
arising out of or in relation to this Agreement, the parties shall use all
reasonable efforts to resolve the dispute through good faith discussions. The
senior management of each of PMSI and Teijin commits itself to respond promptly
to any such dispute. In the event that PMSI and Teijin are unable, after
exerting all reasonable efforts, to resolve the said dispute, the said dispute
shall be finally settled through binding arbitration on the following basis:
10.
<PAGE> 157
(a) The arbitration shall be conducted by a panel of three (3)
arbitrators under the International Arbitration Rules of the American
Arbitration Association then in force, by which each of PMSI and Teijin agrees
to be bound. Within thirty (30) days after notice of arbitration has been given,
each of PMSI and Teijin shall appoint one (1) arbitrator. The arbitrators
appointed by the parties shall then appoint a third arbitrator, who shall serve
as the presiding arbitrator.
(b) If demand for arbitration is made by Teijin, the place of
arbitration shall be Boston, Massachusetts, U.S.A., and if demand for
arbitration is made by PMSI, the place of arbitration shall be Tokyo, Japan.
(C) The language to be used in the arbitration shall be
English.
(d) Any arbitrator may be of any nationality, and need not be
a lawyer or hold any other professional status or membership .
(e) The arbitral award shall be rendered in writing, shall
state the reasons for the award, and shall be final and binding upon the parties
hereto. In no event shall the arbitral award include a sum of punitive damages.
(f) Judgment upon any award may be entered by any court of
competent jurisdiction, or application may be made to such a court for judicial
acceptance of the award and any appropriate order including enforcement.
(g) Each of PMSI and Teijin shall bear its own expenses and
attorneys' fees in connection with the arbitration.
7.4. Notice. All notices concerning this Agreement shall be written in
the English language and shall be deemed to have been received (a) ten (10) days
after being properly airmailed, postage prepaid, (b) three (3) business days
after being properly sent by commercial overnight courier, or (c) two (2)
business days after being transmitted by confirmed telecopy, in each case
addressed to the parties at the addresses set forth below (or at such other
address for a party as shall be specified by like notice):
if to PMSI, to:
Polygen Corporation
200 Fifth Avenue
Waltham, MA 02154
U.S.A.
Attention: Michael J. Savage, President
11.
<PAGE> 158
if to Teijin, to:
Teijin Limited
Iino Building
1-1, Uchisaiwai-cho 2-chome
Chiyoda-ku, Tokyo 100
Japan
Attention: Takehisa Tokunaga, Manager
Information System Development Department
7.5. Severability and Waiver. In the event any provision of this
Agreement is held to be invalid or unenforceable, the valid or enforceable
portion thereof and the remaining provisions of this Agreement will remain in
full force and effect. Any waiver (express or implied) by either party of any
default or breach of this Agreement shall not constitute a waiver of any other
or subsequent default or breach.
7.6. Export Administration. Teijin hereby acknowledges and agrees that
it will not export or permit or cause the export of any of the Programs, related
documentation or technical data (which includes, among other things, any
technical information relating to the Programs, written or otherwise), or any
product incorporating any Program, related documentation or PMSI technical data,
except to its Authorized Subsidiaries as expressly permitted under Section 1.1
of this Agreement, and will otherwise comply with applicable export
administration regulations of the U.S. Department of Commerce and other United
States government regulations pertaining to the export of technical data and
equipment and products produced therefrom. Teijin agrees to notify each of its
Authorized Subsidiaries of all export administration regulations applicable to
the Programs, related documentation and technical data, and to cause each such
Authorized Subsidiary to comply with such regulations.
7.7. Entire Agreement. This Agreement, together with the Appendix
attached hereto, constitutes the entire, final, complete and exclusive agreement
between the parties hereto and supersedes all previous agreements or
representations, written or oral, with respect to the Programs, the services
specified herein, and the licensing and providing of same under this Agreement.
This Agreement may not be modified or amended except in a writing signed by a
duly authorized representative of each party hereto.
7.8. Nonassignability and Binding Effect. Except (a) as expressly
permitted in this Agreement, and (b) in connection with the sale of all or
substantially all of PMSI's assets, or its business (by merger or otherwise), or
any similar transfer by PMSI, any attempted assignment of the rights or
delegation of the obligations of either party under this Agreement shall be void
without the prior written consent of the non-assigning or non-
12.
<PAGE> 159
delegating party. In the case of any permitted assignment or transfer of or
under this Agreement, this Agreement or the relevant provisions shall be binding
upon, and inure to the benefit of, the successors, executors, heirs,
representatives, administrators and assigns of each of the parties hereto.
7.9. Force Majeure. Neither party shall be liable to the other for its
failure to perform any of its obligations under this Agreement or any Appendix,
except for payment obligations, during any period in which such performance is
delayed because rendered impracticable or impossible due to circumstances beyond
its reasonable control, including but not limited to fire, flood, earthquake,
acts of God, labor or materials trouble or shortage, riots, war, acts or
requirements of the government in any state or applicable jurisdiction, provided
that the party experiencing the delay promptly notifies the other of the delay.
7.10. Survival. The provisions of Sections 3.4, 3.5 and 7.1 shall
survive the termination of this Agreement.
7.11. Parties Advised by Counsel - No Interpretation Against Drafter.
This Agreement has been negotiated between unrelated parties who are
sophisticated and knowledgeable in the matters contained in this Agreement and
who have acted in their own self interest. In addition, each party has been
represented by legal counsel. Accordingly, any rule of law, including Section
1654 of the California Civil Code, as well as any other statute, law, ordinance,
or common law principles or other authority of any jurisdiction of similar
effect, or legal decision that would require interpretation of any ambiguities
in this Agreement against the party who has drafted it is not applicable and is
hereby waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the purpose of the parties, and this Agreement shall
not be interpreted or construed against the party to this Agreement because that
party or any attorney or representative for that party drafted this Agreement or
participated in the drafting of this Agreement.
13.
<PAGE> 160
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be signed and delivered by its duly authorized representative as of the date
first set forth above.
POLYGEN CORPORATION
By: ______________________
Name: Michael J. Savage
Title: President
TEIJIN LIMITED
By: ______________________
Name: Hiroshi Itagaki
Title: President and
Chief Executive Officer
14.
<PAGE> 161
APPENDIX A
PMSI JAPANESE PRICE LIST
A. MSI PROGRAMS:
License Fee:
Y428,241,000
B. POLYGEN PROGRAMS:
License Fee:
Y170,625,000
TOTAL AMOUNT: Y598,866,000
15.
<PAGE> 162
APPENDIX A: PMSI JAPANESE PRICE LIST
Prices are valid only when purchased with hardware Page 1 of 9
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING PRODUCTS PRICE LIST
PRICING SUMMARY
JAPAN END-USER BUNDLED PRICE LIST
EFFECTIVE JANUARY 01, 1992
PRICES ARE VALID ONLY WHEN PURCHASED WITH HARDWARE
Prices include software and documentation, but do not include
hardware, installation, training, or continuing license fees.
SYSTEM SOFTWARE DESKTOP
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBEXX..........BIOGRAF (Indigo)................2.2.............Now.............Y 5,250,000.....Y2,265,000......4320
XGNMEXX.........NMRgraf (Indigo)................2.2.............Now.............Y 3,500,000.....Y1,750,000......2880
POLEXX..........Polaris (Indigo)................3.0.............Now.............Y 2,625,000.....Y1,312,500......2160
XGPGEXX.........POLYGRAF (Indigo)...............2.2.............Now.............Y 7,000,000.....Y3,500,000......5760
QNTXX...........QUANTA (Indigo).................3.2.............Now.............Y 3,750,000.....Y1,875,000......3600 P
QINORGXX........Inorganic Solids Modeling.......3.2.............Now.............Y 3,750,000.....Y1,875,000......2550 P
QPOLYXX.........Polymer Dynamics................3.2.............Now.............Y 3,750,000.....Y1,875,000......2550 P
QPROTXX.........Protein Modeling................3.2.............Now.............Y 3,750,000.....Y1,875,000......2550 P
QSTARXX.........X-Ray Structure Analysis........3.2.............Now.............Y 3,750,000.....Y1,875,000......2550 P
</TABLE>
NOTE: If QUANTA is purchased, at least one copy of networked CHARMm
must be available for use.
SYSTEM SOFTWARE PERSONAL
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBEXX..........BIOGRAF (SGI/IBM)...............2.2.............Now.............Y 7,000,000.....Y3,500,000......5760
XGNMEXX.........NMRgraf (SGI/IBM)...............2.2.............Now.............Y 5,250,000.....Y2,625,000......4320
POLEXX..........Polaris (SGI)...................3.0.............Now.............Y 4,375,000.....Y2,187,500......3600
XGPGEXX.........POLYGRAF (SGI/IBM)..............2.2.............Now.............Y10,500,000.....Y5,250,000......8640
QNTXX...........QUANTA (SGI/IBM)................3.2.............Now.............Y 6,240,000.....Y3,120,000......6000 P
QINORGXX........Inorganic Solids Modeling.......3.2.............Now.............Y 4,992,000.....Y2,496,000......3400 P
QPOLYXX.........Polymer Dynamics................3.2.............Now.............Y 4,992,000.....Y2,496,000......3400 P
QPROTXX.........Protein Modeling................3.2.............Now.............Y 4,992,000.....Y2,496,000......3400 P
QSTARXX.........X-Ray Structure Analysis........3.2.............Now.............Y 4,992,000.....Y2,496,000......3400 P
</TABLE>
NOTE: If QUANTA is purchased, at least one copy of networked CHARMm must
be available for use.
NOTE: Items marked with a "P" are Polygen products; all others are
MSI products.
- --------------------------------------
PRICE PER SERVICE UNIT (SU)
- --------------------------------------
<TABLE>
<CAPTION>
Level 1 Level 2
<S> <C> <C>
Commercial Y220 Y265
Academic Y 35 Y105
</TABLE>
Proprietary and Confidential Polygen/Molecular Simulations Japan Price List
January 27, 1992
<PAGE> 163
Page 2 of 9 Prices are valid only when purchased with hardware
SYSTEM SOFTWARE PROFESSIONAL/POWER
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBHXX.........BIOGRAF(SGI/IBM)............2.2...........Now............Y10,500,000......Y5,250,000......8640
XGNMHXX........NMRgraf(SGI/IBM)............2.2...........Now.............Y8,750,000......Y4,375,000......7200
POLHXX.........Polaris (Stardent/SGI)......3.0...........Now.............Y6,125,000......Y3,062,500......5040
XGPGHXX........POLYGRAF(SGI/IBM)...........2.2...........Now............Y15,750,000......Y7,875,000.....12960
QNTXX..........QUANTA(SGI/IBM).............3.2...........Now.............Y6,240,000......Y3,120,000.....6000P
QINORGXX.......Inorganic Solids Modeling...3.2...........Now.............Y4,992,000......Y2,496,000.....3400P
QPOLYXX........Polymer Dynamics............3.2...........Now.............Y4,992,000......Y2,496,000.....3400P
QPROTXX........Protein Modeling............3.2...........Now.............Y4,992,000......Y2,496,000.....3400P
QSTARXX........X-Ray Structure Analysis....3.2...........Now.............Y4,992,000......Y2,496,000.....3400P
</TABLE>
Note: If QUANTA is purchased, at least one copy of networked CHARMm must be
available for use.
QUANTA OPTIONS SGI/IBM
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
QBDSXX..........Brownian Dynamics Sim.........3.2.......Now.............Y2,500,000......Y1,250,000.......1705P
NOTE: Purchase of Brownian
Dynamics requires purchase
of UHBD.
QCRYSTXX........Crystal Modeling..............3.2.......Now..............Y2,125,000.....Y1,062,500.......1450P
QHELIXXX........Helix Modeling................3.2.......Now..............Y2,125,000.....Y1,062,500.......1450P
QMM2XX..........MM2 Interface.................3.2.......Now..............Y1,250,000.......Y625,000........850P
QPBEXX..........Poisson-Boltzmann Electro.....3.2.......Now..............Y2,125,000.....Y1,062,500.......1450P
Note: Purchase of Poisson-
Boltman Electrostatics
requires purchase of UHBD
QOPINTXX........QUANTA Open Interface.........3.2.......Now...............Y5,000,000.....Y2,500,000.....3410P
QQMIXX..........Quantum Mechanics Interface...3.2.......Now...............Y2,500,000.....Y1,250,000.....1750P
QNMRSXX.........NMR Structure.................3.2.......Dec, 1991.........Y4,992,000.....Y2,496,000.....2400P
</TABLE>
QUANTA NMR SOFTWARE SGI/IBM
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
QMADXX...........MADNMR..................x...............Now.............Y3,750,000......Y1,825,000.......2555P
QMADPXX..........MADNMR+.................x...............Now.............Y6,250,000......Y3,125,000.......4260P
QDISNOEXX........DISCON/NOESYSIM.........x...............Now.............Y2,500,000......Y1,250,000.......1705P
</TABLE>
- ------------------------------------
PRICE PER SERVICE UNIT (SU)
- ------------------------------------
<TABLE>
<CAPTION>
Level 1 Level 2
<S> <C> <C>
Commerical Y220 Y265
Academic Y 35 Y105
</TABLE>
Polygen/Molecular Simulations Japan Price List
January 27, 1992 Proprietary and Confidential
<PAGE> 164
Prices are valid only when purchased with hardware Page 3 of 9
CERIUS SOFTWARE SGI/IBM
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Builder Modules
CSVSXX..........Visualizer (required for all)...2.3................Now..........Y 437,500......Y 218,750.......400
CSCRXX..........Crystals........................2.3................Now..........Y1,312,500......Y 656,250......1200
CSCLRXX.........Surfaces........................2.3.............Mar., 1992......Y 437,500......Y 218,750.......400
CSINTXX.........Interfaces......................3.0.............Mar., 1992......Y 437,500......Y 218,750.......400
CSPLXX..........Polymers........................2.3................Now..........Y 437,500......Y 218,750.......400
Calculation Modules
CSOF1XX.........Open Force Field MM/MD (1)......3.0.............Mar., 1992......Y6,562,500......Y3,281,500......6000
CSOF2XX.........Open Force Field MM/MD (2)......3.0.............Mar., 1992..........TBD.............TBD..........TBD
CSSRPXX.........Sorption........................2.3................Now..........Y2,187,500......Y1,093,750......2000
CSPCKXX.........Crystal Packer..................2.3................Now..........Y1,312,500......Y 656,250......1200
CSMPXX..........MopacUI.........................2.3................Now..........Y 875,000......Y 437,500.......800
CSSMXX..........Statmech........................2.3................Now..........Y2,625,000......Y1,312,500......2400
CSDLSXX.........DLS-UI..........................2.3................Now..........Y1,093,750......Y 546,875......1000
CSDF1XX.........Diffraction I...................2.3................Now..........Y2,625,000......Y1,312,500......2400
CSDF2XX.........Diffraction II..................2.3................Now..........Y1,750,000......Y 875,000......1600
CSDF3XX.........Diffraction III.................2.3................Now..........Y1,093,750......Y 546,875......1000
CSDF4XX.........Diffraction IV..................2.3................Now..........Y2,625,000......Y1,312,500......2400
CSRTVXX.........Rietveld........................3.0.............Mar., 1992......Y1,750,000......Y 875,000......1600
CSHRXX..........HRTEM...........................2.3................Now..........Y2,625,000......Y1,312,500......2400
</TABLE>
NOTE: PRICES INCLUDE FIRST YEAR MAINTENANCE
NOTE: DLS-UI, Sorption, Diffraction I, Diffraction III, HRTEM, Surfaces,
Interfaces, Crystal Packer, and Rietveld require CERIUS Crystals.
NOTE: StatMech requires CERIUS Polymers.
NOTE: When quoting Open Force Field MM/MD, all Builder Modules should be
included in the quote.
NOTE: Open Force Field MM/MD (1) is for Desktop and Personal/Entry
machines only. Open Force Field MM/MD (2) is for Professional
and Power machine only.
AVS CHEMISTRYVIEWER ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
................ChemistryViewer alone............................... .........Y1,312,500......Y656,250.........720
................ChemistryViewer with AVS............................ .........Y1,750,000......Y875,000........1440
</TABLE>
NOTE: First year maintenance is required with AVS and ChemistryViewer
- -------------------------------------
PRICE PER SERVICE UNIT (SU)
- -------------------------------------
<TABLE>
<CAPTION>
Level 1 Level 2
<S> <C> <C>
Commercial Y220 Y265
Academic Y 35 Y105
</TABLE>
Proprietary and Confidential Polygen/Molecular Simulations Japan Price List
January 27, 1992
<PAGE> 165
Page 4 of 9 Prices are valid only when purchase with hardware
CHARMm ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDESKXX.......Desktop CHARMm.................................21.3......Now...........Y3,750,000*...Y1,875,000*....2550P
CPERSXX.......Personal CHARMm................................21.3......Now...........Y5,990,000*...Y2,995,000*....4085P
CPROFXX.......Professional CHARMm............................21.3......Now..........Y10,500,000*...Y5,250,000*....7160P
CPARLXX.......Power CHARMm...................................21.3......Now..........Y18,000,000*...Y9,000,000*...12270P
NOTE: At least one copy of networked CHARMm
must be available for use. Above prices (*)
effective only at time of purchase with QUANTA
and include standard discounts. For individual
CHARMm pricing, see pricing below.
NOTE: Desktop CHARMm is only available for the
SGI Indigo.
CPERSXX.......Personal Stand-alone CHARMm....................21.3......Now.........Y11,980,000......Y5,990,000....8165P
CPROFXX.......Professional Stand-alone CHARMm................21.3......Now.........Y15,000,000......Y7,500,000...10225P
CPARLXX.......Power Batch stand-alone CHARMm.................21.3......Now.........Y22,500,000.....Y11,250,000...15340P
CSUPRXX.......Super Stand-alone CHARMm.......................21.3......Now.........Y55,000,000.....Y27,500,000...37500P
CSUPRLXX......Ltd. License Super CHARMm......................21.3......Now.........Y33,000,000.....Y16,500,000...22500P
CSRCXX........CHARMm Source Code.............................21.3......Now.........Y12,500,000......Y6,250,000....8520P
</TABLE>
NOTE: CHARMm source code may only be purchased in addition to a
standard CHARMm object license.
X-PLOR ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XPERSXX........Personal X-PLOR...............................2.11.......Now............Y7,488,000....Y3,744,000.....5105P
XPROFXX........Professional X-PLOR...........................2.11.......Now...........Y11,000,000....Y5,500,000.....7500P
XPARLXX........Power X-PLOR..................................2.11.......Now...........Y16,000,000....Y8,000,000....10900P
XSUPRXX........Super X-PLOR..................................2.11.......Now...........Y33,500,000...Y16,750,000....22840P
XSUPRLXX.......Ltd. License Super X-PLOR.....................2.11.......Now...........Y19,500,000....Y9,750,000....13295P
XSRCXX.........X-PLOR Source code............................2.11.......Now...........Y12,500,000....Y6,250,000.....8520P
</TABLE>
NOTE: X-PLOR source code may only be purchased
in addition to a standard X-PLOR object license.
UHBD ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UPERSXX..........Personal UHBD...........2.2.............Now.............Y10,000,000.....Y5,000,000.......6820P
UPROFXX..........Professional UHBD.......2.2.............Now.............Y11,250,000.....Y5,625,000.......7670P
UPARLXX..........Power UHBD..............2.2.............Now.............Y12,500,000.....Y6,250,000.......8520P
</TABLE>
GRAF BATCH ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GRAFBXX..........Alliant version........ ...............Now.............Y10,500,000.....Y5,250,000......8640
GRAFBXX..........DEC version............ ...............Now..............Y8,750,000.....Y4,375,000......7200
GRAFBXX..........Convex version......... ...............Now.............Y14,000,000.....Y7,000,000.....11520
GRAFBXX..........Cray version........... ...............Now.............Y17,500,000.....Y8,750,000.....14400
</TABLE>
Polygen/Molecular Simulations Japan Price List
January 27, 1992 Proprietary and Confidential
<PAGE> 166
Prices are valid only when purchased with hardware Page 5 of 9
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING PRODUCTS PRICE LIST
HARDWARE CONFIGURATION SUMMARY
EFFECTIVE OCTOBER 01, 1991
SILICON GRAPHICS IRIS 4D SERIES
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape 0/S Other
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Indigo..................Desktop.................xx......xx......16......432/54..........1/4" cartridge..........4.0.0...Note 2
4D/25 G/TG..............Personal/Entry..........xx......xx......16......380/54..........1/4" cartridge..........3.3.3...Note 2
4D/35 G/TG..............Personal/Entry..........xx......xx......16......380/54..........1/4" cartridge..........3.3.3...Note 2
4D/310 GTX/VGX..........Professional/High-End...xx......xx......16......780/54..........1/4" cartridge..........3.3.3...Note 2
4D/320 GTX/VGX..........Power/High-End..........xx......xx......16......780/54..........1/4" cartridge..........3.3.3...Note 2
4D/340 GTX/VGX..........Power/High-End..........xx......xx......16......780/54..........1/4" cartridge..........3.3.3...Note 2
4D/380 GTX/VGX..........Power/High-End..........xx......xx......16......780/54..........1/4" cartridge..........3.3.3...Note 2
4D/420 GTX/VGX..........Power/High-End..........xx......xx......16......780/54..........1/4" cartridge..........3.3.3...Note 2
4D/440 GTX/VGX..........Power/High-End..........xx......xx......16......780/54..........1/4" cartridge..........3.3.3...Note 2
4D/480 GTX/VGX..........Power/High-End..........xx......xx......16......780/54..........1/4" cartridge..........3.3.3...Note 2
</TABLE>
IBM RISC SYSTEM/6000 SERIES
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk (1) Tape O/S Other
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series 320..............Personal/Entry..........xx......xx......16......320/54..........1/4" cartridge...3.1.5......Notes 2,3
Series 520..............Professional/Entry......xx......xx......16......320/54..........1/4" cartridge...3.1.5......Notes 2,3
Series 530..............Professional/Entry......xx......xx......16......320/54..........1/4" cartridge...3.1.5......Notes 2,3
Series 540..............Power/High-End..........xx......xx......16......320/54..........1/4" cartridge...3.1.5......Notes 2,3
Series 550..............Power/High-End..........xx......xx......16......320/54..........1/4" cartridge...3.1.5......Notes 2,3
</TABLE>
EVANS & SUTHERLAND ESV SERIES
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk (1) Tape O/S Other
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ESV-5...................Entry...................4.0..... .....xx......xx/xx...........xx..............xx
All others..............High-End................4.0..... .....xx......xx/xx...........xx..............xx
</TABLE>
Proprietary and Confidential Polygen/Molecular Simulations Japan Price List
January 27, 1992
<PAGE> 167
Page 6 of 9 Prices are valid only when purchased with hardware
BATCH PROCESSORS
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk (1) Tape O/S Other
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliant FX40,80.........Power/Batch.....xx......xx......xx......xx............8 mm cartridge....2.1.02
Alliant FX2800..........Power/Batch.....xx......xx......xx......xx............8 mm cartridge....2.1.02
Convex C-1..............Power/Batch.....xx......xx......xx......xx............Reel-to-reel........xx....Note 4
Convex C-2..............Power/Batch.....xx......xx......xx......xx............Reel-to-reel........xx
Cray X, Y-MP............Super/Batch.....xx......xx......xx......xx............Reel-to-reel.......6.0
Cray 2..................Super/Batch.....xx......xx......xx......xx............Reel-to-reel.......6.0
DEC.....................Batch...........xx......xx......xx......xx............Reel-to-reel........xx....Note 4
IBM 3090 MVS............Super...........xx......xx......xx......xx............Reel-to-reel........xx....Note 5
IBM 3090 VM.............Super...........xx......xx......xx......xx............Reel-to-reel........xx....Note 5
IBM 3090 AIX............Super...........xx......xx......xx......xx............Reel-to-reel........xx....Note 5
</TABLE>
HARDWARE NOTES
1. Under the Disk column, the first number is the minimum total disk space
required while the second number is the minimum swap space required.
2. FORTRAN is required for the QUANTA Open Interface.
3. The following IBM RS/6000 hardware configuration is required for
QUANTA/CHARMm software: 24-bit 3D graphics, 24-bit Z-buffer, Ethernet
LAN adaptor, and the FORTRAN 2.01 run-time libraries (xlfrte 02.01).
4. CHARMm, X-PLOR, and UHBD are not supported on the Convex C-1.
5. GRAF Batch is not supported on the IBM 3090.
PART NUMBERS
<TABLE>
<CAPTION>
Replace XX in all software part numbers with the following machine codes:
<S> <C> <C> <C> <C> <C>
4D All SGI 4D series except Indigo DT SGI Indigo ST Stardent Titan
ES E&S ESV RS All IBM RS/6000 series
FX Alliant C1 Convex C-1 C2 Convex C-2
CX Cray X-MP CY Cray Y-MP CR Cray 2
MV IBM 3090 MVS VM IBM 3090 VM/CMS AX IBM 3090 AIX
VS DEC VMS
</TABLE>
January 27, 1992 Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential
<PAGE> 168
Prices are valid only when purchased with hardware Page 7 of 9
CONTINUING LICENSE/MAINTENANCE
<TABLE>
<CAPTION>
Part Number Description Academic Price/S.U. COMMERCIAL PRICE/S.U.
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SL1SS...........Level 1 (Standard Support........................Y35.........................Y220
Provides the following services:
Continuing license fee
Upgrade of existing software
Hotline support of products: Calls returned
within 4 hours of receipt
SL2SS...........Level 2 (Scientific Support)......................Y105........................Y265
Provides the following services:
Continuing license fee
Upgrade of existing software
Hotline support of products: Calls returned
within 1 hour of receipt
Monthly status calls from senior scientific
staff members
Monthly report of software problems
Scientific support for modeling problems
</TABLE>
SCIENTIFIC PROGRAMS
<TABLE>
<CAPTION>
Part Number Description Cost/Time Period
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SSCON............Scientific Consulting.................................Y175,000 per day
SPMDL............Molecular Design Lab..................................Y700,000 per week
Seat in Introductory Molecular Modeling Course
Use of software on a dedicated machine
Access to Polygen and Harvard scientists
NOTE: A minimum of two weeks is required.
</TABLE>
TRAINING PROGRAMS
<TABLE>
<CAPTION>
Part Number Description Cost/Time Period
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
.................Introductory Molecular Modeling.......................Y175,000/3 days
.................Advances CHARMm.......................................Y262,500/2 days
.................Advances Protein Modeling.............................Y262,500/2 days
.................Advances Polymer Modeling.............................Y262,500/2 days
</TABLE>
Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential January 27, 1992
<PAGE> 169
Page 8 of 9 Prices are valid only when purchased with hardware
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING SOFTWARE PRODUCTS
POLICIES AND PROCEDURES
EFFECTIVE JANUARY 01, 1992
TITLE
All right, title and interest in and to the software licensed and any related
documentation and any copies thereof which may be made by licensee are and shall
remain the exclusive property of licensor or licensor's licensor, as to software
sublicensed by licensor to licensee; licensor and its licensors are collected
referred to as the software owners. Any third party software designated in the
applicable price list as subject to a separate license agreement is subject to
the terms of the agreement accompanying such software. Each software owner shall
have the right to enforce this agreement against licensee as to such software
owner's software.
SOFTWARE LICENSE FEES
Use of the software by licensee shall be subject to the licensee signing the
Polygen/Molecular Simulations Standard Software License Agreement.
UNBUNDLED FEE
In the instance where software is not purchased with hardware, the software list
price shall be increased by an additional amount equal to twenty percent (20%)
of such software list price (the unbundled fee).
PAYMENT TERMS
Unless otherwise arranged, Polygen/Molecular Simulations will invoice purchaser
at the time of shipment of each installment on payment terms of each on
delivery, except where open account credit is established and maintained to
Polygen/Molecular Simulations' satisfaction, in which case payment terms shall
be net 30 days from date of shipment. Purchaser shall make all payments as
provided without regard to whether purchaser has made or may make any inspection
or use of any goods delivered. Any invoiced amount which is not paid when due
shall bear interest at the rate of 2% per month or the highest rate then
permitted by law, whichever is less.
WARRANTY
The software as delivered and installed on the designated system will conform
substantially to licensor's then current published program specifications.
Licensee acknowledges, however, that the software is of such complexity that it
may have inherent or latent defects and agrees that as licensee's sole remedy
licensor will exercise its best efforts to correct documented program errors
which licensors's analysis indicates are caused by a defect in the unaltered
version of the delivered software as installed on an unaltered designated
system. Licensor does not guarantee the results of any such services or
represent or warrant that any such error will be corrected. The foregoing
warranty extends only to licensee and is not applicable to any transferee of the
software license.
LICENSE TRANSFER POLICY
All computers and software are expected to be written off over four years.
Customers will be able to transfer their current software license to a faster
computer (at the same site) and receive a credit equal to 25% of the lower of
the price actually paid or the current price for the license for each year left
in the four years since shipment to the customer by Polygen/Molecular
Simulations. To receive this credit, the customer must be cur-
<PAGE> 170
Prices are valid only when purchased with hardware Page 9 of 9
rent on maintenance.
TERMS AND CONDITIONS
Software orders must be accompanied by the software quotation with standard
quote terms and conditions and a standard software license agreement. Loaners
must be accompanied by a standard software loaner agreement. Any software
purchase or loaner which does include the above documents or which documents
deviate from standard terms must be approved in advance.
QUOTE VALIDITY
Software quotes are valid for 30 days only.
SOFTWARE LOANER PERIOD
Unless otherwise arranged, software to commercial organizations may only be
loaned for a period of 15 days; software to academic institutions may only be
loaned for a period of 30 days.
<PAGE> 171
Exhibit D-2
English Translation of Articles of Incorporation
CHAPTER I
GENERAL
Article 1 - Corporate Name
The name of the company shall be [Japanese Translation of Company Name]
("Company"). In English, the Company shall be called Teijin Molecular
Simulations Incorporated.
Article 2 - Purpose
The objects and purposes of the Company shall be as follows:
(1) to market, distribute, license, and sell software products;
(2) to sell computer hardware; and
(3) to engage in any other business related to or connected with
the activities described above.
Article 3 - Location of Principal Office
The Company shall have its principal office in Chiyoda-ku, Tokyo.
Article 4 - Method of Public Notice
All public notices by the Company shall be published in the Japanese
Official Gazette.
CHAPTER II
SHARES
Article 5 - Number of Shares Authorized to be Issued and Their
Par Value
The total number of shares authorized to be issued by the Company is
sixteen thousand (16,000) shares, having a par value of fifty thousand yen
(Y50,000) per share.
Article 6 - Types of Shares
The Company may issue one type of shares, Common Shares.
Article 7 - Preemptive Rights
Upon issuance by the Company of any of its unissued authorized shares,
the holders of the existing Common Shares
1
<PAGE> 172
shall have the preemptive right to acquire such number of the newly issued
shares as shall be consistent with their respective proportionate ownership
interest in the Company.
Article 8 - Voting Rights
Except as otherwise provided by law, each Common Share issued and
outstanding shall have one vote.
Article 9 - Types of Share Certificates
All share certificates shall be issued in denominations of one (1), ten
(10), one hundred (100), and one thousand (1,000) shares.
Article 10 - Restriction on Transfer of Shares
Any transfer of Common Shares is subject to consent of the Company's
Board of Directors.
Article 11 - Registration of Shareholders
1. Shareholders (including trustees) and holders of pledges of shares,
or their legal representatives, shall register their names, addresses and seal
impressions on forms provided by the Company.
2. Any changes or alterations of any of the foregoing shall likewise be
registered.
3. Foreign nationals who are not accustomed to impressing their seals
may use their signatures for the above purpose.
Article 12 - Suspension of Shareholders' Registration
1. Entries in the Shareholders' Register will be suspended from the day
following the last day of each business year until the close of the ordinary
general meeting of shareholders pertaining to said business year.
2. In addition to the case provided for in the preceding paragraph,
temporary suspension of any new entry in the Shareholders' Register may be
effected by a resolution of the Board of Directors, when necessary, for a period
not exceeding three (3) months by giving not less than two (2) weeks prior
public notice thereof.
CHAPTER III
GENERAL MEETINGS OF SHAREHOLDERS
Article 13 - Convening of General Meetings of Shareholders
2
<PAGE> 173
1. An ordinary general meeting of shareholders shall be convened within
three (3) months after the close of each business year.
2. An extraordinary general meeting of shareholders may be convened
whenever necessary.
Article 14 - Authority to Convene General Meetings of
Shareholders
Except as otherwise provided by law, general meetings of shareholders
shall be convened by the President of the Company in accordance with a
resolution of the Board of Directors; and if the President is unable to convene
a general meeting of shareholders; another director of the Company, according to
the order previously determined by the Board of Directors, may convene the
meeting.
Article 15 - Location of General Meetings of Shareholders
General meetings of shareholders of the Company shall be held at the
place where principal office of the Company is located.
Article 16 - Notice of General Meetings of Shareholders
1. Notice of the convening of a general meeting of shareholders shall
be dispatched to each shareholder listed in the Shareholders' Register not less
than two (2) weeks prior to the date of such meeting.
2. The period of notice may be shortened or dispensed with for a
particular meeting by the unanimous consent of the shareholders listed in the
Shareholders' Register if all of the shareholders listed in the Shareholders'
Register are present at the meeting and waive the notice requirement.
3. The notice shall set forth the agenda of the meeting.
4. Any such notice shall be in both English and Japanese.
Article 17 - Person to Preside at General Meetings of
Shareholders
The President of the Company shall preside as chairman at all general
meetings of shareholders; and if the President is unable to preside at a general
meeting, a director, according to the order previously determined by the Board
of Directors, may preside at the general meeting.
Article 18 - Resolutions of General Meetings of Shareholders
Except as otherwise provided by law or these Articles of
Incorporation, resolutions of general meetings of shareholders
3
<PAGE> 174
shall be adopted by the affirmative vote of a majority of the voting shares
which are present or represented at general meetings of shareholders at which
shareholders owning a majority of all the issued and outstanding shares entitled
to vote are present or are represented by proxy.
Article 19 - Proxy Voting
1. A shareholder may exercise his vote by proxy.
2. The proxyholder need not be a shareholder, but he shall present to
the Company for each general meeting attended a document of proxy evidencing his
appointment as proxy.
Article 20 - Minutes of General Meetings of Shareholders
Minutes of all general meetings of shareholders of the
Company shall be prepared and shall be verified by the printed names and seals
or the signatures of the chairman and all the directors present, and all such
minutes shall be preserved for ten (10) years at the principal office of the
Company and a copy thereof for five (5) years at each branch office of the
Company.
Article 21 - Compensation of Directors and Statutory Auditors
Compensation, if any, of directors and statutory auditors shall be
separately determined by a resolution of a general meeting of shareholders.
CHAPTER IV
DIRECTORS AND BOARD OF DIRECTORS
Article 22 - Number of Directors
The Company shall have three (3) or more directors.
Article 23 - Election of Directors; No Cumulative Voting
All directors shall be elected by a general meeting of shareholders at
which a quorum of shareholders is present as described in Article 18 hereof.
Cumulative voting shall not apply in the election of directors.
Article 24 - Terms of Office of Directors
1. The term of office of a director shall be until the close of the
ordinary general meeting of shareholders concerning the last settlement of
accounts occurring within two (2) years after his assumption of office.
2. The term of office of a director elected to fill a vacancy or
elected due to an increase in the number of directors shall be concurrent with
the term of office of the directors in office at that time.
4
<PAGE> 175
Article 25 - Board of Directors
The Board of Directors shall decide such matters as are required by law
or by these Articles of Incorporation.
Article 26 - Authority to Convene Meetings of the Board of
Directors
Meetings of the Board of Directors shall be convened by the President
of the Company; and if the President is unable or unwilling to convene a
meeting of the Board of Directors, another director of the Company, according to
the order previously determined by the Board of Directors, may convene the
meeting.
Article 27 - Notice of Meetings of the Board of Directors
1. A notice in Japanese and English convening a meeting of the Board of
Directors shall be dispatched to each director and statutory auditor at least
twenty (20) days prior to the date of such meeting.
2. Notice may be shortened or dispensed with by the unanimous written
consent of all the directors and the statutory auditors.
Article 28 - Person to Preside at Meetings of the Board of
Directors
The Chairman of the Board of Directors shall preside at all meetings of
the Board of Directors, and if the Chairman is unable to preside at a meeting,
another director, according to the order previously determined by the Board of
Directors, may preside at the meeting.
Article 29 - Representative Directors
1. The Board of Directors shall elect one (1) or more representative
directors from among the members of the Board of Directors.
2. The Board of Directors shall elect a President, who shall be a
representative director, from among its members.
Article 30 - Resolutions of Meetings of the Board of Directors
Except as otherwise provided by law or by these Articles of
Incorporation, resolutions of the Board of Directors shall be adopted by the
affirmative vote of a majority of all the directors present at the meeting, who
shall constitute in number a majority of the directors.
Article 31 - Minutes of Meetings of the Board of Directors
Minutes of all meetings of the Board of Directors shall be prepared and
shall be verified by the printed names and
5
<PAGE> 176
seals or by the signatures of the chairman and all the directors present and the
statutory auditors, if present, and all such minutes shall be preserved at the
principal office of the Company for ten (10) years.
CHAPTER V
STATUTORY AUDITOR
Article 32 - Number of Statutory Auditors and Method of Election
1. The Company shall have one (1) statutory auditor.
2. The statutory auditor shall be elected at a general meeting of
shareholders at which a quorum of shareholders is present as described in
Article 18 hereof.
Article 33 - Term of Office of the Statutory Auditor
The term of office of the statutory auditor shall be until the close of
the ordinary general meeting of shareholders concerning the last settlement of
accounts occurring within two (2) years after his assumption of office.
CHAPTER VI
ACCOUNTING
Article 34 - Business Year
The business year of the Company shall commence on the first day of
April of each year and end on the last day of March of the next year.
Article 35 - Pavement of Dividends
1. Dividends shall be paid to shareholders of record (including
registered pledgees) as of the last day of the business year for which the
dividends are declared. Dividends shall not yield interest.
2. If three (3) full years have passed without a dividend having been
received by a particular shareholder after a particular dividend payment date,
the Company shall be released from its obligation to effect such payment.
CHAPTER VII
SUPPLEMENTARY PROVISIONS
Article 36 - Number of Shares to be Issued at Time of Incorporation
The total number of shares to be issued at the time of incorporation of
the Company shall be four thousand (4,000)
6
<PAGE> 177
Common Shares having a par value of fifty thousand yen (Y50,000) per share and
an issue price of fifty thousand Yen (Y50,000) per share.
Article 37 - Initial Term of Office
Notwithstanding the provisions of Article 24 and 33, the term of office
of the initial directors and statutory auditor shall be until the close of the
ordinary general meeting of shareholders concerning the last settlement of
accounts occurring within one (1) year after their assumption of office.
Article 38 - First Business Year
The first business year of the Company shall be from the date of
incorporation of the Company to the last day of March, 1992.
Article 39 - Names and Addresses of the Promoter and Number of Shares to be
Subscribed
The names and addresses of the promoters of the Company and the number
of shares subscribed are as follows:
Name Address Number of Shares
---- ------- ----------------
Teijin Limited 6-7, Minamihommachi 1-chome, 2,000
Chuo-ku, Osaka 541, Japan
Representative Director
Hiroshi Itagaki
In order to establish [Japanese Translation of Company Name]
(Teijin Molecular Simulations Incorporated) and in witness whereof, the
above-named promoter has executed these Articles of Incorporation.
Dated: __________________ 1992
Promoter: Teijin Limited
Representative Director
Hiroshi Itagaki
7
<PAGE> 1
EXHIBIT 10.27
DISTRIBUTORSHIP AGREEMENT
___________ , 1992
between
POLYGEN CORPORATION
and
TEIJIN MOLECULAR SIMULATIONS INCORPORATED
<PAGE> 2
TABLE OF CONTENTS
Page
1. DEFINITIONS ................................................... 1
(a) "Agreement" .......................................... 1
(b) "Customer" ........................................... 2
(c) "Documentation" ...................................... 2
(d) "End User License Agreement" ......................... 2
(e) "PMSI Customers" ..................................... 2
(f) "Software" ........................................... 2
(g) "Subdistributor ...................................... 2
(h) "Sublicense" ......................................... 2
(i) "Territory" .......................................... 2
(j) "Trademarks" ......................................... 2
2. APPOINTMENT AND GRANT OF LICENSE .............................. 2
(a) Distributor License .................................. 2
(b) Limited Demonstration/Training/Support License ....... 3
(c) Documentation License ................................ 3
(d) Grant of Right to Sublicense ......................... 4
(e) General License Provisions ........................... 4
(f) Exclusivity .......................................... 5
3. ORDER PROCEDURE AND SHIPMENT AND DELIVERY TERMS ............... 6
(a) Orders ............................................... 6
(b) Shipping and Delivery ................................ 6
(c) Cancellation of Orders ............................... 7
(d) Localization and Shipment from Japan ................. 7
4. PRICES (LICENSING FEES) AND PAYMENT TERMS ..................... 7
(a) Licensing Fees ....................................... 7
(b) Taxes ................................................ 8
(c) Payment Schedule ..................................... 8
(d) Installation Fees .................................... 8
(e) Maintenance Fees ..................................... 8
(f) Discounts to Subdistributors and Customers ........... 9
(g) Hardware ............................................. 9
5. OBLIGATIONS AND FUNCTIONS OF THE COMPANY ...................... 9
(a) Management and Support of Distribution ............... 9
(b) Relationship with Subdistributors .................... 9
(c) Adequate Company Facilities and Customer Satisfac-
tion ................................................. 10
(d) Promotion and Marketing .............................. 10
(e) Contract Services .................................... 10
(f) Porting .............................................. 10
i.
<PAGE> 3
(g) OEM Arrangements ..................................... 10
(h) Company's General Businesslike Conduct ............... 11
(i) Technical Support and Other Staff .................... 11
(j) Installation ......................................... 11
(k) Keeping PMSI Informed ................................ 11
(l) Reports and Forecasts ................................ 11
(m) Competing Representations ............................ 11
6. OBLIGATIONS OF PMSI ........................................... 12
(a) Availability of Documentation ........................ 12
(b) Training ............................................. 12
(c) Developments ......................................... 12
(d) Third Party OEM Arrangements ......................... 12
(e) Maintenance Upon Termination ......................... 12
(f) Bug Fixes ............................................ 13
7. WARRANTIES, DISCLAIMERS AND LIMITATIONS OF LIABILITY .......... 13
(a) PMSI's Warranty ...................................... 13
(b) Warranty Disclaimers and Limitations ................. 13
(c) No Warranty Pass-Through ............................. 13
(d) Limitation of Liability .............................. 13
8. INDEMNITY ..................................................... 14
(a) Proprietary Rights ................................... 14
(b) Other Indemnity ...................................... 15
9. PROPRIETARY RIGHTS ............................................ 15
(a) Ownership of Proprietary Rights ...................... 15
(b) No Modification ...................................... 15
(c) Trademarks and Trade Names ........................... 15
(d) Nondisclosure and Non-Use ............................ 16
10. COMPLIANCE WITH LAWS .......................................... 17
(a) Export Law Compliance ................................ 17
(b) Foreign Corrupt Practices Act ........................ 18
(c) Licenses and Permits ................................. 18
11. EFFECTIVE DATE, TERM, TERMINATION AND EFFECT OF
TERMINATION ................................................... 18
(a) Effective Date ....................................... 18
(b) Term ................................................. 18
(c) Termination by Either Party .......................... 19
(d) Termination by PMSI .................................. 19
(e) No Other Rights Upon Termination ..................... 19
(f) Effect of Termination ................................ 19
(g) The Company's Duties Upon Termination ................ 20
ii.
<PAGE> 4
12. GENERAL TERMS .................................................. 21
(a) Assignment ............................................ 21
(b) Benefits and Binding Nature of Agreement .............. 21
(c) Entire Agreement ...................................... 21
(d) Force Majeure ......................................... 21
(e) Notice ................................................ 21
(f) Governing Law and Official Language ................... 22
(g) Dispute Resolution .................................... 22
(h) Waiver ................................................ 23
(i) Severability .......................................... 23
(j) Rights and Remedies Cumulative ........................ 23
(k) No Agency - Independent Contractors ................... 23
(l) Captions and Section References ....................... 23
(m) Counterparts .......................................... 24
(n) No Limitation on Supplier PMSI ........................ 24
(o) Parties Advised by Counsel -- No Interpretation
Against Drafter ....................................... 24
(p) Authority to Enter Into and Execute Agreement ......... 24
APPENDICES
Appendix A: Software
Appendix B: Polygen (PMSI) Standard Software License
Agreement
Appendix C: Price List
Appendix D: Wire Transfer (Bank) Information
Appendix E: PMSI Trademarks
iii.
<PAGE> 5
DISTRIBUTORSHIP AGREEMENT
This Distributorship Agreement is made and entered into as of the ____
day of __________ , 1992, by and between Polygen Corporation (doing business as
Polygen Molecular Simulations Incorporated), a Delaware corporation, having its
principal place of business at 200 Fifth Avenue, Waltham, Massachusetts 02154,
U.S.A. ("PMSI") and Teijin Molecular Simulations Incorporated, a corporation
organized under the laws of Japan, with its principal place of business at 1-1,
Uchisaiwai-cho 2-chome, Chiyoda-ku, Tokyo 100, Japan ("the Company").
RECITALS
A. PMSI and Teijin Limited, a corporation organized under the laws of
Japan with its principal office at 6-7, Minamihommachi 1-chome, Chuo-ku, Osaka
541, Japan ("Teijin") have entered into a Joint Venture Agreement dated as of
February 14, 1992 (the "Joint Venture Agreement"), pursuant to which the Company
was organized as a joint venture corporation under the laws of Japan.
B. PMSI and its subsidiaries are engaged in the design, development and
licensing of proprietary computational chemistry software products and related
documentation.
C. It was contemplated by PMSI and Teijin under the Joint Venture
Agreement that the Company be appointed as PMSI's exclusive distributor in the
Territory (as defined below) of the Software (as defined below).
D. PMSI is willing to grant to the Company an exclusive right to market
and sublicense the Software and related documentation in the Territory,
subject to the terms and conditions set forth in this Agreement.
THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto agree as follows:
AGREEMENT
1. DEFINITIONS.
For the purpose of this Agreement, the following terms shall have the
following meanings unless otherwise required by the context:
(a) "Agreement" shall mean this Distributorship Agreement as it may be
amended from time to time.
1.
<PAGE> 6
(b) "Customer" shall mean any third party user to whom the Company has,
in accordance with the terms of this Agreement and the End User License
Agreement, granted the right to use the Software.
(c) "Documentation" shall mean the standard user documentation and
sales support materials which PMSI has published or may publish during the term
of this Agreement.
(d) "End User License Agreement" shall mean the Company's standard end
user license agreement, pursuant to which Customers are Sublicensed by the
Company the right to use the Software. Pursuant to Section 2(d)(ii) hereof, the
End User License Agreement shall contain terms that are substantially the same
as those found in PMSI's Standard Software License Agreement, a current copy of
which is attached hereto as Appendix B.
(e) "PMSI Customers" shall mean any third party user in the Territory
to whom PMSI or PMSI's agent has granted the right to use the Software prior to
the Effective Date hereof.
(f) "Software" shall mean the computational chemistry software products
marketed by PMSI or PMSI's subsidiaries and licensed hereunder, to be provided
in machine readable (object code) form, and set forth on Appendix A attached
hereto, as such Appendix A may be amended from time to time by PMSI and the
Company in accordance with Section 2(a) below.
(g) "Subdistributor" shall mean any subdistributor, agent or value-
added reseller authorized by the Company to distribute the Software.
(h) "Sublicense" shall mean the non-exclusive, non-transferable right
(unless otherwise stated) to sublicense (without the further right to
sublicense) Software pursuant to the End User License Agreement.
(i) "Territory" shall mean the entire country of Japan, which Territory
may be expanded from time to time by mutual agreement of PMSI and Teijin to
include other countries in the Asian Pacific Rim such as Korea and Taiwan.
(j) "Trademarks" shall mean any trademark which PMSI owns or has right
to use as may be designated by PMSI from time to time.
2. APPOINTMENT AND GRANT OF LICENSE.
(a) Distributor License. Subject to the terms and conditions
contained herein, PMSI hereby grants to the Company, and the Company hereby
accepts, the exclusive, non-transferable and indivisible right to market the
Software in the Territory during
2.
<PAGE> 7
the term hereof solely for distribution to Customers located in the Territory.
The Company shall have no right to assign or otherwise transfer any or all of
its rights under this Agreement except as may be otherwise provided in Section
2(d) hereof with respect to the licensing and sublicensing of Customers. It is
the intention of the parties to amend Appendix A of this Agreement from time to
time to include within the definition of "Software" under this Agreement, all
computational chemistry software products that are developed or marketed by PMSI
or its subsidiaries in the future during the term of this Agreement, including
extensions of, replacements for, or improvements of the software products
presently enumerated on Appendix A; provided, however, that PMSI may at its
option exclude from "Software" and the scope of this Agreement, software
products for which it does not have distribution rights for the Territory due to
limitations or restrictions imposed by the licensor or party providing such
software products to PMSI. Notwithstanding the grant of exclusivity under this
Section 2(a), PMSI may, upon prior notice to the Company, license Software to
third parties outside the Territory who will bundle the Software with hardware
and distribute those bundled products in the Territory, provided that such
bundling shall be on an OEM basis.
(b) Limited Demonstration/Training/Support License. PMSI hereby grants
and the Company hereby accepts, subject to the terms and conditions specified
herein, an exclusive license, except for licenses to use the Software for
demonstration and support activities that have been or may be granted by PMSI to
OEM's or computer manufacturers, to use in the Territory, during the term
hereof, the Software for demonstration and technical support of the Software,
and for training of Company and Subdistributor personnel on the Software.
(c) Documentation License. PMSI hereby grants and the Company hereby
accepts, subject to the terms and conditions specified herein, an exclusive
license, except for licenses to use the Documentation for demonstration and
support activities that have been or may be granted by PMSI to OEM's or computer
manufacturers, to use the Documentation in the Territory during the term hereof
for the purpose of enabling the Company to carry out its sublicensing and
support obligations to PMSI Customers and Customers under this Agreement. The
Company may, at its expense, translate, copy and repackage the Documentation as
is necessary in connection with its Sublicensing of the Software pursuant to
Section 2(d) hereof. All translations of the Documentation shall, pursuant to
Section 2(e)(i) hereof, include PMSI copyright and other proprietary rights
notices. PMSI shall retain title to and ownership of any such translations of
the Documentation.
3.
<PAGE> 8
(d) Grant of Right to Sublicense.
(i) The licenses granted under this Agreement are non-transferable,
except that the Company is hereby authorized to grant Sublicenses to Customers
of the Company or to Customers of Subdistributors for use of the Software on any
appropriate platform on the terms and conditions set forth below. Sub-licenses
of the Software may only be granted to Customers who represent that they shall
not use the Software to provide any service bureau or consulting service to any
third party, or to re-export the Software without first obtaining written
permission from PMSI. Software provided to Customers shall be in
machine-readable (object) code.
(ii) Until termination of this Agreement, the Company shall Sublicense
and provide the Software and Documentation to Customers pursuant only to the
terms of an End User License Agreement. Promptly following the execution of this
Agreement, the Company shall, at its expense, develop an End User License
Agreement in the Japanese language, together with an English language
translation of the same, which End User License Agreement shall contain terms
that are substantially equivalent to those set forth in PMSI's Standard Software
License Agreement (Appendix B hereto). Without prejudice to the generality of
the foregoing, and in addition to such terms, the End User License Agreement
shall expressly provide that: (x) the End User License Agreement (and any
related software maintenance agreement) between the Customer and the Company
shall be automatically assigned to PMSI or PMSI's designee in the event of
termination of this Agreement for any reason, and (y) the terms of the End User
License Agreement shall govern and control in the event of any inconsistency
between its terms and those of any purchase order between the Customer and the
Company. The Company shall provide PMSI with copies of its End User License
Agreement and the English translation thereof for PMSI's written approval. The
Company shall not transfer Software to a Customer unless and until the Company
shall have obtained a signed copy of the End User License Agreement from the
Customer, and the Company agrees to obtain prior written approval from PMSI to
any modifications or changes to the pre-approved End User License Agreement.
(iii) The Company agrees to use its reasonable commercial efforts to
ensure that each Customer sublicensed pursuant to this Agreement continues to
comply with the terms of the End User License Agreement. The Company shall
maintain adequate Customer records which may be inspected by PMSI during regular
business hours upon reasonable prior written notice.
(e) General License Provisions. All licenses granted herein shall be
further subject to the following:
4.
<PAGE> 9
(i) The Software and Documentation and any copies thereof shall in all
cases remain the exclusive property of PMSI. The Company agrees to reproduce and
include any PMSI copyright notices and other legends both in and on every copy
of the Software or Documentation in every form, including partial copies and
modifications of the Software.
(ii) Except as expressly set forth in Sections 2(c) and 6(a) hereof,
the Company agrees not to copy, provide, or otherwise make available any of the
Software or Documentation, in whole or in part in any form, to any person other
than employees of the Company, Subdistributors and Customers as provided for in
this Section 2. The Company agrees to take appropriate action by instruction,
agreement, or otherwise with the Company's employees or other persons permitted
access hereunder to the Software or Documentation to satisfy its obligations
under this Agreement with respect to the use, copying, modification, protection,
and security of the Software and Documentation.
(iii) The Company agrees not to license or ship any Software to any
person in the Territory which the Company knows or has reason to know, based
upon information provided to it by the licensee at the time of grant of such
license, will cause or permit the Software ultimately to be shipped, licensed or
used outside of the Territory.
(f) Exclusivity. The grant by PMSI to the Company of certain
"exclusive" rights with respect to the Territory shall mean that, unless
otherwise expressly permitted herein, PMSI shall have no right to, directly or
indirectly, exercise, or permit third parties to exercise, those rights in the
Territory. This shall mean, without limitation, that, without the express
written consent of the Company, PMSI:
(i) shall not itself license or ship any Software to any person in
the Territory; and
(ii) shall not license or ship any Software to any person outside of
the Territory which PMSI knows or has reason to know, based upon information
provided to it by the licensee at the time of grant of such license, will cause
or permit the Software ultimately to be shipped, licensed or used in the
Territory;
(iii) provided, however, that PMSI may:
(x) grant licenses to OEM or computer manufacturers to use the
Software and Documentation for demonstration and support activities; and
(y) grant corporate licenses to third parties outside of the
Territory; provided, however, that in the event
5.
<PAGE> 10
PMSI grants a corporate license to a third party located outside of the
Territory that has subsidiaries or facilities in the Territory, and if, at the
time of entering into such corporate license, PMSI has a reasonable belief that
a significant level (if any) of licenses will be shipped into the Territory as a
consequence of such corporate license, PMSI and the Company shall determine in
good faith the manner in which revenues arising from such third party corporate
license are to be divided between PMSI and the Company. Similarly, in the event
the Company grants a corporate license to a third party located in the Territory
that has subsidiaries or facilities outside of the Territory, and if, at the
time of entering into such corporate license, the Company has a reasonable
belief that a significant level (if any) of licenses will be shipped outside of
the Territory as a consequence of such corporate license, the Company and PMSI
shall determine in good faith the manner in which revenues arising from such
third party corporate license are to be divided between the Company and PMSI.
PMSI shall cause PMSI's subsidiaries to comply with the foregoing provisions and
limitations with respect to any Software which they have, directly or
indirectly, licensed to the Company hereunder.
3. ORDER PROCEDURE AND SHIPMENT AND DELIVERY TERMS.
(a) Orders. The Company shall submit written purchase orders for
Software in accordance with the then current order processing procedures of PMSI
as designated from time to time by PMSI. All purchase orders placed with PMSI
for Software shall be subject to acceptance by PMSI at its principal place of
business, such acceptance not to be unreasonably withheld. PMSI shall use
reasonable efforts to meet the resale requirements of the Company and to make
deliveries in accordance with the delivery date on orders so accepted, but PMSI
shall not be liable to the Company, any Subdistributor or Customer or to any
other party, for PMSI's delay in delivery or failure to deliver any products
that are under development by PMSI at the time an order is received. If the
Company manufactures and packages Software in Japan by replicating "master"
copies of the Software and Documentation provided by PMSI, instead of submitting
purchase orders for each copy of the Software and Documentation to PMSI, the
Company shall, within eight (8) business days of the end of each calendar month,
and in addition to the reports required under Section 5(l) hereof, report to
PMSI the date of shipment and quantity of such Software shipped during such
month and the fees for such Software received from PMSI Customers, Customers and
Subdistributors during such month.
(b) Shipping and Delivery. The following shipping and delivery
procedures shall apply to Software and Documentation ordered by the Company from
PMSI pursuant to Section 3(a) above,
6.
<PAGE> 11
but shall not apply to Software and Documentation that is manufactured and
packaged by the Company in Japan for shipment directly to PMSI Customers,
Customers and Subdistributors in the Territory. In the absence of specific
instructions from the Company, the shipping and packaging method used will be at
the discretion of PMSI. Deliveries shall be made F.O.B. (as defined in Incoterms
1990, Publ. No. 460 of the International Chamber of Commerce) from PMSI's
warehouse or manufacturing facility, and shall be shipped to the Company's
address as first set forth in this Agreement. Unless the Company's order
specifies the name of a carrier, PMSI will select the carrier. PMSI shall bear
the risk of loss until such time as a shipment has been placed on board the
carrier, at which time the risk of loss shall be borne by the Company. Any
claims for damage or loss in transit shall be placed by the Company through the
carrier. All shipments will be shipped by PMSI freight collect, or if prepaid,
such freight will be subsequently billed to the Company, and the Company will
reimburse PMSI for such freight in accordance with Section 4 below. PMSI
reserves the right to deliver in advance of estimated delivery dates.
(c) Cancellation of Orders. The Company may cancel any order (or part
thereof) for Software by giving PMSI written notice of such cancellation.
(d) Localization and Shipment from Japan. The Company will as soon as
practical, at its expense, develop a Japanese language version of the
Documentation and/or manufacture, package and ship the Software to PMSI
Customers, Customers and Subdistributors from the Company's facilities in Japan
in accordance with procedures mutually agreed upon between PMSI and the Company.
Following the localization of the Software and Documentation pursuant to this
Section 3(d), the Company may manufacture and package the Software in Japan and
ship such Software directly to PMSI Customers, Customers and Subdistributors in
the Territory. In such case, the Company shall, within eight (8) business days
of the end of each calendar month, and in addition to the reports required under
Section 5(l) hereof, report to PMSI in English the date of shipment and quantity
of such Software shipped during such month and the fees for such Software
received from PMSI Customers, Customers and Subdistributors during such month.
4. PRICES (LICENSING FEES) AND PAYMENT TERMS.
(a) Licensing Fees. In consideration of the licenses and rights granted
to the Company under this Agreement, the Company agrees to pay PMSI the fees
specified in PMSI's price list attached to this Agreement as Appendix C (the
("Price List"), as in effect when each order is accepted by PMSI, less an
initial discount of [*] of such Price List for the period ending on [*]; such
discount to be re-negotiated
* CONFIDENTIAL TREATMENT REQUESTED
7.
<PAGE> 12
annually in good faith by PMSI and the Company. Such fees are exclusive of, and
the Company shall pay, all shipping charges for each order. PMSI agrees to give
written notice to the Company at least sixty (60) days in advance of the
effective date of any change in its Price List. Such changes in PMSI's Price
List shall be made no more frequently than once during each calendar year, shall
be made only after consultation with the Company, and shall be commercially
reasonable.
(b) Taxes. Any and all fees and other amounts due to PMSI from the
Company under this Agreement are exclusive of, and the Company shall pay and
shall indemnify and hold PMSI harmless against (i) any liability for, any sales,
use, property, license, value added, withholding, import, excise or similar tax,
federal, state or local, U.S. and non-U.S., that may be imposed upon or with
respect to the Software products or their delivery, sale, licensing, use,
ownership or possession, and (ii) any duties, tariffs, customs, import and
related fees and charges, exclusive of taxes based on PMSI's net income.
Notwithstanding the foregoing, Japanese income tax may be withheld by the
Company from the license fees payable to PMSI pursuant to Section 4(a) hereof,
so long as such withholding is required by Japanese law. The Company shall
provide PMSI with copies of tax receipts or other documents evidencing that such
taxes withheld have been paid to the Japanese tax authorities. Such evidence
shall be forwarded to PMSI no later than thirty (30) days after such taxes have
been paid.
(c) Payment Schedule. PMSI shall invoice the Company each time Software
is shipped in accordance with the Price List attached hereto as Appendix C. The
Company will make payment to PMSI by the twentieth (20th) of each month for all
shipments made by the Company or by PMSI in the preceding month in U.S. dollars
by wire transfer of immediately available funds to such bank account as is
specified in Appendix D attached hereto, as may be revised from time to time by
PMSI. Invoices shall be considered paid when PMSI is in receipt of such funds or
upon confirmation of receipt by the bank. From and after the date of any default
of any payment due hereunder, until such default is cured, interest shall accrue
at the rate of two percent (2%) per month on such unpaid amounts, or at the
maximum rate permitted by Massachusetts law, if less.
(d) Installation Fees. The Company may not charge Customers
installation fees except as set forth in Appendix C or as otherwise approved in
writing by PMSI.
(e) Maintenance Fees. For each Software product, maintenance and
updates shall be provided by the Company, on behalf of PMSI, to PMSI Customers
and Customers. This maintenance service shall be provided to PMSI Customers and
Customers in accordance with PMSI's policies and the terms of the Company's
standard
8.
<PAGE> 13
software maintenance agreement to be entered into between the Company and PMSI
Customers or Customers, which terms shall be mutually determined and approved by
PMSI and the Company (the "Software Maintenance Agreement"). Unless and until
the maintenance pricing shall be adjusted by PMSI in accordance with the terms
of this Agreement, the maintenance pricing to be paid to PMSI for a given
Software product shall conform to the maintenance pricing schedule shown in
attached Appendix C, less an initial discount of [*] to be
retained by the Company for the period ending on [*]; such discount
to be re-negotiated annually in good faith by PMSI and the Company. The fee for
the annual maintenance contracts and their renewals shall be paid in advance of
the effective date or renewal date thereof (as the case may be) by the Company
to PMSI.
(f) Discounts to Subdistributors and Customers. Nothing contained
herein shall prevent or otherwise limit the Company's ability to grant
additional discounts to Subdistributors and/or Customers; provided, however,
that all such discounts are and shall be borne entirely by the Company or its
Subdistributor.
(g) Hardware. PMSI shall sell to the Company workstations manufactured
by Silicon Graphics Inc. ("SGI") at [*] of the Japanese list
price for the period ending on March 31, 1993. Thereafter, PMSI shall use
reasonable commercial efforts to extend or continue its existing relationships
with SGI and other value-added reseller hardware vendors in order to offer and
sell such hardware to the Company at a favorable price. The Company agrees to
purchase such hardware from PMSI as long as PMSI is able to offer such hardware
at prices equal to or more favorable than prices available to the Company from
other sources.
5. OBLIGATIONS AND FUNCTIONS OF THE COMPANY.
(a) Management and Support of Distribution. The Company shall be
responsible for managing and supporting the distribution of the Software in the
Territory, including the management of Subdistributors and value-added reseller
relationships.
(b) Relationship with Subdistributors. The Company may, in its
reasonable discretion, appoint and authorize Subdistributors to subdistribute
the Software in the Territory. In doing so, the Company shall enter into
agreements or arrangements with such Subdistributors that maximize, and shall
act to the best interests of, the distribution and support of the Software in
the Territory. The Company shall use reasonable commercial efforts to ensure
compliance by such Subdistributors with all of the Company's obligations under
this Agreement, and at all times transact with such Subdistributors on an
arms'-length basis.
*CONFIDENTIAL TREATMENT REQUESTED
9.
<PAGE> 14
(c) Adequate Company Facilities and Customer Satisfaction. The Company
will establish, staff, equip and maintain such place or places of business in
such location or locations in the Territory as may be necessary to provide good
customer service and support and marketing coverage in the Territory. The
Company shall use its best efforts to ensure customer satisfaction including
maintaining a qualified sales force to promote the sale/Sublicensing of the
Software.
(d) Promotion and Marketing. The Company agrees to use its best efforts
to market, distribute, Sublicense and support the Software throughout the
Territory and further agrees that its marketing and advertising efforts will be
of high quality, in good taste, and will preserve the professional image and
reputation of PMSI and the Software. The Company agrees to include in all
related advertising materials all applicable proprietary rights' notices and any
other notices of PMSI as they appear on or in the Software. PMSI may provide, at
its option, a reasonable amount of advertising material in English, as requested
by the Company, for use in the Company's efforts to market the Software. All
such material shall remain the property of PMSI and, upon request, the Company
agrees to return same to PMSI without cost to PMSI. If required by Customer
demand, the Company shall translate all such materials into the Japanese
language or other language necessary for proper marketing of the Software in the
Territory and provide such materials to PMSI for review. PMSI shall retain title
to and ownership of any such translations. The Company agrees to refrain from
making any claim or representation concerning the Software in excess of those
made by PMSI.
(e) Contract Services. The Company may enter into application contracts
with PMSI Customers or Customers whereby the Company will provide services to
address customer problems related to the use of the Software in the Territory.
The Company may also act as PMSI's agent with respect to the development or
establishment of strategic technology partner (STP) relationships with major
Customers and PMSI Customers in the Territory.
(f) Porting. The Company shall act as PMSI's agent with respect to
establishing and managing porting contracts with computer companies in the
Territory. PMSI agrees to use its best commercial efforts to supply information
necessary to complete porting that is reasonably requested by the Company.
(g) OEM Arrangements. The Company shall endeavour to establish OEM
arrangements with third parties in the Territory, and PMSI agrees to use its
best commercial efforts to supply information necessary to establish such
arrangements.
10.
<PAGE> 15
(h) Company's General Businesslike Conduct. The Company shall at all
times conduct its business in a businesslike manner and will not engage in any
deceptive, misleading, illegal or unethical business practice or any practice
that will reflect unfavorably on PMSI or the Software.
(i) Technical Support and Other Staff. The Company agrees to develop,
maintain and train or otherwise provide a competent technical and scientific
support organization for the Software that will be responsible for the
installation and on-site servicing of the Software, the provision of remote
telephone support services, and the provision of training and application
development to PMSI Customers, Customers and Subdistributors. The Company shall
at all times have a sufficient number of competent office, sales, service and
other employees to carry out its obligations under this Agreement.
(j) Installation. The Company shall be responsible for the installation
of the Software at Customers' facilities, either directly or through
Subdistributors.
(k) Keeping PMSI Informed. The Company agrees to use its best efforts
to keep PMSI fully informed of all governmental, commercial and industrial
activities and plans which affect, or could affect, the Software in the
Territory. The Company shall consult with PMSI regarding any advertising or
trade practice which might affect the good name, trademarks, goodwill, or
reputation of PMSI or the Software.
(l) Reports and Forecasts. The Company shall furnish to PMSI in
English: (i) within eight (8) business days after the end of each calendar
month, a report on the monthly sales and Sublicensing of the Software in the
Territory for the preceding month, identifying the Software shipped by the
Company or Subdistributors to Customers and the respective locations and contact
persons of such Customers, and showing the price and national currency involved
in which the Software was sold/Sublicensed and for which services relating
thereto were provided, and (ii) a rolling six (6)-month forecast of sales on a
monthly basis. The Company shall also furnish PMSI with such other reports as
PMSI may reasonably require from time to time.
(m) Competing Representations. In consideration for the license granted
to the Company under Section 2 above, the Company agrees that during the term of
this Agreement, the Company shall not develop, contract to develop, manufacture,
sell, license, lease or otherwise distribute or exploit in any manner any
product that is directly competitive with the Software in the Territory. For the
purposes of this Agreement, a product shall be considered to be competitive with
the Software if the sale of that product could result in lower sales of the
Software.
11.
<PAGE> 16
6. OBLIGATIONS OF PMSI.
(a) Availability of Documentation. PMSI shall provide the Company with
one (1) copy of all Documentation in the English language including sales
literature, training manuals, operator manuals, graphic materials, and other
documentation relating to the Software. The Company may translate, copy, and
repackage the Documentation as is necessary in accordance with the terms of
Section 2(c) above.
(b) Training. PMSI will provide intensive training for a reasonable
number of the Company's personnel at PMSI's facilities in the U.S.A., for a
reasonable number of days per year. The Company shall pay all travel, living and
incidental expenses of its personnel. PMSI shall also provide technical
instructors for seminars to be held in Japan on a periodic basis, subject to the
availability and reasonable schedules of such instructors. All travel, living
and incidental expenses of such instructors shall be borne by the Company.
(c) Developments. During the term of this Agreement, PMSI will use
reasonable commercial efforts to provide the Company with full and complete
information concerning all improvements, updates, enhancements, and
modifications to the Software and will provide the Company with such
improvements, updates, enhancements and modifications for distribution to
Customers at the same time as PMSI makes any such improvement, update,
enhancement or modification generally available to its other customers. In
addition, if there is any software product which is under development by PMSI
which may be added to the definition of "Software" pursuant to Section 2(a)
hereof, PMSI shall use its reasonable commercial efforts to provide the Company,
on a regular basis as it becomes available, with full and complete information
concerning such product, including, but not limited to, the projected
development and shipping schedule, beta release, documentation and other
information that would assist with pre-marketing preparation.
(d) Third Party OEM Arrangements. In the event that PMSI enters into an
OEM arrangement with a third party relating to the manufacture and distribution
of bundled PMSI software and third party hardware products (as contemplated
under Section 2(a) hereof), which arrangement includes distribution by such
third party in the Territory being served by the Company, PMSI agrees to
negotiate in good faith with the Company to have the Company provide technical
support for such bundled products in the Territory (if necessary). PMSI shall
give advance written notice to the Company of such OEM arrangements if support
by the Company is necessary.
(e) Maintenance Upon Termination. Upon the termination of this
Agreement and provided that the relevant End User License
12.
<PAGE> 17
Agreements and Software Maintenance Agreements have been assigned to PMSI or its
designee in accordance with Section 11(f)(iii) hereof, PMSI shall use its best
efforts to arrange for the continued maintenance and support of PMSI Customers,
Customers and the Software in the Territory.
(f) Bug Fixes. PMSI will use its reasonable commercial efforts to
notify the Company in writing of any outstanding bugs or other defects in the
Software and will endeavour to correct such bugs and defects and supply such
corrections to the Company in accordance with PMSI's reasonable commercial
procedures.
7. WARRANTIES, DISCLAIMERS AND LIMITATIONS OF LIABILITY.
(a) PMSI's Warranty. All Software is warranted as provided in Section
10 of the current form of PMSI's Standard Software License Agreement attached
hereto as Appendix B, the provisions of which are made a part hereof by
reference.
(b) Warranty Disclaimers and Limitations. THE WARRANTIES DESCRIBED IN
7(a) ABOVE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. The
warranties shall apply only if PMSI's examination discloses to PMSI's
satisfaction that alleged defects actually exist and were not caused by misuse,
unauthorized modifications, neglect, improper installation or testing, attempts
to repair, or the like, or by accident, fire, power surge or failure, or other
hazard.
(c) No Warranty Pass-Through. The Company shall not pass through to its
Customers or any other third party the warranties made by PMSI under this
Section 7, shall make no other representations to its Customers or any other
third party on behalf of PMSI, and shall expressly indicate to its Customers
that they must look solely to the Company in connection with any problems,
warranty, claim or other matters concerning the Software. No warranty,
representation or agreement herein shall be deemed to be made for the benefit of
any Customer or any other third party. Notwithstanding the foregoing, the
Company may pass through only to Customers only those warranties specified in
Section 10 of the attached PMSI Standard Software License Agreement (Appendix B
hereto). Repair or replacement of code or other items does not extend the
warranty period beyond the initial warranty period which shall begin on the date
of installation of the Software at the Customer's facilities.
(d) Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS
OF PROFITS, REVENUE, DATA, OR USE, INCURRED BY EITHER PARTY OR ANY THIRD PARTY,
WHETHER IN AN ACTION IN CONTRACT OR TORT OR BASED ON A WARRANTY, EVEN IF THE
13.
<PAGE> 18
OTHER PARTY OR ANY OTHER PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. PMSI'S LIABILITY FOR ANY DAMAGES UNDER THIS AGREEMENT SHALL IN NO EVENT
EXCEED THE AMOUNTS ACTUALLY PAID BY THE COMPANY TO PMSI UNDER THIS AGREEMENT.
SOME STATES AND JURISDICTIONS OUTSIDE OF THE UNITED STATES DO NOT ALLOW THE
LIMITATION OR EXCLUSION OF IMPLIED WARRANTIES, OR LIABILITY FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY. THE
COMPANY ACKNOWLEDGES THAT THE ALLOCATION OF RISKS AND BENEFITS UNDER THIS
AGREEMENT ARE BASED ON, AND THE LICENSE FEES UNDER THIS AGREEMENT WOULD BE
GREATER IN THE ABSENCE OF, THE LIMITATIONS DESCRIBED ABOVE.
8. INDEMNITY.
(a) Proprietary Rights. PMSI will defend the Company against a claim
that the Software furnished and used within the scope of this Agreement
infringes any third party patent, copyright or other intellectual property right
("Claim"), and PMSI will indemnify the Company for any damages finally awarded
by a court of competent jurisdiction based upon a Claim, or any amount that is
paid to finally settle a Claim, so long as PMSI has approved the settlement in
writing, provided that: (i) the Company notifies PMSI in writing within thirty
(30) days of any Claim, (ii) PMSI has sole control of the defense and all
related settlement negotiations, and (iii) the Company provides PMSI with the
assistance, information and authority necessary to perform the above. Reasonable
out-of-pocket expenses incurred by the Company in providing such assistance will
be reimbursed by PMSI.
(i) Notwithstanding the foregoing, PMSI shall have no liability for any
claim of patent or copyright infringement based on: (A) a modification by the
Company of the Software or the use of a superseded or altered release of the
Software if such infringement would have been avoided by the use of current or
unaltered releases of the Software that PMSI provides to Distributor, or (B) the
combination, operation or use of the Software furnished under this Agreement
with products or data not furnished by PMSI if such infringement would have been
avoided by the use of the Software without such products or data.
(ii) In the event the Software is held or is believed by PMSI to
infringe, PMSI shall have the option, at its expense, to (A) modify the Software
to be non-infringing, (B) obtain for the Company the right to continue using and
distributing the Software, or (C) terminate this Agreement with respect to the
infringing Software and refund the fees paid for such Software, to the extent
each Customer, if any, requests a corresponding refund, but in any event the
amount of the refund shall equal [*].
14.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 19
(iii) This Section 8(a) states the Company's exclusive remedy and
PMSI's entire liability for any infringement.
(b) Other Indemnity. The Company shall be responsible and shall
indemnify and hold PMSI harmless for any and all losses, liability or damages
arising out of or incurred in connection with (i) Company's, Subdistributors' or
Customers' marketing, distribution, use or Sublicensing of the Software, except
for valid warranty claims under Section 7 above and valid third party
infringement Claims under Section 8(a) above, and (ii) any unauthorized
representation, warranty or agreement, express or implied, made by Company, any
Subdistributor or Customer to or with any other Customers or any third party
with respect to the Software.
9. PROPRIETARY RIGHTS.
(a) Ownership of Proprietary Rights. PMSI shall retain all of its
rights, title and interest in and to and ownership of all copyrights,
trademarks, trade secrets, patents, mask works and all other industrial and
intellectual property embodied in the Software including any improvements,
updates, enhancements or modifications to the Software. Except as otherwise
expressly provided in this Agreement, the Company has no right, title or
interest in the Software or any industrial or intellectual property relating to
the Software and shall not copy, reproduce, reverse engineer, decompile,
disassemble, or otherwise use, in whole or in part, the Software. The Company
shall keep each and every item to which PMSI retains title free and clear of all
claims, liens, and encumbrances except those of PMSI, and any act of the
Company, voluntary or involuntary, purporting to create a claim, lien, or
encumbrance on such item shall be void.
(b) No Modification. Except as required under Section 3(d) hereof, the
Company shall distribute the Software only in the form shipped by PMSI, and the
Company shall not alter, modify, or change the Software or its package or use in
relation to any product or any trademark of the Company or any third parties
without the prior written consent of PMSI.
(c) Trademarks and Trade Names.
(i) In connection with the distribution or advertising of the Software,
the Company may use such trade names or Trademarks of PMSI listed in Appendix E,
as may be amended from time to time by PMSI. The Company acknowledges the
validity of such Trademarks and trade names and PMSI's ownership thereof. All
such marks and names and any additional marks of which PMSI may in the future be
the proprietor will bear the designation (TM) or the designation (R) as
specified by PMSI. The Company agrees to submit to PMSI any published material
not previously reviewed by
15.
<PAGE> 20
PMSI containing references to the Software for PMSI's approval prior to the
publication or release of such published material, such approval shall not be
unreasonably withheld. The Company shall not challenge PMSI's rights to use the
Trademarks or trade names which PMSI may apply to or use in connection with the
Software. If the Company in the course of its business in the distribution of
the Software acquires any goodwill or reputation in any of the Trademarks or
trade names of PMSI applied thereto, then at the expiration or termination of
this Agreement all such goodwill or reputation automatically shall vest in PMSI
without any separate payment or other consideration of any kind to Distributor,
and the Company agrees to take all such actions necessary to effect such
vesting.
(ii) The Company shall, at the request and expense of PMSI, do such
acts or things as PMSI may reasonably require for the purpose of obtaining,
maintaining, enforcing and preserving any of the Trademarks, trade names or
other proprietary rights of PMSI in the Territory; provided, however, that the
Company agrees that only PMSI has the right to enjoin any infringement or
registration by a third party of the trademarks, trade names or similar rights.
In the event that any unlawful copying of the Software, infringement of PMSI's
rights in the Software, or infringement or registration by a third party of
the trademarks, trade names or other property rights of PMSI in the Territory
comes to the attention of the Company, the Company shall immediately inform PMSI
in writing, stating the full facts of the infringement or registration known to
it, including the identity of the suspected infringer or registrant, the place
of the asserted infringement or registration and evidence thereof. The Company
agrees to cooperate fully with PMSI at the expense of PMSI if PMSI sues to
enjoin such infringements or to oppose or invalidate any such registration.
Notwithstanding the foregoing, in the event that PMSI refuses in writing to
enjoin such infringements or to oppose or invalidate any such registration
following a written request by the Company to do so, the Company may, at its
expense, sue to enjoin or otherwise oppose any such infringement of PMSI's
proprietary rights.
(iii) Except as permitted herein, the Company shall not (nor shall it
attempt to) adopt, use, or register any acronym, Trademark, trade names or other
marketing name of PMSI or any confusingly similar work or symbol as part of the
Company's own name or the name of any of its affiliates or the names of the
products it markets.
(d) Nondisclosure and Non-Use.
(i) Without the prior written consent of the supplying party, no
receiving party, its officers, directors, agents or employees shall, in the case
of Confidential Information (as defined hereafter) of a business nature, both
during the term of
16.
<PAGE> 21
this Agreement and for a period of three (3) years after termination of this
Agreement, and in the case of Confidential Information of a technical nature,
both during the term of this Agreement and for period of ten (10) years after
the termination of this Agreement, in any manner whatsoever disclose or
communicate such information to a third party, except as legally required by a
governmental or judicial agency, and each party agrees to keep such Confidential
Information strictly confidential. For the purpose of this Agreement, the term
"Confidential Information" shall mean and include any and all financial and
other information relating to PMSI's or the Company's business and their
respective relationships with Teijin, the Software, the Documentation,
information relating to the Software (including but not limited to technical
information such as design specifications, instructions, and know-how) acquired
either directly or indirectly by either party hereunder; provided, however, that
all such Confidential Information shall be clearly marked as "confidential" and
the term "Confidential Information" shall not include any information which:
(1) has become or entered the public domain through no fault
of the receiving party; or
(2) was in the demonstrable possession of the receiving party
prior to or at the time of receipt hereunder; or
(3) was or has been obtained lawfully from a third party; or
(4) has been independently developed by the receiving party
without violation of its obligations under this Agreement, and which independent
development is properly documented by such party.
(ii) Each party agrees, during the term of this Agreement, that it
shall not use any Confidential Information obtained from the other for any
purpose whatsoever except in a manner expressly provided for in this Agreement.
The provisions of this Section 9(d) shall survive the termination of this
Agreement.
10. COMPLIANCE WITH LAWS.
(a) Export Law Compliance. The Company understands and recognizes that
the Software and other materials made available to it hereunder may be subject
to the export administration regulations of the United States Department of
Commerce and other United States government regulations related to the export of
technical data and equipment and products produced therefrom. The Company
represents that it is familiar with and agrees to comply with all such
regulations, including any future modifications thereof, in connection with the
distribution of the Soft-
17.
<PAGE> 22
ware. The Company agrees that it will not export or re-export outside the
Territory, directly or indirectly, any Software or technical data relating to
the Software without the prior written consent of PMSI and without complying
with all applicable regulations. The Company agrees to obtain the same agreement
from each of its Subdistributors and Customers. The Company hereby agrees to
indemnify and hold PMSI harmless from any breach of this Section 10(a) by it,
any Subdistributor and/or Customer.
(b) Foreign Corrupt Practices Act. The Company hereby agrees to refrain
from making any payments to third parties which could cause PMSI to violate the
U.S. Foreign Corrupt Practices Act. The Company hereby agrees to indemnify and
hold PMSI harmless from any breach of this Section 10(b).
(c) Licenses and Permits. The Company shall be responsible for
obtaining at its own expense, and shall use its best efforts to obtain, any and
all required non-U.S. governmental authorizations, including without limitation
any import licenses and foreign exchange permits. The Company shall provide
proof of compliance with required non-U.S. governmental authorization to PMSI
upon request. PMSI shall not be liable if any authorization is delayed, denied,
revoked, restricted or not renewed. The Company shall bear all such risks and
costs caused thereby. In addition, if this Agreement is terminated due to a
default of the Company, PMSI or its designee shall be exclusively entitled,
free-of-charge, to any rights the Company may have acquired as a result of, or
in, governmental approvals, authorizations or permits. If this Agreement is
terminated due to a default of PMSI, PMSI shall pay the Company a reasonable sum
to be mutually agreed upon for the exclusive transfer to PMSI or its designee of
any such rights the Company may have acquired as a result of, or in, said
governmental approvals, authorizations or permits. The Company agrees to use its
best efforts to effect the transfer of interest in the foregoing approvals,
authorizations or permits to PMSI or to any third party so identified by PMSI.
11. EFFECTIVE DATE, TERM, TERMINATION AND EFFECT OF TERMINATION.
(a) Effective Date. This Agreement shall become effective on the later
to occur of: (i) the date of execution of this Agreement by the parties, or (ii)
the date on which Japanese governmental clearance (whether in the form of an
approval, notification or otherwise) is obtained with respect to Japanese
foreign exchange and trade control regulations (the "Effective Date")
(b) Term. This Agreement shall commence on the Effective Date and shall
remain in full force and effect until the dissolution of the Company pursuant to
the terms of the Joint Venture Agreement or unless the parties otherwise agree.
18.
<PAGE> 23
(c) Termination by Either Party. Notwithstanding anything in this
Agreement to the contrary, either party shall have the right, in addition and
without prejudice to any other rights or remedies, to terminate this Agreement
immediately upon written notice to the other party if the other party commits
any material breach of any of the terms of this Agreement which, in the case of
a breach capable of remedy, shall not have been remedied within thirty (30) days
of the receipt by the party in default of notice specifying the breach and
requiring its remedy.
(d) Termination by PMSI. PMSI shall have the right, in addition and
without prejudice to any other rights or remedies, to terminate this Agreement:
(i) upon the termination of the Joint Venture Agreement for any
reason, unless otherwise mutually agreed between PMSI and Teijin where all the
shares of the Company are acquired by either Teijin or PMSI pursuant to Section
12 of the Joint Venture Agreement; or
(ii) upon written notice at any time for breach of Section 9
hereof (Proprietary Rights).
(e) No Other Rights Upon Termination. It is expressly understood and
agreed that the rights of termination as provided in this Agreement are absolute
and that both parties hereto have considered the making of expenditures in
preparing for performance as contemplated by this Agreement and possible losses
and damages incident and resulting to them that may result in the event of its
termination. Therefore, in agreeing to said terms of termination it is with the
full knowledge of such possibilities and except as provided herein neither party
hereto shall be responsible to the other for compensation, damages or otherwise
by reason of such termination of this Agreement at any time. Further, no
payments in the nature of severance payments shall be due either party upon
termination of this Agreement at any time. Without limiting the generality of
the foregoing, the Company understands and acknowledges that any contracts or
other arrangements it enters into with any third parties with respect to the
Software will be subject and subordinate to the rights of termination set forth
in this Agreement. The Company will indemnify and hold PMSI harmless from any
and all liability, loss, damages, costs or expenses incurred by PMSI in
connection with claims by any such third party made because of the termination
of this Agreement.
(f) Effect of Termination. Termination or expiration of this Agreement
shall not affect any other rights of either party which may have accrued up to
the date of such termination or expiration and the Company shall not be relieved
of any obligation for any sums due to PMSI for the Software or services covered
by purchase orders accepted prior to termination or expi-
19.
<PAGE> 24
ration or any confidentiality obligations of the Company under Section 9(d) of
this Agreement. Upon termination:
(i) the due date of all outstanding invoices to the Company for the
Software shall automatically be accelerated to become due and payable by
immediate wire transfer on the effective date of termination, even if longer
terms have been previously agreed to;
(ii) all orders or portions thereof remaining unshipped as of the
effective date of termination shall automatically be cancelled; and
(iii) all executed End User License Agreements and Software
Maintenance Agreements between Customers and the Company then in effect, and all
rights and obligations thereunder, shall immediately be assigned by the Company
to PMSI or its designee.
(g) The Company's Duties Upon Termination. Upon the termination or
expiration of this Agreement, the Company agrees to do the following:
(i) refrain thereafter from representing itself as a distributor of
PMSI or using any trademarks or trade names of PMSI;
(ii) immediately return to PMSI or immediately destroy (A) all
Confidential Information of PMSI including but not limited to advertising matter
and (B) all other printed material in its possession or under its control
containing or bearing any trademark or trade names of PMSI;
(iii) take all appropriate steps to remove and cancel its listing in
telephone books, directories, public records or elsewhere, which state or
indicate that the Company is a distributor of PMSI;
(iv) make available to PMSI for a period of one (1) year for
inspection and copying all books and records of the Company that pertain to the
Company's performance of and compliance with its obligations, warranties and
representations under this Agreement; and
(v) immediately cease using the applicable Software, and certify in
writing to PMSI within thirty (30) days after such termination that the Company
has either destroyed, permanently erased or returned to PMSI the Software, all
related Documentation and all copies. This requirement applies to copies in all
forms, partial and complete, in all types of media and computer memory and
storage, and whether or not modified or merged into other programs or materials.
20.
<PAGE> 25
12. GENERAL TERMS.
(a) Assignment. Except in connection with the sale of all or
substantially all of PMSI's assets, or its business (by merger or otherwise), or
any similar transfer by PMSI, any attempted assignment of the rights or
delegation of the obligations under this Agreement shall be void without the
prior written consent of the non-assigning or non-delegating party.
(b) Benefits and Binding Nature of Agreement. In the case of any
permitted assignment or transfer of or under this Agreement, this Agreement or
the relevant provisions shall be binding upon, and inure to the benefit of, the
successors, executors, heirs, representatives, administrators and assigns of the
parties hereto.
(c) Entire Agreement. This Agreement, together with the Appendices
attached hereto and incorporated herein by reference, embodies the final,
complete and exclusive understanding between the parties, and replaces and
supersedes all previous agreements, understandings or arrangements between the
parties with respect to its subject matter. No modification or waiver of any
terms or conditions hereof, nor any representations or warranties shall be of
any force or effect unless such modification or waiver is in writing and signed
by an authorized officer of each party hereto. It is expressly agreed that any
of the terms and conditions of the Company's purchase order or the like shall be
superseded by the terms and conditions of this Agreement.
(d) Force Majeure. Neither party shall be liable to the other for its
failure to perform any of its obligations under this Agreement, except for
payment obligations, during any period in which such performance is delayed
because rendered impracticable or impossible due to circumstances beyond its
reasonable control, including but not limited to fire, flood, earthquake,
explosion, acts of God, labor trouble or shortage, inability to obtain or
shortage of materials, equipment or transportation, insurrections, riots, war,
acts or requirements of the governments in any state, provided that the party
experiencing the delay promptly notifies the other of the delay. Any
installation, warranty, technical support, consulting services and other
services to be performed at the Company's facility may not be performed if PMSI
reasonably believes conditions at such facility represent a safety or health
hazard to any PMSI employee.
(e) Notice. All notices concerning this Agreement shall be written in
the English language and shall be deemed to have been received (i) ten (10) days
after being properly airmailed, postage prepaid, (ii) three (3) business days
after being properly sent by commercial overnight courier, or (iii) two (2)
business days after being transmitted by confirmed telecopy, in each case
addressed to the relevant party at its address first
21.
<PAGE> 26
set forth in this Agreement to the attention of Michael J. Savage, President, in
the case of PMSI, and to the attention of ______________________________________
in the case of the Company.
(f) Governing Law and Official Language. This Agreement is made in
accordance with and shall be governed and construed under the laws of the State
of Massachusetts, U.S.A., as applied to agreements executed and performed
entirely in Massachusetts by Massachusetts residents and in no event shall this
Agreement be governed by the United Nations Convention on Contracts for the
International Sale of Goods; provided, however, that the provisions of this
Agreement relating to dispute resolution, as set forth in Section 12(g) below,
shall be governed exclusively by the United States Arbitration Act (9 U.S.C.
Section et. seq.) notwithstanding any different or contrary provision of state
law. The official text of this Agreement and any Appendix or any notice given or
accounts or statements required by this Agreement shall be in English. In the
event of any dispute concerning the construction or meaning of this Agreement,
reference shall be made only to this Agreement as written in English and not to
any other translation into any other language.
(g) Dispute Resolution. If a dispute arises between the parties arising
out of or in relation to this Agreement, the parties shall use all reasonable
efforts to resolve the dispute through good faith discussions. The senior
management of each of PMSI and the Company commits itself to respond promptly to
any such dispute. In the event that PMSI and the Company are unable, after
exerting all reasonable efforts, to resolve the said dispute, the said dispute
shall be finally settled through binding arbitration on the following basis:
(i) The arbitration shall be conducted by a panel of three (3)
arbitrators under the International Arbitration Rules of the American
Arbitration Association then in force, by which each of PMSI and the Company
agrees to be bound. Within thirty (30) days after notice of arbitration has been
given, each of PMSI and the Company shall appoint one (1) arbitrator. The
arbitrators appointed by the parties shall then appoint a third arbitrator, who
shall serve as the presiding arbitrator.
(ii) If demand for arbitration is made by the Company, the place of
arbitration shall be Boston, Massachusetts, U.S.A, and if demand for arbitration
is made by PMSI, the place of arbitration shall be Tokyo, Japan.
(iii) The language to be used in the arbitration shall be English.
22.
<PAGE> 27
(iv) Any arbitrator may be of any nationality, and need not be a
lawyer or hold any other professional status or membership.
(v) The arbitral award shall be rendered in writing, shall state the
reasons for the award, and shall be final and binding upon the parties. In no
event shall the arbitral award include a sum for punitive damages.
(vi) Judgment upon any award may be entered by any court of
competent jurisdiction, or application may be made to such a court for judicial
acceptance of the award and any appropriate order including enforcement.
(vii) Each of PMSI and the Company shall bear its own expenses and
attorneys' fees in connection with the arbitration.
(h) Waiver. Any waiver (express or implied) by either party of any
default or breach of this Agreement shall not constitute a waiver of any other
or subsequent default or breach.
(i) Severability. In the event that any provision of this Agreement
shall be unenforceable or invalid under any applicable law or be so held by
applicable court decision, such unenforceability or invalidity shall not
render this Agreement unenforceable or invalid as a whole, and, in such event,
such provision shall be changed and interpreted so as to best accomplish the
objectives of such unenforceable or invalid provision within the limits of
applicable law or applicable court decisions.
(j) Rights and Remedies Cumulative. Except as expressly provided
herein, the rights and remedies provided in this Agreement shall be cumulative
and not exclusive of any other rights and remedies provided by law or otherwise.
(k) No Agency - Independent Contractors. The Company shall act as an
independent contractor under the terms of this Agreement. The Company is not,
and shall not be deemed to be, an employee, agent, partner or legal
representative of PMSI for any purpose. The Company shall not be entitled to
enter into any contracts in the name of, or on behalf of PMSI, nor shall the
Company be entitled to pledge the credit of PMSI in any way or hold itself out
as having authority to do so.
(l) Captions and Section References. The section headings appearing in
this Agreement are inserted only as a matter of convenience and in no way
define, limit, construe or describe the scope or extent of such section or in
any way affect such section.
23.
<PAGE> 28
(m) Counterparts. This Agreement may be executed in counterparts with
the same force and effect as if each of the signatories had executed the same
instrument.
(n) No Limitation on Supplier PMSI. Nothing in this Agreement shall be
construed so as to preclude PMSI from selling or otherwise marketing any of the
Software to (i) any Customer outside the Territory, (ii) any value added
reseller or original equipment manufacturers outside the Territory, or (iii) any
other distributors outside the Territory.
(o) Parties Advised by Counsel -- No Interpretation Against Drafter.
This Agreement has been negotiated between unrelated parties who are
sophisticated and knowledgeable in the matters contained in this Agreement and
who have acted in their own self interest. In addition, each party has been
represented by legal counsel. Accordingly, any rule of law, including Section
1654 of the California Civil Code, as well as any other statute, law, ordinance,
or common law principles or other authority of any jurisdiction of similar
effect, or legal decision that would require interpretation of any ambiguities
in this Agreement against the party who has drafted it is not applicable and is
hereby waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the purpose of the parties, and this Agreement shall
not be interpreted or construed against any party to this Agreement because that
party or any attorney or representative for that party drafted this Agreement or
participated in the drafting of this Agreement.
(p) Authority to Enter Into and Execute Agreement. Both parties
represent and warrant to each other that they have the right and lawful
authority to enter into this Agreement for the purposes herein and that there
are no other outstanding agreements or obligations inconsistent with the terms
and provisions hereof.
24.
<PAGE> 29
Appendix A
SOFTWARE
(attached)
26.
<PAGE> 30
APPENDIX B
POLYGEN (PMSI) STANDARD SOFTWARE LICENSE AGREEMENT
(attached)
27.
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be signed and delivered by their duly authorized representatives as of the
date first set forth above.
POLYGEN CORPORATION
By: ________________________
Michael J. Savage,
President
TEIJIN MOLECULAR SIMULATIONS INCORPORATED
By: ______________________
Name:
Title:
25.
<PAGE> 32
Appendix A: Software
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING PRODUCTS PRICE LIST
PRICING SUMMARY
JAPAN END-USER BUNDLED PRICE LIST
EFFECTIVE JANUARY 01, 1992
--------------------------------------------------
PRICES ARE VALID ONLY WHEN PURCHASED WITH HARDWARE
--------------------------------------------------
Prices include software documentation, but do not include
hardware, installation, training, or continuing license fees.
<TABLE>
<CAPTION>
SYSTEM SOFTWARE DESKTOP
- -----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBEXX......... BIOGRAF (Indigo)..................2.2...............Now.......Yen 5,250,000....Yen 2,265,000.......4320
XGNMEXX........ NMRgraf (Indigo)..................2.2...............Now.......Yen 3,500,000....Yen 1,750,000.......2880
POLEXX......... Polaris (Indigo)..................3.0...............Now.......Yen 2,625,000....Yen 1,312,500.......2160
XGPGEXX........ POLYGRAF (Indigo).................2.2...............Now.......Yen 7,000,000....Yen 3,500,000.......5760
QNTXX.......... QUANTA (Indigo)...................3.2...............Now.......Yen 3,750,000....Yen 1,875,000.......3600
QINORGXX....... Inorganic Solids Modeling.........3.2...............Now.......Yen 3,750,000....Yen 1,875,000.......2550
QPOLYXX........ Polymer Dynamics..................3.2...............Now.......Yen 3,750,000....Yen 1,875,000.......2550
QPROTXX........ Protein Modeling..................3.2...............Now.......Yen 3,750,000....Yen 1,875,000.......2550
QSTARXX........ X-Ray Structure Analysis..........3.2...............Now.......Yen 3,750,000....Yen 1,875,000.......2550
</TABLE>
NOTE: If QUANTA is purchased, at least one copy of networked CHARMm
must be available for use.
<TABLE>
<CAPTION>
SYSTEM SOFTWARE PERSONAL
- -----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBEXX......... BIOGRAF (SGI/IBM).................2.2...............Now.......Yen 7,000,000...Yen 3,500,000.......5760
XGNMEXX........ NMRgraf (SGI/IBM).................2.2...............Now.......Yen 5,250,000...Yen 2,625,000.......4320
POLEXX......... Polaris (SGI).....................3.0...............Now.......Yen 4,375,000...Yen 2,187,500.......3600
XGPGEXX........ POLYGRAF (SGI/IBM)................2.2...............Now.......Yen 10,500,000...Yen 5,250,000.......8640
QNTXX.......... QUANTA (SGI/IBM)..................3.2...............Now.......Yen 6,240,000...Yen 3,120,000.......6000
QINORGXX....... Inorganic Solids Modeling.........3.2...............Now.......Yen 4,992,000...Yen 2,496,000.......3400
QPOLYXX........ Polymer Dynamics..................3.2...............Now.......Yen 4,992,000...Yen 2,496,000.......3400
QPROTXX........ Protein Modeling..................3.2...............Now.......Yen 4,992,000...Yen 2,496,000.......3400
QSTARXX........ X-Ray Structure Analysis..........3.2...............Now.......Yen 4,992,000...Yen 2,496,000.......3400
</TABLE>
NOTE: If QUANTA is purchased, at least one copy of networked CHARMm
must be available for use.
--------------------------------------
PRICE PER SERVICE UNIT (SU)
--------------------------------------
<TABLE>
<CAPTION>
Level 1 Level 2
<S> <C> <C>
Commercial Yen 220 Yen 265
Academic Yen 35 Yen 105
</TABLE>
--------------------------------------
Proprietary and Confidential Polygen/Molecular Simulations Japan Price List
January 30, 1992
<PAGE> 33
System Software Professional/Power
________________________________________________________________________________
<TABLE>
<CAPTION>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
XGBHXX..........BIOGRAF (SGI/IBM)..............2.2.........Now..........Yen10,500,000...Yen5,250,000......8640
XGNMHXX.........NMRgraf (SGI/IBM)..............2.2.........Now..........Yen 8,750,000...Yen4,375,000......7200
POLHXX..........Polaris (Stardent/SGI).........3.0.........Now..........Yen 6,125,000...Yen3,062,500......5040
XGPGHXX.........POLYGRAF (SGI/IBM).............2.2.........Now..........Yen15,750,000...Yen7,875,000.....12960
QNTXX...........QUANTA (SGI/IBM)...............3.2.........Now..........Yen 6,240,000...Yen3,120,000......6000
QINORGXX........Inorganic Solids Modeling......3.2.........Now..........Yen 4,992,000...Yen2,496,000......3400
QPOLYXX.........Polymer Dynamics...............3.2.........Now..........Yen 4,992,000...Yen2,496,000......3400
QPROTXX.........Protein Modeling...............3.2.........Now..........Yen 4,992,000...Yen2,496,000......3400
QSTARXX.........X-Ray Structure Analysis.......3.2.........Now..........Yen 4,992,000...Yen2,496,000......3400
Note: If QUANTA is purchased, at least one copy of networked CHARMm must be available for use.
QUANTA Options SGI/IBM
_______________________________________________________________________________________________________________
<CAPTION>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
QBDSXX..........Brownian Dynamics Sim. ........3.2.........Now..........Yen 2,500,000...Yen1,250,000......1705
Note: Purchase of Brownian Dynamics requires purchase of UHBD.
QCRYSTXX........Crystal Modeling...............3.2.........Now..........Yen 2,125,000...Yen1,062,500......1450
QHELIXXX........Helix Modeling.................3.2.........Now..........Yen 2,125,000...Yen1,062,500......1450
QMM2XX..........MM2 Interface..................3.2.........Now..........Yen 1,250,000...Yen 625,000.......850
QPBEXX..........Poisson-Boltzmann Electro......3.2.........Now..........Yen 2,125,000...Yen1,062,500......1450
Note: Purchase of Poisson-Boltmann Electrostatics requires purchase of UHBD.
QOPINTXX........QUANTA Open Interface..........3.2.........Now..........Yen 5,000,000...Yen2,500,000......3410
QQMIXX..........Quantum Mechanics Interface....3.2.........Now..........Yen 2,500,000...Yen1,250,000......1705
QNMRSXX.........NMR Structure..................3.2......Dec, 1991.......Yen 4,992,000...Yen2,496,000......2400
QUANTA NMR Software SGI/IBM
_______________________________________________________________________________________________________________
<CAPTION>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
QMADXX..........MADNMR..........................x..........Now..........Yen 3,750,000...Yen1,825,000......2555
QMADPXX.........MADNMR+.........................x..........Now..........Yen 6,250,000...Yen3,125,000......4260
QDISNOEXX.......DISCON/NOESYSIM.................x..........Now..........Yen 2,500,000...Yen1,250,000......1705
</TABLE>
__________________________________
<TABLE>
PRICE PER SERVICE UNIT(SU)
__________________________________
<CAPTION>
<S> <C> <C>
Level 1 Level 2
Commercial Yen 220 Yen 265
Academic Yen 35 Yen 105
</TABLE>
__________________________________
Polygen/Molecular Simulations Japan Price List
January 30, 1992 Proprietary and Confidential
<PAGE> 34
CERIUS SOFTWARE SGI/IBM
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann.SU
- --------------- ------------------------------ -------- ------------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
BUILDER MODULES
CSVSXX Visualizer (required for all) 2.3 Now Yen 437,500 Yen 218,750 400
CSCRXX Crystals 2.3 Now Yen1,312,500 Yen 656,250 1200
CSCLRXX Surfaces 2.3 Mar., 1992 Yen 437,500 Yen 218,750 400
CSINTXX Interfaces 3.0 Mar., 1992 Yen 437,500 Yen 218,750 400
CSPLXX Polymers 2.3 Now Yen 437,500 Yen 218,750 400
CALCULATION MODULES
CSOF1XX Open Force Field MM/MD(1) 3.0 Mar., 1992 Yen6,562,500 Yen3,281,500 6000
CSOF2XX Open Force Field MM/MD(2) 3.0 Mar., 1992 TBD TBD TBD
CSSRPXX Sorption 2.3 Now Yen2,187,500 Yen1,093,750 2000
CSPCKXX Crystal Packer 2.3 Now Yen1,312,500 Yen 656,250 1200
CSMPXX MopacU1 2.3 Now Yen 875,000 Yen 437,500 800
CSSMXX Statmech 2.3 Now Yen2,625,000 Yen1,312,500 2400
CSDLSXX DLS-UI 2.3 Now Yen1,093,750 Yen 546,875 1000
CSDF1XX Diffraction I 2.3 Now Yen2,625,000 Yen1,312,500 2400
CSDF2XX Diffraction II 2.3 Now Yen1,750,000 Yen 875,000 1600
CSDF3XX Diffraction III 2.3 Now Yen1,093,750 Yen 546,875 1000
CSDF4XX Diffraction IV 2.3 Now Yen2,625,000 Yen1,312,500 2400
CSRTVXX Rietveld 3.0 Mar., 1992 Yen1,750,000 Yen 875,000 1600
CSHRXX HRTEM 2.3 Now Yen2,625,000 Yen1,312,500 2400
</TABLE>
NOTE: PRICES INCLUDE FIRST YEAR MAINTENANCE
NOTE: DLS-UI, Sorption, Diffraction I, Diffraction III, HRTEM,
Surfaces, Interfaces, Crystal Packer, and Rietveld require CERIUS
Crystals.
NOTE: StatMech requires CERIUS Polymers.
NOTE: When quoting Open Force Field MM/MD, all Builder Modules should
be included in the quote.
NOTE: Open Force Field MM/MD) (1) is for Desktop and Personal/Entry
machines only. Open Force Field MM/MD (2) is for Professional and Power
machine only.
AVS CHEMISTRYVIEWER
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann.SU
- --------------- ------------------------------ -------- ------------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Chemistry Viewer alone Yen1,312,500 Yen 656,250 720
Chemistry Viewer with AVS Yen1,750,000 Yen 875,000 1440
</TABLE>
NOTE: First year maintenance is required with AVS and Chemistry Viewer
------------------------------
Price per Service Unit (SU)
------------------------------
Level 1 Level 2
Commercial Yen220 Yen265
Academic Yen 35 Yen105
------------------------------
Proprietary Polygen/Molecular Simulations Japan Price List January 30, 1992
and
Confidential
<PAGE> 35
<TABLE>
<CAPTION>
CHARMm ALL PLATFORMS
- ----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDESKXX........Desktop CHARMm...................21.3........Now........Yen 3,750,000*.......Yen 1,875,000*....... 2550
CPERSXX........Personal CHARMm..................21.3........Now........Yen 5,990.000*.......Yen 2,995.000*....... 4085
CPROFXX........Professional CHARMm..............21.3........Now........Yen10,500.000*.......Yen 5,250.000*....... 7160
CPARLXX........Power CHARMm.....................21.3........Now........Yen18,000.000*.......Yen 9,000.000*.......12270
</TABLE>
NOTE: At least one copy of networked CHARMm must be available for use.
Above prices (*) effective only at time of purchase with QUANTA
and include standard discounts. For individual CHARMm pricing,
see pricing below.
NOTE: Desktop CHARMm is only available for the SGI Indigo.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CPERSXX........Personal Stand-alone CHARMm......21.3........Now........Yen11,980,000........Yen 5,990,000........ 8165
CPROFXX........Professional Stand-alone CHARMm..21.3........Now........Yen15,000.000........Yen 7,500.000........10225
CPARLXX........Power Batch stand-alone CHARMm...21.3........Now........Yen22,500.000........Yen11,250.000........15340
CSUPRXX........Super stand-alone CHARMm.........21.3........Now........Yen55,000.000........Yen27,500.000........37500
CSUPRLXX.......Ltd. License Super CHARMm........21.3........Now........Yen33,000.000........Yen16,500.000........22500
CSRCXX.........CHARMm Source Code...............21.3........Now........Yen12,500.000........Yen 6,250.000........ 8520
</TABLE>
NOTE: CHARMm source code may only be purchased in addition to a
standard CHARMm object license.
<TABLE>
<CAPTION>
X-PLOR ALL PLATFORMS
- ----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XPERSXX........Personal X-PLOR..................2.11........Now........Yen 7,488,000........Yen 3,744,000........ 5105
XPROFXX........Professional X-PLOR..............2.11........Now........Yen11,000.000........Yen 5,500.000........ 7500
XPARLXX........Power X-PLOR.....................2.11........Now........Yen16,000.000........Yen 8,000.000........10900
XSUPRXX........Super X-PLOR.....................2.11........Now........Yen33,500,000........Yen16,750,000........22840
XSUPRLXX.......Ltd. License Super X-PLOR........2.11........Now........Yen19,500.000........Yen 9,750.000........13295
XSRCXX.........X-PLOR Source Code...............2.11........Now........Yen12,500.000........Yen 6,250.000........ 8250
</TABLE>
NOTE: X-PLOR source code may only be purchased in addition to a
standard X-PLOR object license.
<TABLE>
<CAPTION>
UHBD ALL PLATFORMS
- ----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UPERSXX........Personal UHBD....................2.2.........Now........Yen10,000,000........Yen 5,000,000........ 6820
UPROFXX........Professional UHBD................2.2.........Now........Yen11,250.000........Yen 5,625.000........ 7670
UPARLXX........Power UHBD.......................2.2.........Now........Yen12,500.000........Yen 6,250.000........ 8250
</TABLE>
<TABLE>
<CAPTION>
GRAF Batch ALL PLATFORMS
- ----------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN. SU
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GRAFBXX........Alliant version.................. ..........Now........Yen10,500,000........Yen 5,250,000........ 8640
GRAFBXX........DEC version...................... ..........Now........Yen 8,750.000........Yen 4,375.000........ 7200
GRAFBXX........Convex version................... ..........Now........Yen14,000.000........Yen 7,000.000........11520
GRAFBXX........Cray version..................... ..........Now........Yen17,500.000........Yen 8,750.000........14400
</TABLE>
<TABLE>
<S> <C> <C>
Polygen/Molecular Simulations Japan Price List
January 30, 1992 Proprietary and Confidential
</TABLE>
<PAGE> 36
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING PRODUCTS PRICE LIST
HARDWARE CONFIGURATION SUMMARY
EFFECTIVE OCTOBER 01, 1991
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SILICON GRAPHICS IRIS 4D SERIES
- -----------------------------------------------------------------------------------------------------------------------------------
MACHINE CATEGORY MFLOPS MIPS MEMORY DISK(1) TAPE O/S OTHER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Indigo................ Desktop......................... xx.... xx...... 16... 432/54....... 1/4" cartridge.... 4.0.0... Note 2
4D/25 G/TG............ Personal/Entry.................. xx.... xx...... 16... 380/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/35 G/TG............ Personal/Entry.................. xx.... xx...... 16... 380/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/310 GTX/VGX........ Professional/High-End........... xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/320 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/340 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/380 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/420 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/440 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
4D/480 GTX/VGX........ Power/High-End.................. xx.... xx...... 16... 780/54....... 1/4" cartridge.... 3.3.3... Note 2
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
IBM RISC SYSTEM/6000 SERIES
- -----------------------------------------------------------------------------------------------------------------------------------
MACHINE CATEGORY MFLOPS MIPS MEMORY DISK(1) TAPE O/S OTHER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series 320............ Personal/Entry.................. xx.... xx...... 16... 320/54....... 1/4" cartridge.... 3.1.5... Notes 2.3
Series 520............ Professional/Entry.............. xx.... xx...... 16... 320/54....... 1/4" cartridge.... 3.1.5... Notes 2.3
Series 530............ Personal/Entry.................. xx.... xx...... 16... 320/54....... 1/4" cartridge.... 3.1.5... Notes 2.3
Series 540............ Power/High-End.................. xx.... xx...... 16... 320/54....... 1/4" cartridge.... 3.1.5... Notes 2.3
Series 550............ Power/High-End.................. xx.... xx...... 16... 320/54....... 1/4" cartridge.... 3.1.5... Notes 2.3
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
EVANS & SUTHERLAND ESV SERIES
- -----------------------------------------------------------------------------------------------------------------------------------
MACHINE CATEGORY MFLOPS MIPS MEMORY DISK(1) TAPE O/S OTHER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ESV-5................. Entry........................... 4.0... ...... xx... xx/xx....... ......xx.... ....... xx
All others............ High-End........................ 4.0... ...... xx... xx/xx....... ......xx.... ....... xx
</TABLE>
Proprietary and Confidential Polygen/Molecular Simulations Japan Price List
January 30, 1992
<PAGE> 37
- --------------------------------------------------------------------------------
BATCH PROCESSORS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape O/S Other
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliant FX40,80.........Power/Batch.....xx......xx......xx......xx......8 mm cartridge.........2.1.02
Alliant FX2800..........Power/Batch.....xx......xx......xx......xx......8 mm cartridge.........2.1.02
Convex C-1..............Power/Batch.....xx......xx......xx......xx.......Reel-to-reel.............xx....Note 4
Convex C-2..............Power/Batch.....xx......xx......xx......xx.......Reel-to-reel.............xx
Cray X,Y-MP.............Super/Batch.....xx......xx......xx......xx.......Reel-to-reel............6.0
Cray 2..................Super/Batch.....xx......xx......xx......xx.......Reel-to-reel............6.0
DEC.....................Batch...........xx......xx......xx......xx.......Reel-to-reel.............xx....Note 4
IBM 3090 MVS............Super...........xx......xx......xx......xx.......Reel-to-reel.............xx....Note 5
IBM 3090 VM.............Super...........xx......xx......xx......xx.......Reel-to-reel.............xx....Note 5
IBM 3090 AIX............Super...........xx......xx......xx......xx.......Reel-to-reel.............xx....Note 5
</TABLE>
- -------------------------------------------------------------------------------
HARDWARE NOTES
- -------------------------------------------------------------------------------
1. Under the Disk column, the first number is the minimum total disk space
required while the second number is the minimum swap space required.
2. FORTRAN is required for the QUANTA Open Interface.
3. The following IBM RS/6000 hardware configuration is required for
QUANTA/CHARMm software: 24-bit 3D graphics, 24-bit Z-buffer, Ethernet
LAN adaptor, and the FORTRAN 2.01 run-time libraries (xlfrte 02.01).
4. CHARMm, X-PLOR, and UHBD are not supported on the Convex C-1.
5. GRAF Batch is not supported on the IBM 3090.
- ------------------------------------------------------------------------------
PART NUMBERS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Replace XX in all software part numbers with the following machine codes:
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4D All SGI 4D series except Indigo DT SGI Indigo ST Stardent Titan
ES E&S ESV RS All IBM RS/6000 series
FX Alliant C1 Convex C-1 C2 Convex C-2
CX Cray X-MP CY Cray Y-MP CR Cray 2
MV IBM 3090 MVS VM IBM 3090 VM/CMS AX IBM 3090 AIX
VS DEC VMS
</TABLE>
January 30, 1992 Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential
<PAGE> 38
CONTINUING LICENSE/MAINTENANCE
<TABLE>
<CAPTION>
Part Number Description Academic Price/S.U. Commercial Price/S.U.
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SL1SS ..........Level 1 (Standard Support)............Yen35.....................Yen220
Provides the following services:
Continuing license fee
Upgrade of existing software
Hotline support of products: Calls returned within 4 hours of receipt
SL2SS ..........Level 2 (Scientific Support) .........Yen105....................Yen265
Provides the following services:
Continuing license fee
Upgrade of existing software
Hotline support of products: Calls returned within 1 hour of receipt
Monthly status calls from senior scientific staff members
Monthly report of software problems
Scientific support for modeling problems
</TABLE>
SCIENTIFIC PROGRAMS
<TABLE>
<CAPTION>
Part Number Description Cost/Time Period
- ----------------------------------------------------------------
<S> <C> <C>
SSCON...........Scientific Consulting...........Yen175,000 per day
SPMDL...........Molecular Design Lab............Yen700,000 per week
Seat in Introductory Molecular Modeling Course
Use of software on a dedicated machine
Access to Polygen and Harvard scientists
NOTE: A minimum of two weeks is required.
</TABLE>
TRAINING PROGRAMS
<TABLE>
<CAPTION>
Part Number Description Cost/Time Period
- ------------------------------------------------------------------------
<S> <C> <C>
................Introductory Molecular Modeling.........Yen175,000/3 days
................Advanced CHARMm.........................Yen262,500/2 days
................Advanced Protein Modeling...............Yen262,500/2 days
................Advanced Polymer Modeling...............Yen262,500/2 days
</TABLE>
<TABLE>
<S> <C> <C>
Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential January 30, 1992
</TABLE>
<PAGE> 39
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING SOFTWARE PRODUCTS
POLICIES AND PROCEDURES
EFFECTIVE JANUARY 01, 1992
TITLE
All right, title and interest in and to the software licensed and any related
documentation and any copies thereof which may be made by licensee are and shall
remain the exclusive property of licensor or licensor's licensor, as to software
sublicensed by licensor to licensee; licensor and its licensors are collected
referred to as the software owners. Any third party software designated in the
applicable price list as subject to a separate license agreement is subject to
the terms of the agreement accompanying such software. Each software owner shall
have the right to enforce this agreement against licensee as to such software
owner's software.
SOFTWARE LICENSE FEES
Use of the software by licensee shall be subject to the licensee signing the
Polygen/Molecular Simulations Standard Software License Agreement.
UNBUNDLED FEE
In the instance where software is not purchased with hardware, the software list
price shall be increased by an additional amount equal to twenty percent (20%)
of such software list price (the unbundled fee).
PAYMENT TERMS
Unless otherwise arranged, Polygen/Molecular Simulations will invoice purchaser
at the time of shipment of each installment on payment terms of each on
delivery, except where open account credit is established and maintained to
Polygen/Molecular Simulations' satisfaction, in which case payment terms shall
be net 30 days from date of shipment. Purchaser shall make all payments as
provided without regard to whether purchaser has made or may make any inspection
or use of any goods delivered. Any invoiced amount which is not paid when due
shall bear interest at the rate of 2% per month or the highest rate then
permitted by law, whichever is less.
WARRANTY
The software as delivered and installed on the designated system will conform
substantially to licensor's then current published program specifications.
Licensee acknowledges, however, that the software is of such complexity that it
may have inherent or latent defects and agrees that as licensee's sole remedy
licensor will exercise its best efforts to correct documented program errors
which licensors's analysis indicates are caused by a defect in the unaltered
version of the delivered software as installed on an unaltered designated
system. Licensor does not guarantee the results of any such services or
represent or warrant that any such error will be corrected. The foregoing
warranty extends only to licensee and is not applicable to any transferee of the
software license.
LICENSE TRANSFER POLICY
All computers and software are expected to be written off over four years.
Customers will be able to transfer their current software license to a faster
computer (at the same site) and receive a credit equal to 25% of the lower of
the price actually paid or the current price for the license for each year left
in the four years since shipment to the customer by Polygen/Molecular
Simulations. To receive this credit, the customer must be cur-
<PAGE> 40
rent on maintenance.
TERMS AND CONDITIONS
Software orders must be accompanied by the software quotation with standard
quote terms and conditions and a standard software license agreement. Loaners
must be accompanied by a standard software loaner agreement. Any software
purchase or loaner which does include the above documents or which documents
deviate from standard terms must be approved in advance.
QUOTE VALIDITY
Software quotes are valid for 30 days only.
SOFTWARE LOANER PERIOD
Unless otherwise arranged; software to commercial organizations may only be
loaned for a period of 15 days: software to academic institutions may only be
loaned for a period of 30 days.
<PAGE> 41
APPENDIX B
POLYGEN (PMSI) STANDARD SOFTWARE LICENSE AGREEMENT
This Software License Agreement (the "Agreement") is made and entered
into as of _________________, 19__ by and between Polygen Corporation having a
principal place of business at 200 Fifth Avenue, Waltham, MA 02154 ("LICENSOR")
and ______________________________________________ having a principal place of
business at _____________________________________________ ("LICENSEE").
1. DEFINITIONS.
A. "Software" shall mean each computer program, in machine readable
form, furnished by LICENSOR to LICENSEE hereunder, including related supporting
materials and all updates thereto, if any.
B. "Designated System" shall mean the computer hardware identified by
the serial number(s) and located at the address set forth below.
2. GRANT OF LICENSE.
Subject to the terms and conditions of this Agreement, LICENSOR hereby
grants to LICENSEE a non-exclusive, non-transferable license to use the Software
to operate and run solely on a Designated System for the term of this Agreement.
3. REPRODUCTION.
LICENSEE may make no more than three (3) copies of each Software
program for LICENSEE's own use on the Designated System for back-up purposes
only. Except as provided in this paragraph 3, LICENSEE shall make no additional
copies of, nor allow others to copy any of the Software without LICENSOR's prior
written consent. LICENSE shall duplicate the copyright notice and any
proprietary rights legend on all Software copies hereunder.
4. TITLE.
All right, title and interest in and to the Software licensed hereunder
and any related documentation, and any copies thereof which may be made by
LICENSEE are and shall remain the exclusive property of LICENSOR or LICENSOR's
licensor, as to Software sublicensed by LICENSOR to LICENSEE hereunder (LICENSOR
and its licensors are collectively referred to as the "Software Owners"). Any
third party Software designated in the applicable
1.
<PAGE> 42
price list as subject to a separate license agreement is subject to the terms of
the agreement accompanying such Software. Each Software Owner shall have the
right to enforce this Agreement against Licensee as to such Software Owner's
Software.
5. PROTECTION OF LICENSED SOFTWARE.
The Software is acknowledged by LICENSEE to include confidential and
proprietary information and trade secrets of the Software Owners in which
LICENSEE has no rights other than as granted by this Agreement. LICENSEE
acknowledges that unauthorized copying or disclosure of the Software will cause
irreparable injury to the Software Owners and that the Software Owners shall be
entitled to, among other things, enjoin such activities. LICENSEE agrees not to
provide or otherwise make available any Software in any form without LICENSOR's
prior written consent. LICENSEE agrees that the Software is being licensed
hereunder for LICENSEE's internal use and that LICENSEE may not make the
Software available to third parties in connection with any form of time-sharing
service. LICENSEE agrees not to create source code for the Software nor to
translate the Software into any other computer or natural language, nor to
attempt to do so or provide assistance to others to do so. LICENSEE further
agrees to take appropriate action to satisfy its obligations hereunder with
respect to use, copying , modification and protection of the Software by
suitable instructions to its employees or other persons who are permitted access
to the Software, or to any documentation describing or disclosing the same.
LICENSEE shall have no liability under this paragraph 5 for disclosure
of information supplied by LICENSOR if and to the extent that: (a) LICENSEE
establishes that the information was already known to LICENSEE, without
obligation to keep it confidential, at the time of its receipt from LICENSOR, as
disclosure, (b) LICENSEE establishes that the information was received by
LICENSEE in good faith from a third party lawfully in possession thereof and
having no obligation to keep such information confidential, or (c) LICENSEE
establishes that the information was publicly known at the time of its receipt
by LICENSEE from LICENSOR or has become publicly known other than by a breach of
the Agreement or other action by LICENSEE.
6. SOFTWARE INSTALLATION/ACCEPTANCE.
Unless otherwise agreed in writing, Software installation shall take
place following execution of this Agreement upon Designated System(s) which
LICENSEE has notified LICENSOR in writing are operational and available for
installation during normal working hours on normal working days, excepting
LICENSEE or LICENSOR-observed holidays. LICENSEE shall pay to LICENSOR an
installation fee in the amount indicated in the Quotation of
2.
<PAGE> 43
which this Agreement forms a part. LICENSEE shall allow LICENSOR full access to
the installation site during Software installation and shall provide reasonable
working facilities and scratch media as required in order to effect
installation, all without charge. LICENSOR installation personnel shall subject
the Software as installed on a Designated System to LICENSOR's then current
standard published software acceptance test procedure, and LICENSEE agrees to
provide written confirmation of successful completion of such test procedure on
demand. LICENSEE's use of the Software for any purpose other than testing or
training purposes shall be deemed to constitute acceptance.
7. SOFTWARE LICENSE FEES.
Use of the Software by LICENSEE shall be subject to the payment of
Initial and Quarterly License Fees for each Software product on each Designated
System in the amounts specified on the Quotation of which this Agreement forms a
part. Initial License Fees shall be due and payable as of the date on which
LICENSEE accepts or is deemed to accept the Software ("Acceptance Date"), and
Quarterly License fees shall be due and payable commencing on the first day of
the month which is the same as or first follows the Acceptance Date, inclusive
of a pro rata amount for the period between the Acceptance Date and the first
payment date, and on the first day of every third month thereafter. All license
fees shall be due and payable in United States Dollars.
Quarterly License Fee rates shall remain in effect for four (4)
consecutive quarters. Subject to the foregoing, LICENSOR shall have the right to
increase such rates prospectively on an annual basis in a uniform manner with
respect to all LICENSEEs upon three (3) months advance written notice to take
effect with the quarter which first commences following the expiration of such
notice period.
8. TERM AND TERMINATION.
A. This Agreement is effective from the date first written above
("Commencement Date") until termination as provided herein. Upon termination,
LICENSEE shall cease all use of the Software and shall return to LICENSOR the
original(s) and any and all copies of the Software made or furnished hereunder.
B. This Agreement may be terminated by LICENSEE by written notice to
LICENSOR given no later than sixty (60) days prior to any anniversary of the
Commencement Date, to take effect as of such anniversary date.
C. This Agreement may be terminated by LICENSOR sixty (60) days
following the giving of written notice to LICENSEE upon the occurrence of the
following:
3.
<PAGE> 44
(a) Upon failure of LICENSEE to perform any of its existing or future
obligations hereunder if such breach shall continue for a period of fifteen (15)
days after receipt by LICENSEE of written notice from LICENSOR specifying such
breach;
(b) In the event (i) LICENSEE makes a general assignment for the
benefit of creditors, or transfers all or substantially all of its assets to a
receiver or a trustee in bankruptcy, (ii) a proceeding is commenced against
LICENSEE for relief under bankruptcy or similar laws and such proceeding is not
dismissed within thirty (30) days, or (iii) LICENSEE is adjudged insolvent or
bankrupt; or
(c) Upon any attempt by LICENSEE to assign this Agreement or any rights
or obligations hereunder without LICENSOR's prior written consent.
9. INDEMNITY.
LICENSOR will defend at its own expense any action against LICENSEE to
the extent it is based on a claim of direct infringement of a United States
patent, trademark or copyright by the LICENSOR Software licensed hereunder, and
pay those damages and costs finally awarded against LICENSEE in such action
which are attributable to such claim, provided LICENSEE notifies LICENSOR
promptly in writing of any such action and all prior related claims and gives
LICENSOR (at LICENSOR's expense) sole control of the defense of same and all
negotiations for its settlement or compromise. Should any such Software become,
or in LICENSOR's opinion be likely to become, the subject of a claim of
infringement, LICENSEE shall permit LICENSOR, at its option and expense, to
either: (a) procure for LICENSEE the right to continue using the Software, or
(b) replace or modify the Software to become noninfringing. Notwithstanding the
foregoing, LICENSOR shall have no liability for any claim of infringement based
upon (a) the operation or use of the Software in combination with any other
hardware or software not supplied by LICENSOR, or (b) LICENSEE's modification to
the Software if such claim could have been avoided by the absence of such
modification.
THE FOREGOING STATES THE ENTIRE LIABILITY OF LICENSOR WITH RESPECT TO
INFRINGEMENT OF ANY PROPERTY RIGHT OF A THIRD PARTY BY THE SOFTWARE OR ANY
PORTION THEREOF ALONE OR IN COMBINATION WITH ANY OTHER PRODUCT.
10. WARRANTY.
For each item of Software, LICENSOR warrants for thirty (30) days from
the date such Program is installed at LICENSEE's facilities (the "Installation
Date"), that such Software, unless modified by LICENSEE, will perform the
functions described in the
4.
<PAGE> 45
documentation provided by LICENSOR to LICENSEE when properly operated on the
Designated System and LICENSOR will undertake to correct any reported,
reproducible and repeatable error condition in accordance with LICENSOR's
then-prevailing Software Support Policies. LICENSOR does not warrant that the
operation of the Software will be uninterrupted or error-free, that all Program
errors will be corrected, that the Software will satisfy LICENSEE's
requirements, or that the Software will operate in the combinations which
LICENSEE may select for use. For any breach of the above warranties, LICENSEE's
exclusive remedy, and LICENSOR's entire liability, shall be the exercise of best
efforts by LICENSOR to correct (including suitable workarounds) the Software
errors.
11. LIMITATION OF LIABILITY.
EXCEPT FOR THE EXPRESS WARRANTY IN PARAGRAPH 10 ABOVE, LICENSOR GRANTS
NO WARRANTIES, EITHER EXPRESS OR IMPLIED, WITH REGARD TO THE SOFTWARE, EXCLUDING
HEREBY ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. THE STATED EXPRESS WARRANTY IS IN LIEU OF ALL LIABILITIES OR
OBLIGATIONS OF LICENSOR FOR DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THE
DELIVERY, USE OR PERFORMANCE OF THE SOFTWARE.
LICENSEE agrees that LICENSOR's liability hereunder for damages,
including but not limited to liability for infringement, shall not exceed the
charges paid by LICENSEE for the particular Software involved. LICENSEE further
agrees that LICENSOR will not be liable for any lost profit, or for any claim or
demand against LICENSEE by any other party, except a claim for patent, trademark
or copyright infringement as provided herein.
IN NO EVENT WILL LICENSOR BE LIABLE FOR CONSEQUENTIAL DAMAGES EVEN IF
LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
12. ASSIGNMENT.
This Agreement, including all rights and obligations hereunder, is not
assignable without the prior written consent of LICENSOR. Notwithstanding the
foregoing, upon any sale of the Designated System by LICENSEE to a third party,
LICENSEE shall require such party to enter into a License Agreement with
LICENSOR on LICENSOR's then current standard terms.
13. TAXES.
All license fees and amounts payable to LICENSOR under the terms of
this Agreement and the Quotation of which it forms a part are not of and shall
not be reduced by any tax, including, but not by way of limitation, any use,
sales, property, import, duty, export, withholding, gross receipts, or
value-added tax or
5.
<PAGE> 46
other tax or charge of similar nature imposed by any governmental authority upon
or with respect to LICENSOR or LICENSEE, this license, or the license fees
payable hereunder, excepting only a tax on LICENSOR's net business income.
LICENSEE agrees to indemnify and hold LICENSOR harmless from any such taxes and
to pay the same promptly on presentation of LICENSOR's invoice for the same.
14. GENERAL.
The provisions of the Agreement shall control over the terms of any
present or future agreement except to the extent such agreement expressly
provides otherwise.
This Agreement supersedes all prior agreements and understandings
between the parties related to the subject matter herein and is intended by the
parties as the complete and exclusive statement of the terms of this Agreement.
If any of the provisions of this Agreement are invalid under any applicable
statute or rule of law they are, to the extent they are invalid, deemed omitted,
and the remainder of this Agreement shall remain in full force and effect. This
Agreement is made in the Commonwealth of Massachusetts, and shall be construed,
and the legal relations between the parties hereto determined, in accordance
with the laws applicable to contracts made by Massachusetts residents in, and to
be performed in, Massachusetts. The parties hereto consent to personal
jurisdiction before and venue in any court of Boston, Massachusetts with respect
to any dispute arising under this Agreement. If either party fails to perform
any term of this Agreement and the other party does not enforce that term,
failure to enforce on that occasion shall not prevent enforcement on later
occasions.
15. MODIFICATION.
Any deviations from or additions to the terms of this Agreement must be
in writing and will not be valid unless confirmed in writing by duly authorized
officers of LICENSOR and LICENSEE.
16. NOTICES.
All notices, requests, and demands given to or made upon LICENSOR or
LICENSEE hereunder shall be in writing and delivered or mailed to the address
first indicated above, or to such other
6.
<PAGE> 47
address as LICENSOR or LICENSEE shall designate in writing from time to time.
POLYGEN CORPORATION ("LICENSOR")
By:___________________________
Name: ________________________
________________________
LICENSEE
By:___________________________
Name:_________________________
_________________________
7.
<PAGE> 48
SERIAL NUMBERS AND LOCATION OF DESIGNATED SYSTEM(S)
Software________________________________ Software_________________________
System Type___________________0/S_______ System Type_____________0/S______
Serial No. _____________________________ Serial No. ______________________
________________________________________ _________________________________
________________________________________ _________________________________
Software________________________________ Software_________________________
System Type_______________ 0/S__________ System Type_________0/S__________
Serial No. _____________________________ Serial No. ______________________
________________________________________ _________________________________
________________________________________ _________________________________
8.
<PAGE> 49
APPENDIX C
PRICE LIST
(attached)
28.
<PAGE> 50
APPENDIX C: PRICE LIST
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING PRODUCTS PRICE LIST
PRICING SUMMARY
JAPAN END-USER BUNDLED PRICE LIST
EFFECTIVE JANUARY 01, 1992
--------------------------------------------------
PRICES ARE VALID ONLY WHEN PURCHASED WITH HARDWARE
--------------------------------------------------
PRICES INCLUDE SOFTWARE AND DOCUMENTATION, BUT DO NOT INCLUDE
HARDWARE, INSTALLATION, TRAINING, OR CONTINUING LICENSE FEES.
<TABLE>
<CAPTION>
- -------------------------------------------------------------
SYSTEM SOFTWARE Desktop
- -------------------------------------------------------------===========================================================
Part Number Description Revision Availability Commercial Academic Ann.SU
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBEXX ........ BIOGRAF (Indigo) ................. 2.2........ Now ....... Yen5,250,000 ....... Yen2,265,000...... 4320
XGNMEXX ....... NMRgraf (INdigo) ................. 2.2........ Now ....... Yen3,500,000 ....... Yen1,750,000...... 2880
POLEXX ........ Polaris (Indigo) ................. 3.0........ Now ....... Yen2,625,000 ....... Yen1,312,500...... 2160
XGPGEXX ....... POLYGRAF (Indigo)................. 2.2........ Now ....... Yen7,000,000 ....... Yen3,500,000...... 5760
QNTXX ......... QUANTA (Indigo)................... 3.2........ Now ....... Yen3,750,000 ....... Yen1,875,000...... 3600
QINORGXX ...... Inorganic Solids Modeling......... 3.2........ Now ....... Yen3,750,000 ....... Yen1,875,000...... 2550
QPOLYXX ....... Polymer Dynamics.................. 3.2........ Now ....... Yen3,750,000 ....... Yen1,875,000...... 2550
QPROTXX ....... Protein Modeling.................. 3.2........ Now ....... Yen3,750,000 ....... Yen1,875,000...... 2550
QSTARXX ....... X-Ray Structure Analysis.......... 3.2........ Now ....... Yen3,750,000 ....... Yen1,875,000...... 2550
</TABLE>
NOTE: IF QUANTA is purchased, at least one copy of
networked CHARMm must be available for use.
<TABLE>
<CAPTION>
- -------------------------------------------------------------
SYSTEM SOFTWARE Personal
- -------------------------------------------------------------===========================================================
Part Number Description Revision Availability Commercial Academic Ann.SU
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XGBEXX ........ BIOGRAF (SGI/IBM)................. 2.2........ Now ....... Yen7,000,000 ....... Yen3,500,000...... 5760
XGNMEXX ....... NMRgraf (SGI/IBM)................. 2.2........ Now ....... Yen5,250,000 ....... Yen2,625,000...... 4320
POLEXX ........ Polaris (SGI)..................... 3.0........ Now ....... Yen4,375,000 ....... Yen2,187,500...... 3600
XGPGEXX ....... POLYGRAF (SGI?IBM)................ 2.2........ Now .......Yen10,500,000 ....... Yen5,250,000...... 8640
QNTXX ......... QUANTA (SGI/IBM).................. 3.2........ Now ....... Yen6,240,000 ....... Yen3,120,000...... 6000
QINORGXX ...... Inorganic Solids Modeling......... 3.2........ Now ....... Yen4,992,000 ....... Yen2,496,000...... 3400
QPOLYXX ....... Polymer Dynamics.................. 3.2........ Now ....... Yen4,992,000 ....... Yen2,496,000...... 3400
QPROTXX ....... Protein Modeling.................. 3.2........ Now ....... Yen4,992,000 ....... Yen2,496,000...... 3400
QSTARXX ....... X-Ray Structure Analysis.......... 3.2........ Now ....... Yen4,992,000 ....... Yen2,496,000...... 3400
</TABLE>
NOTE: IF QUANTA is purchased, at least one copy of
networked CHARMm must be available for use.
<TABLE>
<CAPTION>
---------------------------------------------------------
Price per Service Unit (SU)
---------------------------------------------------------
Level 1 Level 2
------- -------
<S> <C> <C>
Commercial Yen220 Yen265
Academic Yen 35 Yen105
---------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential January 30, 1992
</TABLE>
<PAGE> 51
SYSTEM SOFTWARE PROFESSIONAL POWER
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN.SU
- ----------------------------------------------------------------------------------------------------------------------
XGBHXX....... BIOGRAF (SGI/IBM)............. 2.2.......... Now......... Yen10,500,000.. Yen5,250,000.. 8640
XGNMHXX...... NMRgraf(SGI/IBM).............. 2.2.......... Now......... Yen 8,750,000.. Yen4,375,000.. 7200
POLHXX....... Polaris(Stardent/SGI)......... 3.0.......... Now......... Yen 6,125,000.. Yen3,062,500.. 5040
XGPGHXX...... POLYGRAF (SGI/IBM)............ 2.2.......... Now......... Yen15,750,000.. Yen7,875,000.. 12960
QNTXX........ QUANTA (SGI/IBM).............. 3.2.......... Now......... Yen 6,240,000.. Yen3,120,000.. 6000
QINORGXX..... Inorganic Solids Modeling..... 3.2.......... Now......... Yen 4,992,000.. Yen2,496,000.. 3400
QPOLYXX...... Polymer Dynamics.............. 3.2.......... Now......... Yen 4,992,000.. Yen2,496,000.. 3400
QPROTXX...... Protein Modeling.............. 3.2.......... Now......... Yen 4,992,000.. Yen2,496,000.. 3400
QSTARXX...... X-Ray Structure Analysis...... 3.2.......... Now......... Yen 4,992,000.. Yen2,496,000.. 3400
Note: If QUANTA is purchased, at least one copy of networked CHARMm must be available for use.
</TABLE>
QUANTA OPTIONS SGI/IBM
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN.SU
- ----------------------------------------------------------------------------------------------------------------------
QBDSXX....... Brownian Dynamics Sim......... 3.2.......... Now......... Yen2,500,000.. Yen1,250,000... 1705
Note: Purchase of Brownian Dynamics requires purchase of UHBD.
QCRYSTXX..... Crystal Modeling.............. 3.2.......... Now......... Yen2,125,000.. Yen1,062,500... 1450
QHELIXXX..... Helix Modeling................ 3.2.......... Now......... Yen2,125,000.. Yen1,062,500... 1450
QMM2XX....... MM2 Interface................. 3.2.......... Now......... Yen1,250,000.. Yen 625,000... 850
QPBEXX....... Poisson-Bolzmann Electro...... 3.2.......... Now......... Yen2,125,000.. Yen1,062,500... 1450
Note: Purchase of Poisson-Boltmann Electrostatics requires purchase of UHBD
QOPINTXX..... QUANTA Open Interface......... 3.2.......... Now......... Yen5,000,000.. Yen2,500,000... 3410
QQMIXX....... Quantum Mechanics Interface... 3.2.......... Now......... Yen2,500,000.. Yen1,250,000... 1705
QNMRSXX...... NMR Structure................. 3.2.......... Dec, 1991... Yen4,992,000.. Yen2,496,000... 2400
</TABLE>
QUANTA NMR SOFTWARE SGI/IBM
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PART NUMBER DESCRIPTION REVISION AVAILABILITY COMMERCIAL ACADEMIC ANN.SU
- ----------------------------------------------------------------------------------------------------------------------
QMADXX....... MADNMR........................ x............. Now........... Yen3,750,000... Yen1,825,000... 2555
QMADPXX...... MADNMR+....................... x............. Now........... Yen6,250,000... Yen3,125,000... 4260
QDISNOEXX.... DISCON/NOESYSIM............... x............. Now........... Yen2,500,000... Yen1,250,000... 1705
</TABLE>
----------------------------------------------------------
PRICE PER SERVICE UNIT (SU)
----------------------------------------------------------
Level 1 Level 2
Commercial Yen220 Yen265
Academic Yen 35 Yen105
----------------------------------------------------------
<PAGE> 52
CERIUS SOFTWARE SGI/IBM
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Builder Modules
CSVSXX..........Visualizer (required for all)...2.3................Now..........Y 437,500......Y 218,750.......400
CSCRXX..........Crystals........................2.3................Now..........Y1,312,500......Y 656,250......1200
CSCLRXX.........Surfaces........................2.3.............Mar., 1992......Y 437,500......Y 218,750.......400
CSINTXX.........Interfaces......................3.0.............Mar., 1992......Y 437,500......Y 218,750.......400
CSPLXX..........Polymers........................2.3................Now..........Y 437,500......Y 218,750.......400
Calculation Modules
CSOF1XX.........Open Force Field MM/MD (1)......3.0.............Mar., 1992......Y6,562,500......Y3,281,500......6000
CSOF2XX.........Open Force Field MM/MD (2)......3.0.............Mar., 1992..........TBD.............TBD..........TBD
CSSRPXX.........Sorption........................2.3................Now..........Y2,187,500......Y1,093,750......2000
CSPCKXX.........Crystal Packer..................2.3................Now..........Y1,312,500......Y 656,250......1200
CSMPXX..........MopacUI.........................2.3................Now..........Y 875,000......Y 437,500.......800
CSSMXX..........Statmech........................2.3................Now..........Y2,625,000......Y1,312,500......2400
CSDLSXX.........DLS-UI..........................2.3................Now..........Y1,093,750......Y 546,875......1000
CSDF1XX.........Diffraction I...................2.3................Now..........Y2,625,000......Y1,312,500......2400
CSDF2XX.........Diffraction II..................2.3................Now..........Y1,750,000......Y 875,000......1600
CSDF3XX.........Diffraction III.................2.3................Now..........Y1,093,750......Y 546,875......1000
CSDF4XX.........Diffraction IV..................2.3................Now..........Y2,625,000......Y1,312,500......2400
CSRTVXX.........Rietveld........................3.0.............Mar., 1992......Y1,750,000......Y 875,000......1600
CSHRXX..........HRTEM...........................2.3................Now..........Y2,625,000......Y1,312,500......2400
</TABLE>
NOTE: PRICES INCLUDE FIRST YEAR MAINTENANCE
NOTE: DLS-UI, Sorption, Diffraction I, Diffraction III, HRTEM, Surfaces,
Interfaces, Crystal Packer, and Rietveld require CERIUS Crystals.
NOTE: StatMech requires CERIUS Polymers.
NOTE: When quoting Open Force Field MM/MD, all Builder Modules should be
included in the quote.
NOTE: Open Force Field MM/MD (1) is for Desktop and Personal/Entry
machines only. Open Force Field MM/MD (2) is for Professional and
Power machine only.
AVS CHEMISTRYVIEWER ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
................ChemistryViewer alone...................................Y1,312,500......Y656,250.........720
................ChemistryViewer with AVS................................Y1,750,000......Y875,000........1440
</TABLE>
NOTE: First year maintenance is required with AVS and ChemistryViewer
- ---------------------------------------
PRICE PER SERVICE UNIT (SU)
- ---------------------------------------
<TABLE>
<CAPTION>
Level 1 Level 2
<S> <C> <C>
Commercial Y220 Y265
Academic Y 35 Y105
</TABLE>
Proprietary and Confidential Polygen/Molecular Simulations Japan Price List
January 30, 1992
<PAGE> 53
CHARMm ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDESKXX.........Desktop CHARMm...................21.3............Now.............Y 3,750,000*....Y 1,875,000*.....2550
CPERSXX.........Personal CHARMm..................21.3............Now.............Y 5,990,000*....Y 2,995,000*.....4085
CPROFXX.........Professional CHARMm..............21.3............Now.............Y10,500,000*....Y 5,250,000*.....7160
CPARLXX.........Power CHARMm.....................21.3............Now.............Y18,000,000*....Y 9,000,000*....12270
NOTE: At least one copy of networked CHARMm must be available for use. Above prices(*) effective
only at time of purchase with QUANTA and include standard discounts. For individual CHARMm
pricing, see pricing below.
NOTE: Desktop CHARMm is only available for the SGI Indigo.
CPERSXX.........Personal Stand-alone CHARMm......21.3............Now.............Y11,980,000.....Y 5,990,000......8165
CPROFXX.........Professional Stand-alone CHARMm..21.3............Now.............Y15,000,000.....Y 7,500,000.....10225
CPARLXX.........Power Batch stand-alone CHARMm...21.3............Now.............Y22,500,000.....Y11,250,000.....15340
CSUPRXX.........Super Stand-alone CHARMm.........21.3............Now.............Y55,000,000.....Y27,500,000.....37500
CSUPRLXX........Ltd. License Super CHARMm........21.3............Now.............Y33,000,000.....Y16,500,000.....22500
CSRCXX..........CHARMm Source Code...............21.3............Now.............Y12,500,000.....Y 6,250,000......8520
</TABLE>
NOTE: CHARMm source code may only be purchased in addition to a
standard CHARMm object license.
X-PLOR ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
XPERSXX.........Personal X-PLOR.................2.11............Now.............Y 7,488,000.....Y 3,744,000......5105
XPROFXX.........Professional X-PLOR.............2.11............Now.............Y11,000,000.....Y 5,500,000......7500
XPARLXX.........Power X-PLOR....................2.11............Now.............Y16,000,000.....Y 8,000,000.....10900
XSUPRXX.........Super X-PLOR....................2.11............Now.............Y33,500,000.....Y16,750,000.....22840
XSUPRLXX........Ltd. License Super X-PLOR.......2.11............Now.............Y19,500,000.....Y 9,750,000.....13295
XSRCXX..........X-PLOR Source Code..............2.11............Now.............Y12,500,000.....Y 6,250,000..... 8520
</TABLE>
NOTE: X-PLOR source code may only be purchased in addition to a standard
X-PLOR object license.
UHBD ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UPERSXX.........Personal UHBD...................2.2.............Now.............Y10,000,000.....Y5,000,000......6820
UPROFXX.........Professional UHBD...............2.2.............Now.............Y11,250,000.....Y5,625,000......7670
UPARLXX.........Power UHBD......................2.2.............Now.............Y12,500,000.....Y6,250,000......8520
</TABLE>
GRAF BATCH ALL PLATFORMS
<TABLE>
<CAPTION>
Part Number Description Revision Availability Commercial Academic Ann. SU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GRAFBXX.........Alliant version................. .............Now.............Y10,500,000.....Y5,250,000.......8640
GRAFBXX.........DEC version..................... .............Now.............Y 8,750,000.....Y4,375,000.......7200
GRAFBXX.........Convex version.................. .............Now.............Y14,000,000.....Y7,000,000......11520
GRAFBXX.........Cray version.................... .............Now.............Y17,500,000.....Y8,750,000......14400
</TABLE>
January 30, 1992 Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential
<PAGE> 54
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING PRODUCTS PRICE LIST
HARDWARE CONFIGURATION SUMMARY
EFFECTIVE OCTOBER 01, 1991
SILICON GRAPHICS IRIS 4D SERIES
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape O/S Other
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Indigo............Desktop......................xx.....xx.......16......432/54.....1/4" cartridge.....4.0.0.....Note 2
4D/25 G/TG........Personal/Entry...............xx.....xx.......16......380/54.....1/4" cartridge.....3.3.3.....Note 2
4D/35 G/TG........Personal/Entry...............xx.....xx.......16......380/54.....1/4" cartridge.....3.3.3.....Note 2
4D/310 GTX/VGX....Professional/High-End........xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/320 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/340 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/380 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/420 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/440 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
4D/480 GTX/VGX....Power/High-End...............xx.....xx.......16......780/54.....1/4" cartridge.....3.3.3.....Note 2
</TABLE>
IBM RISC SYSTEM/6000 SERIES
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape O/S Other
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series 320........Personal/Entry...............xx.....xx.......16......320/54.....1/4" cartridge.....3.1.5.....Notes 2.3
Series 520........Professional/Entry...........xx.....xx.......16......320/54.....1/4" cartridge.....3.1.5.....Notes 2.3
Series 530........Professional/Entry...........xx.....xx.......16......320/54.....1/4" cartridge.....3.1.5.....Notes 2.3
Series 540........Power/High-End...............xx.....xx.......16......320/54.....1/4" cartridge.....3.1.5.....Notes 2.3
Series 550........Power/High-End...............xx.....xx.......16......320/54.....1/4" cartridge.....3.1.5.....Notes 2.3
</TABLE>
EVANS & SUTHERLAND ESV SERIES
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape O/S Other
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ESV-5.............Entry........................4.0.... .......xx......xx/xx.........xx..............xx
All others........High-End.....................4.0.... .......xx......xx/xx.........xx..............xx
</TABLE>
Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential January 30, 1992
<PAGE> 55
BATCH PROCESSORS
<TABLE>
<CAPTION>
Machine Category MFLOPS MIPS Memory Disk(1) Tape O/S Other
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliant FX40,80...Power/Batch..................xx.....xx.......xx........xx.......8mm cartridge......2.1.02
Alliant FX2800....Power/Batch..................xx.....xx.......xx........xx.......8mm cartridge......2.1.02
Convex C-1........Power/Batch..................xx.....xx.......xx........xx.......Reel-to-reel.......xx.......Note 4
Convex C-2........Power/Batch..................xx.....xx.......xx........xx.......Reel-to-reel.......xx
Cray X,Y-MP.......Super/Batch..................xx.....xx.......xx........xx.......Reel-to-reel.......6.0
Cray 2............Super/Batch..................xx.....xx.......xx........xx.......Reel-to-reel.......6.0
DEC...............Batch........................xx.....xx.......xx........xx.......Reel-to-reel.......xx.......Note 4
IBM 3090 MVS......Super........................xx.....xx.......xx........xx.......Reel-to-reel.......xx.......Note 5
IBM 3090 VM.......Super........................xx.....xx.......xx........xx.......Reel-to-reel.......xx.......Note 5
IBM 3090 AIX......Super........................xx.....xx.......xx........xx.......Reel-to-reel.......xx.......Note 5
</TABLE>
HARDWARE NOTES
1: Under the Disk column, the first number is the minimum total disk space
required while the second number is the minimum swap space required.
2: FORTRAN is required for the QUANTA Open Interface.
3: The following IBM RS/6000 hardware configuration is required for
QUANTA/CHARMm software: 24-bit 3D graphics, 24-bit Z-buffer, Ethernet LAN
adaptor, and the FORTRAN 2.01 run-time libraries (xlfrte 02.01).
4: CHARMm, X-PLOR, and UHBD are not supported on the Convex C-1.
5: GRAF Batch is not supported on the IBM 3090.
PART NUMBERS
Replace XX in all software part numbers with the following machine codes:
<TABLE>
<S> <C> <C> <C> <C> <C>
4D All SGI 4D sereis except Indigo DT SGI Indigo ST Stardent Titan
ES E&S ESV RS All IBM RS/6000 series
FX Alliant C1 Convex C-1 C2 Convex C-2
CX Cray X-MP CY Cray Y-MP CR Cray 2
MV IBM 3090 MVS VM IBM 3090 VM/CMS AX IBM 3090 AIX
VS DEC VMX
</TABLE>
Polygen/Molecular Simulations Japan Price List
January 30, 1992 Proprietary and Confidential
<PAGE> 56
Prices are valid only when purchased with hardware Page 7 of 9
CONTINUING LICENSE/MAINTENANCE
<TABLE>
<CAPTION>
Part Number Description Academic Price/S.U. Commercial Price/S.U.
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SL1SS..........Level 1 (Standard Support)......................Y 35..................Y220
Provides the following services:
Continuing license fee
Upgrade of existing software
Hotline support of products: Calls returned within 4 hours of receipt
SL2SS..........Level 2 (Scientific Support)....................Y105.................Y265
Provides the following services:
Continuing license fee
Upgrade of existing software
Hotline support of products: Calls returned within 1 hour of receipt
Monthly status calls from senior scientific staff members
Monthly report of software problems
Scientific support for modeling problems
</TABLE>
SCIENTIFIC PROGRAMS
<TABLE>
<CAPTION>
Part Number Description Cost/Time Period
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
SSCON..........Scientific Consulting....................Y175,000 per day
SPMDL..........Molecular Design Lab.....................Y700,000 per week
Seat in Introductory Molecular Modeling Course
Use of software on a dedicated machine
Access to Polygen and Harvard scientists
NOTE: A minimum of two weeks is required.
</TABLE>
TRAINING PROGRAMS
<TABLE>
<CAPTION>
Part Number Description Cost/Time Period
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
...............Introductory Molecular Modeling..........Y175,000/3 days
...............Advanced CHARMm..........................Y262,500/2 days
...............Advanced Protein Modeling................Y262,500/2 days
...............Advanced Polymer Modeling................Y262,500/2 days
</TABLE>
Polygen/Molecular Simulations Japan Price List
Proprietary and Confidential January 30, 1992
<PAGE> 57
POLYGEN/MOLECULAR SIMULATIONS
MOLECULAR MODELING SOFTWARE PRODUCTS
POLICIES AND PROCEDURES
EFFECTIVE JANUARY 01, 1992
TITLE
All right, title and interest in and to the software licensed and any related
documentation and any copies thereof which may be made by licensee are and shall
remain the exclusive property of licensor or licensor's licensor, as to software
sublicensed by licensor to licensee; licensor and its licensors are collected
referred to as the software owners. Any third party software designated in the
applicable price list as subject to a separate license agreement is subject to
the terms of the agreement accompanying such software. Each software owner shall
have the right to enforce this agreement against licensee as to such software
owner's software.
SOFTWARE LICENSE FEES
Use of the software by licensee shall be subject to the licensee signing the
Polygen/Molecular Simulations Standard Software License Agreement.
UNBUNDLED FEE
In the instance where software is not purchased with hardware, the software list
price shall be increased by an additional amount equal to twenty percent (20%)
of such software list price (the unbundled fee).
PAYMENT TERMS
Unless otherwise arranged, Polygen/Molecular Simulations will invoice purchaser
at the time of shipment of each installment on payment terms of each on
delivery, except where open account credit is established and maintained to
Polygen/Molecular Simulations' satisfaction, in which case payment terms shall
be net 30 days from date of shipment. Purchaser shall make all payments as
provided without regard to whether purchaser has made or may make any inspection
or use of any goods delivered. Any invoiced amount which is not paid when due
shall bear interest at the rate of 2% per month or the highest rate then
permitted by law, whichever is less.
WARRANTY
The software as delivered and installed on the designated system will conform
substantially to licensor's then current published program specifications.
Licensee acknowledges, however, that the software is of such complexity that
it may have inherent or latent defects and agrees that as licensee's sole remedy
licensor will exercise its best efforts to correct documented program errors
which licensors's analysis indicates are caused by a defect in the unaltered
version of the delivered software as installed on an unaltered designated
system. Licensor does not guarantee the results of any such services or
represent or warrant that any such error will be corrected. The foregoing
warranty extends only to licensee and is not applicable to any transferee of the
software license.
LICENSE TRANSFER POLICY
All computers and software are expected to be written off over four years.
Customers will be able to transfer their current software license to a faster
computer (at the same site) and receive a credit equal to 25% of the lower of
the price actually paid or the current price for the license for each year left
in the four years since shipment to the customer by Polygen/Molecular
Simulations. To receive this credit, the customer must be cur-
<PAGE> 58
rent on maintenance.
TERMS AND CONDITIONS
Software orders must be accompanied by the software quotation with standard
quote terms and conditions and a standard software license agreement. Loaners
must be accompanied by a standard software loaner agreement. Any software
purchase or loaner which does include the above documents or which documents
deviate from standard terms must be approved in advance.
QUOTE VALIDITY
Software quotes are valid for 30 days only.
SOFTWARE LOANER PERIOD
Unless otherwise arranged, software to commercial organizations may only be
loaned for a period of 15 days: software to academic institutions may only be
loaned for a period of 30 days.
<PAGE> 59
APPENDIX D
WIRE TRANSFER (BANK) INFORMATION
Bank: Shawmut Bank, NA
One Federal Street
Boston, MA 02211
Routing No.: ABA 011000206
Account No.: 20-103-394-4
29.
<PAGE> 60
APPENDIX E
PMSI TRADEMARKS
POLYGRAF
NMRgraf
BIOGRAF
CERIUS
X-PLOR
Polaris
MADNMR
UHBD
The Company may use the foregoing Trademarks which have not been registered in
Japan. PMSI intends to file applications for registration of these Trademarks
with the assistance of the Company.
Applications for the following Trademarks are pending before the Patent Office
of Japan, and upon the approval and registration of such Trademarks in Japan,
the Company may use such Trademarks in connection with the distribution and
advertising of the Software:
CHARMm
QUANTA
30.
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.28
[MOLECULAR SIMULATIONS LOGO]
DISTRIBUTION LICENSE AGREEMENT
THIS AGREEMENT is made as of 27 October, 1994, between MOLECULAR
SIMULATIONS INCORPORATED, a corporation with its principal offices in
Burlington, Massachusetts, U.S.A. ("MSI"), Dr. Michael C. Payne, an individual
domiciled at Cambridge, United Kingdom, and LYNXVALE LTD., a corporation with
its principal offices in Cambridge, United Kingdom. Dr. Payne and Lynxvale Ltd.
are collectively referred to herein as "Licensor."
WHEREAS, Licensor has developed the computer program more specifically
described in Exhibit A (the "Program");
WHEREAS, MSI and Dr. Payne are entering into a Consulting Agreement of
even date herewith pursuant to which MSI will make certain payments and provide
other support to Dr. Payne and Dr. Payne will continue working to enhance the
Program (the "Consulting Agreement"); and
WHEREAS, MSI wants to distribute, maintain and support the Program and
derivative versions thereof throughout the world.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS
A. ORIGINAL WORKS. The Program (in source code, executable object code and
all other forms), reference manuals and other materials described in Exhibit A.
B. DERIVATIVE WORKS. A revision, enhancement, improvement, modification,
translation, condensation, or expansion of the Works or any other form in which
the Works may be recast, transferred or adapted. Licensor and MSI hereby agree
to exercise their respective best efforts to obtain, exercise, and maintain the
control referred to in Sections 1(c) and 1(d) below with respect to Derivative
Works for so long as this Agreement remains in effect.
C. LICENSOR IMPROVEMENTS. Derivative Works to the extent that they are
created by or for Licensor and which Licensor controls to the extent of being
able to grant the rights contemplated hereunder. Derivative Works created by Dr.
Payne pursuant to the Consulting Agreement will be deemed to be Licensor
Improvements.
D. MSI IMPROVEMENTS. Derivative Works to the extent that they are created
by or for MSI and which MSI controls to the extent of being able to grant the
rights contemplated hereunder. MSI Improvements shall not include the API's
described in Section 4(b) of this Agreement or MSI's software development
environment known as the Chemistry Backplane
1
<PAGE> 2
(which permits various software applications to run on a unified platform and
includes programs relating to the user interface, interprocessor communication,
file management, graphics, formats, and other functions).
E. WORKS. The Original Works, Licensor Improvements, and MSI Improvements,
collectively.
F. NON-COMMERCIAL USE. Academic research or educational use which is: (i)
not-for-profit; (ii) not conducted or funded by a person or entity engaged in
the commercial use or exploitation of works similar to the Works; and (iii) not
conducted to provide services or to produce works (including results or products
of the Works) for commercial use.
G. LICENSED WORKS. The Original Works and Licensor Improvements,
collectively.
H. PATENT RIGHTS. All rights, title and interest in and under: U.S. Patent
Application No. 07/490,750 filed March 8, 1990; Canadian Patent Application No.
2,012,142 naming Michael P. Teter as sole inventor; any United States or
Canadian patent issuing from either of the foregoing; any continuation,
divisional or continuation-in-part of any of the foregoing; any and all foreign
counterparts of any of the foregoing; any reissues, reexaminations or extensions
of the foregoing; and any other present or future patent or patent application
owned by or assigned to Corning Incorporated or its affiliates to the extent it
covers the Licensed Works.
2. LICENSE
A. GRANT OF EXCLUSIVE LICENSE. Subject to this Agreement, Licensor hereby
grants to MSI, and MSI accepts from Licensor, an exclusive (even as to Licensor)
and worldwide license for a term of [*] under and to Licensor's
patents, patent applications, copyrights, know-how, and other intellectual
property and rights of all kinds to (i) use, reproduce, license, sell,
distribute, maintain, support and otherwise market and service the Works, and
(ii) create Derivative Works, without any further consent from Licensor. MSI may
exercise these rights, in whole or in part, directly or through other persons.
B. EXCEPTIONS TO EXCLUSIVE LICENSE.
(i) GRANT BACK OF RIGHTS. MSI grants to Licensor the personal,
non-transferable, non-exclusive right to use the Works and create Derivative
Works (but not to reproduce or distribute Works or Derivative Works) solely for
Non-Commercial Use. These rights shall include Licensor's right to engage in
scientific collaborations with responsible parties at accredited universities or
other non-profit organizations for the continued development of the Licensed
Works; provided that such collaborations are pursuant to written agreements
which provide that (A) such parties may not use the Licensed Works for purposes
other than the scientific collaboration and may not sublicense, distribute or
copy (except for archival purposes) the Licensed Works, and (B) all ownership
rights in the Licensed Works and any improvements, modifications or additions
thereto remain with Licensor. Licensor and MSI agree that developments resulting
from such collaborations shall be considered Licensor Improvements hereunder.
Upon MSI's request, Licensor shall furnish MSI with written notice of the
identity and location of each scientific collaborator and an executed copy of
the applicable agreement.
2
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
Licensor agrees to terminate third party access to the Licensed Works which is
available by means of computer networks.
3. LICENSOR'S OBLIGATIONS
A. DELIVERABLES. Within thirty (30) days after the execution of this
Agreement, Licensor will deliver three (3) copies of the then-current version of
the Original Works (the Program will be in object and source code forms) to
MSI's designee in Cambridge, United Kingdom. Licensor will promptly deliver to
MSI (or its designee) a copy of all Licensor Improvements created during the
term of this Agreement.
B. ASSISTANCE. During the term of this Agreement, Dr. Payne will provide
MSI with advice, consultation and assistance that MSI may reasonably request to
(i) modify, adapt or translate the Works for MSI's commercial purposes, (ii)
update, revise and create new releases of the Works and (iii) correct errors
that may appear in the Works (collectively, the "Assistance"). Dr. Payne will
provide the Assistance at no additional charge. Licensor will refer any
inquiries received by them regarding the commercial use of the Works to MSI.
C. EPCC. Licensor will assist MSI in obtaining for MSI, on terms acceptable
to MSI, the right to distribute the parallelized version of the Licensed Works
from the Edinburgh Parallel Computing Centre (EPCC).
4. MSI'S OBLIGATIONS
A. MARKETING EFFORTS. MSI will use its reasonable efforts to promote and
solicit orders for the Works, directly or through other persons, in countries
where MSI distributes or otherwise markets its own computer programs.
B. TECHNICAL DEVELOPMENT. MSI will develop any application software
interfaces (the "APIs") necessary to enable the Program to operate together with
other suitable programs specified by MSI.
C. CONTROL OF MARKETING AND DISTRIBUTION. All aspects of the distribution
and marketing of the Works will be in MSI's sole control, including without
limitation the methods of marketing, pricing, naming, packaging, labeling,
advertising, the terms and conditions of sale or license, and the collection of
fees. MSI may distribute the Works through any combination of direct marketing,
distributors, representatives, original equipment manufacturers, and other
means, and either alone or in combination with other products.
D. RECORDS. MSI will maintain accurate records of its marketing activities
under this Agreement, including (i) a current list of customers who have
licensed the Works and (ii) the prices or fees that MSI receives for the Works.
At Licensor's request, MSI will provide Licensor with a report that shows the
actual orders obtained for the Works, but not more than two (2) times per annum.
5. COMPENSATION
3
<PAGE> 4
A. CONSULTING AGREEMENT. In consideration of the license and other rights
granted to MSI pursuant to this Agreement, MSI has entered into a Consulting
Agreement of even date herewith (the "Consulting Agreement") pursuant to which
MSI will make payments and provide other support to Dr. Payne on the terms
specified in the Consulting Agreement.
B. ROYALTY. For each copy of the Works that is licensed by MSI (directly
or through another person) to a customer for internal business use, MSI will pay
Licensor a royalty (the "Royalty") equal to [ * ] of the License
Fee, as defined below. For purposes of this Section 5(b), the following
provisions shall apply:
(i) LICENSE FEE."License Fee" means the price or fee (including
maintenance and support charges) that MSI actually receives when a customer is
granted (directly by MSI or through another person) the right to use the Works,
after deducting (A) trade or quantity discounts allowed or taken by customers;
(B) actual credits or refunds to customers on account of any returns of the
Works; (C) any insurance, shipping or other out-of-pocket expense that may be
incurred in connection with delivery, to the extent such charges are separately
stated on contracts, invoices or other licensing documents; (D) any excise,
sales, value-added, property and use taxes; and (E) import and export duties,
taxes (including foreign withholding taxes) and surcharges.
(ii) COMPANION PRODUCTS. If any Works are distributed by MSI with
other products in a package for a single charge, the License Fee attributable to
such Works shall be determined by prorating the receipts (after applicable
deductions as described above) from the sale or license of the package according
to the published list prices established by MSI for the separate products
contained in the package (whether or not such products are distributed
separately), but shall not exceed MSI's published list price for the Works.
(iii) PAYMENT. The obligation to pay Royalties will accrue upon MSI's
receipt of License Fees. Amounts received by MSI as deposits or advances shall
not be deemed to have been received until installations of the Works have
occurred with respect to such deposits or advances. MSI will pay the accrued
Royalties, less applicable Credits as described below, to Licensor within sixty
(60) days after the end of each calendar quarter during which Royalties are
earned. MSI will pay all amounts due to Licensor under this Agreement in British
Pounds by check or wire transfer sent to Licensor at the address specified in
this Agreement.
(iv) CREDIT AGAINST ROYALTIES. The Royalties otherwise payable by MSI
pursuant to this Section 5(b) during any given year of this Agreement shall be
reduced by the amounts paid by MSI during such year to Dr. Payne and persons in
his lab in the form of consulting fees and loaned equipment, including the
amounts paid pursuant to the Consulting Agreement (collectively, the "Credits").
For purposes of calculating these Credits, loaned equipment shall be valued
based on a three year useful life at one-third of the manufacturer's list price
to purchase such equipment for each year (up to a maximum of three years) that
the equipment is on loan.
(v) PROMOTIONAL USE AND UPDATES. It is expressly understood that MSI
may, without incurring any obligation to pay the Royalty, (A) make copies of the
Works available to potential customers for evaluation or demonstration purposes
without charge for periods not in excess of [ * ], and (B) make copies
of any corrected or updated Works and distribute
* CONFIDENTIAL TREATMENT REQUESTED
4
<PAGE> 5
them, as part of MSI's standard maintenance and support, to all customers who
previously licensed the Works which were so corrected or updated.
C. TAXES. All amounts payable by MSI to Licensor under this Agreement are
exclusive of any tax, levy or similar governmental charge that may be assessed
by any jurisdiction, whether based on gross revenue, the delivery, performance
or use of the Works, or the execution or performance of this Agreement. If MSI
is legally required to withhold tax on any such payment, MSI will notify
Licensor of such requirement and promptly furnish Licensor with a copy of the
tax receipt that evidences payment of the withheld tax to the appropriate taxing
authority.
6. WARRANTIES AND CONDITIONS
A. LEGAL RIGHTS. Licensor represents and warrants that (i) Licensor owns
all patents, copyrights, trade secrets and other proprietary rights in or to the
Licensed Works; (ii) to the best of Licensor's knowledge, the Licensed Works do
not infringe any copyright, trade secret, patent or other proprietary right of a
third party, (iii) Licensor possesses the legal right and authority to execute
and perform this Agreement, and Dr. Payne possesses the legal right and
authority to execute and perform the Consulting Agreement, (iv) the execution
and performance of this Agreement and the Consulting Agreement will not violate
any other agreement, commitment or obligation by which Licensor may be bound,
and (v) except as set forth in a list of academic parties provided separately to
MSI, Licensor has not granted any rights in the Licensed Works to any third
party. MSI's execution and performance of this Agreement are subject to (A)
execution of the attached Acknowledgment by University of Cambridge on or before
the date of this Agreement and (B) MSI's determination that its proposed
distribution of the Works may be conducted in a commercially reasonable manner
in the U.S., Canada and other countries without infringing the Patent Rights.
B. PERFORMANCE. Licensor represents and warrants that the Licensed Works
operate as described in Exhibit B (the "Performance Warranty"). In case of
breach of the Performance Warranty or any other duty related to the quality of
the Licensed Works, Licensor will promptly correct the Licensed Works. If
Licensor is unable to correct the defect within thirty (30) days after receipt
of MSI's notice, then MSI will be entitled to (i) correct the defect directly or
through other persons and (ii) deduct the costs that MSI may reasonably incur in
correcting the defect from the amounts owed to Licensor pursuant to the
Consulting Agreement.
C. INDEMNITY. MSI will promptly notify Licensor if any claim is brought or
threatened against MSI or any of its affiliated companies that arises from a
breach of the warranties and conditions set forth in Section 6(a) above. MSI
will not settle or compromise any such actual or threatened claim without
Licensor's prior consent. Subject to these conditions, Licensor will indemnify
MSI and its affiliated companies against all losses, damages and expenses
(including reasonable attorneys fees) that they may incur or suffer in
connection with any such actual or threatened claim or breach. Such
indemnification shall be satisfied by means of MSI offsetting the amount of such
losses, damages and expenses against payments otherwise due Licensor (and not
previously paid to Licensor) under the Consulting Agreement or this Agreement.
Except as a result of Licensor's breach of this Agreement or Licensor's willful
misconduct, MSI will indemnify Licensor in respect of any claims against
Licensor for loss, damages or injury to any person or property arising from
MSI's use or distribution to a third
5
<PAGE> 6
party of the Licensed Works in connection with this Agreement; provided that MSI
is given prompt written notice of any such claim, MSI shall have sole control of
the settlement or defense of any action against Licensor to which this indemnity
applies, and Licensor cooperates with MSI in such defense.
D. LIMITATION. Licensor will have no obligation to MSI or its affiliated
companies under this Section if and to the extent that the claim that is brought
or threatened arises directly from a correction, modification or other change of
the Licensed Works not provided by Licensor.
7. CONFIDENTIALITY
A. INFORMATION. Each party acknowledges that it may disclose certain
confidential information to the other party. If either party discloses such
confidential information to the other party, the disclosing party will designate
such information as confidential by appropriate legend or instruction, and the
recipient party will (i) use at least the same degree of care to maintain the
secrecy of such confidential information as such party uses to maintain the
secrecy of its own confidential information and (ii) use the confidential
information only to accomplish the purposes of this Agreement or the Consulting
Agreement. MSI hereby specifically designates information concerning MSI's
customers, sales leads and pricing information as confidential, and Licensor
agrees to maintain such information in strictest confidence.
B. DISCLOSURE. Neither party will disclose the confidential information
received from the other party to any other person, except that MSI may disclose
such information to its employees, customers, distributors, resellers,
representatives and other agents as required to accomplish the purposes of this
Agreement. If either party learns of an actual or potential unauthorized use or
disclosure of the other party's confidential information, such party will
promptly notify the other party and, at such other party's request, provide such
other party with reasonable assistance to recover the confidential information
and to prevent subsequent unauthorized uses or disclosures of such information.
C. LIMITATION. Neither party will have any confidentiality obligation with
respect to the confidential information belonging to or disclosed by the other
party that (i) the party independently knew or developed before receiving the
confidential information from the other party, (ii) the party lawfully obtained
from another person under no obligation of confidentiality or (iii) is or
becomes publicly available other than as a result of an act or omission of such
party or any of its employees.
8. PROPRIETARY RIGHTS
A. LICENSED WORKS. MSI acknowledges and agrees that (i) all patents,
copyrights, trade secrets and other proprietary rights in or to the Licensed
Works are and will remain the exclusive property of Licensor and (ii) MSI will
not acquire any right in or to the Licensed Works, except as contemplated in
this Agreement.
B. DEVELOPMENTS. Licensor acknowledges and agrees that (i) all patents,
copyrights, trade secrets and other proprietary rights in or to MSI
Improvements, the APIs and MSI's
6
<PAGE> 7
Chemistry Backplane will be and remain the exclusive property of MSI and (ii)
Licensor hereby assigns any right that it may now or in the future possess in
such items to MSI.
C. TRADEMARKS. Licensor acknowledges and agrees that (i) MSI may
distribute, support and maintain the Works under the trademarks, service marks,
trade name, logos, words or symbols that MSI deems appropriate and (ii) MSI will
not be obligated to expressly attribute authorship of the Licensed Works to
Licensor, except as MSI may deem appropriate. MSI intends to attribute
authorship of the Licensed Works to Licensor in the reference manuals
distributed with the Works.
D. FURTHER ASSURANCE. At either party's request, the other party will cause
the execution of the instruments that may be appropriate to give full legal
effect to this Section 8.
9. TERMINATION
A. TERM. This Agreement will become effective, as of the date first set
forth above, upon its execution by MSI and Licensor. This Agreement will remain
in effect thereafter for a period of [*] unless terminated under this Section.
Within a reasonable period in advance of the expiration date, the parties will
enter into negotiations in good faith over a renewal on whatever terms are
permissible under the then prevailing laws of the United Kingdom and, to the
extent applicable, the European Community.
B. TERMINATION BY LICENSOR. Licensor will have just cause to terminate this
Agreement immediately upon notice to MSI, without judicial or arbitral notice or
resolution, if MSI breaches any material obligation hereunder and fails to cure
such breach within thirty (30) days after Licensor presents written notice of
its demand for such cure.
C. TERMINATION BY MSI. MSI will have just cause to terminate this Agreement
immediately upon notice to Licensor, without judicial or arbitral notice or
resolution, if (i) any warranty set forth in Section 6(a) is breached, (ii)
Licensor breaches any material obligation under this Agreement and fails to cure
such breach within thirty (30) days after MSI presents written notice of its
demand for such cure, (iii) upon thirty (30) days prior written notice following
MSI's determination that its proposed distribution of the Works may not be
conducted in a commercially reasonable manner in the U.S., Canada and other
countries without infringing the Patent Rights, or (iv) upon thirty (30) days
prior written notice if within a reasonable period of time following execution
of this Agreement neither Licensor nor MSI has obtained for MSI, on terms
acceptable to MSI, the right to distribute the parallelized version of the
Licensed Works from the EPCC. In the event of a determination pursuant to clause
(iii) above, MSI and Licensor may also elect to renegotiate in good faith this
Agreement and the Consulting Agreement to provide MSI with the right to
distribute the Works in countries where such distribution would not infringe the
Patent Rights, but on mutually acceptable terms and conditions different from
those set forth in this Agreement and the Consulting Agreement. Similarly, in
the event the license described in clause (iv) above has not been obtained for
MSI from EPCC, MSI and Licensor may elect to renegotiate in good faith this
Agreement and the Consulting Agreement on mutually acceptable terms and
conditions different from those set forth in this Agreement and the Consulting
Agreement. MSI may also terminate this Agreement for convenience, without
judicial or arbitral notice or resolution, upon no less than ninety (90) days
prior notice to Licensor.
7
* CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 8
10. CONSEQUENCES OF TERMINATION
A. TERMINATION OF LICENSE . Upon termination of this Agreement, (i) all
rights and obligations of MSI and Licensor hereunder will immediately cease,
(ii) MSI will promptly pay all Royalties that may be due and outstanding, (iii)
MSI will promptly destroy all copies of the Licensed Works and confidential
information belonging to Licensor within MSI's possession other than such items
that MSI may require to fulfill its ongoing maintenance and support obligations
to customers of the Works, and (iv) Licensor will promptly destroy all copies of
the MSI Improvements and confidential information belonging to MSI within
Licensor's possession.
B. SURVIVAL. The termination of this Agreement for any reason will not
affect the validity of the licenses that MSI may have previously granted to
customers with respect to the Works, directly or through other persons. The
provisions of Sections 6, 7, 8, 10, 18 and 19 will survive the termination of
this Agreement for any reason.
11. INDEPENDENT PARTIES
MSI and Licensor are independent persons. Nothing in this Agreement will be
construed to make one party an agent, employee, franchisee, joint venturer,
partner or legal representative of the other party.
12. FORCE MAJEURE
Neither party will be liable for any failure or delay in performing an
obligation under this Agreement that is due to causes beyond its reasonable
control, such as natural catastrophes, governmental acts or omissions, laws or
regulations, labor strikes or difficulties, transportation stoppages or
slowdowns or the inability to procure parts or materials.
13. NOTICES
Any notice, approval or other communication required or permitted under
this Agreement will be given in writing and will be sent by telex, telefax,
courier or registered airmail, postage prepaid, to the address specified below
or to any other address that may be designated by prior notice. Any such notice
or other communication will be deemed effective upon receipt.
<TABLE>
<CAPTION>
If to MSI: If to Dr. Payne: If to Lynxvale Ltd.
<S> <C> <C>
Molecular Simulations Inc. Dr. Michael Payne Lynxvale Ltd.
16 New England Executive Park 141 Gwydir Street 20 Trumpington Street
Burlington, MA 01803-5297 Cambridge CB1 2LJ Cambridge CB2 1QA
Attn: Corporate Counsel England England
Telephone: (617) 229-9800 Telephone: 44 223 337 381 Telephone: 44 223 334 755
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C> <C>
Telefax: (617) 229-9899 Telefax: 44 223 337 356 Telefax: 44 223 332 797
</TABLE>
14. ASSIGNMENT
Except as otherwise contemplated above, neither party may assign or
otherwise transfer this Agreement or any of its rights or obligations without
the other party's prior approval. Any attempt to do so without the other party's
approval will be void. Notwithstanding the foregoing, MSI may assign this
Agreement or any of its rights or obligations, upon notice to Licensor, to (i)
an affiliated company or (ii) an unaffiliated company pursuant to a sale of
substantially all of MSI's assets to, or merger or other consolidation of MSI
with, such party or any of its operating divisions.
15. WAIVER, AMENDMENT, MODIFICATION
Any waiver, amendment or other modification of this Agreement will not be
effective unless in writing and signed by the party against whom enforcement is
sought.
16. SEVERABILITY
If any provision of this Agreement is held to be unenforceable, in whole or
in part, such holding will not affect the validity of the other provision of
this Agreement.
17. INTERPRETATION
The terms that are defined in this Agreement may be used in the singular or
the plural, as the context requires. "Days" means calendar days, unless
otherwise specified. "Person" means an individual, partnership, company,
corporation or other legal entity, as the context requires. "Agreement" means
this Agreement and all of its Exhibits. Headings are intended only for reference
purposes.
18. ARBITRATION
A. GENERAL. Any controversy or claim arising out of or relating to this
Agreement or the existence, validity, breach or termination thereof, whether
during or after its term, will be finally settled by compulsory arbitration in
accordance with the Rules of the London Court of International Arbitration, as
modified or supplemented under this Section 18.
B. PROCEEDING. The arbitration proceeding will take place in London,
England and will be conducted in the English language. The arbitration panel
will consist of three arbitrators, one arbitrator appointed by each party and a
third neutral arbitrator appointed by the two arbitrators appointed by the
parties. The arbitration panel will conduct its proceedings during a period not
to exceed one hundred eighty (180) days commencing as of the date the
arbitration is initiated.
9
<PAGE> 10
C. AWARD. The award of the arbitrators will be the exclusive remedy of the
parties for all claims, counterclaims, issues or accountings presented or plead
to the arbitrators. The award will (i) be granted and paid in U.S. Dollars
exclusive of any tax, deduction or offset and (ii) include interest from the
date of breach or other violation of the Agreement until the award is fully
paid, computed at the then-prevailing London Inter-Bank Offered Rate (LIBOR) .
Judgment upon the award of the arbitrators may be entered in any court that has
jurisdiction thereof. Any additional costs, fees or expenses incurred in
enforcing the award of the arbitrators will be charged against the party that
resists its enforcement.
D. INJUNCTION. Nothing in this Section will prevent either party from
seeking injunctive relief against the other party from any competent court or
other authority pending the resolution of a controversy or claim through
arbitration.
19. GOVERNING LAW
This Agreement will be governed by and interpreted in accordance with the
laws of England. MSI and Licensor exclude the United Nations Convention on
Contracts for the International Sale of Goods from this Agreement.
20. ENTIRE AGREEMENT
This Agreement, its Exhibits and the Consulting Agreement constitute the
complete and entire statement of all terms, conditions and representations of
the agreement between MSI and Licensor with respect to its subject matter and
supersedes all prior discussions, commitments or agreements related thereto,
whether written or oral.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
10
<PAGE> 11
IN WITNESS THEREOF, Dr. Payne executes this Agreement, and MSI and Lynxvale
Ltd. each causes this Agreement to be executed by its duly authorized
representative identified below.
MOLECULAR SIMULATIONS INC. MICHAEL C. PAYNE
("MSI") ("LICENSOR")
By: /s/ Patrick Coulter By: /s/ M.C. Payne
----------------------------- -----------------------------
Name: P. Coulter Name: M.C. Payne
--------------------------- ---------------------------
Title: Vice President Title: Dr.
-------------------------- --------------------------
Date: 9 Aug. 94 Date: 30 Aug. 94
--------------------------- ---------------------------
LYNXVALE LTD.
("LICENSOR")
By: /s/ R.C. Jennings
-----------------------------
Name: R.C. Jennings
---------------------------
Title: Director
--------------------------
Date: 29-7-94
---------------------------
11
<PAGE> 12
ACKNOWLEDGMENT
I, Dr. R. C. Jennings, an authorized representative of the University of
Cambridge ("University"), hereby represent and warrant that (i) I have read and
understood the Distribution License Agreement dated __, 1994 between Michael C.
Payne, Lynxvale Ltd. and Molecular Simulations Incorporated and (ii) in the name
and on behalf of the University, I hereby ratify and agree to this Agreement,
particularly section 6(a).
UNIVERSITY OF CAMBRIDGE
("University")
By: /s/ R. C. Jennings
---------------------------------
Name: R. C. Jennings
-------------------------------
Title: Director of Industrial Liaison
------------------------------
Date: 29-7-94
-------------------------------
12
<PAGE> 13
EXHIBIT A
ORIGINAL WORKS
Original Works
1. Cambridge Sequential Total Energy Package ("CASTEP")
2. Cambridge-Edinburgh Total Energy Package ("CETEP")
3. Real space pseudopotential transform program
Description of the Original Works
1. CASTEP is a software package, including data and documentation, for
performing ab-initio quantum mechanical calculations by density functional
theory methods. Latest version of the package is version 3.2. Capabilities of
the package include:
- - Calculation of total energies and derivatives for configurations of atoms and
molecules
- - Calculation of electron densities
- - Use of pseudopotentials in either reciprocal or real space form
- - Energy minimization
- - Molecular dynamics
- - Calculations with symmetry
- - Calculation of band structures
CASTEP includes a pseudopotentials database. This is a set of files containing
reciprical-space pseudopotentials for a range of elements of the periodic table.
These potentials are a required input for the CASTEP and CETEP packages.
2. CETEP is a version of CASTEP that is optimized for distributed memory
parallel computers. Examples of such computers include Meiko CS and Intel i-860
computers. Functionalities and content of CETEP are similar to those of CASTEP.
3. The real-space pseudopotential transform program is a program that
generates real-space pseudopotentials from reciprical-space pseudopotentials.
13
<PAGE> 14
EXHIBIT B
PERFORMANCE WARRANTY
Licensor will ensure that the Program remains commercially viable as follows:
(i) enables published work to be reproduced
(ii) performs in accordance with its documentation
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.29
SOFTWARE LICENSE AGREEMENT
This Software License Agreement (this "Agreement") is made and entered
into as of 13th February 1986 (the "Effective Date") by and among Roderick E.
Hubbard ("Author") and the University of New York ("York") as co-licensors
(which parties are hereafter referred to collectively as "Licensor"), and
Polygen (UK) Limited, an English liability company with its registered office
at Third Floor Suite, 29 Queen Anne's Gate, London SW1H9BU, ("Licensee").
RECITALS
A. Author has developed a computer program.
B. York has certain rights in such program.
C. Licensor is not properly equipped or in a position to successfully
market such program and prefers to grant Licensee exclusive rights to
commercially exploit such program, and any future-developed computer programs of
substantially similar commercial applicability developed by Author and which are
owned or controlled by York, in return for certain royalties and promises by
Licensee to use its best efforts to exploit such programs as described below.
AGREEMENT
In consideration of the mutual covenants and promises herein contained,
the parties hereto agree as follows:
1. DEFINITIONS
1.1 ORIGINAL WORKS. The reference manuals and other materials listed on
Exhibit A hereto, and he computer program described on Exhibit B hereto, in
source code, executable object code and all other forms.
1.2 FUNCTIONAL DEFINITION OF THE WORKS. The functional description of
the Works described on Exhibit I.
1.3 DERIVATIVE WORKS. A revision, enhancement, improvement,
modification, translation, condensation, or expansion of the Works or any other
form in which the Works may be recast, transferred or ADAPTED. In addition,
"Derivative Works" shall include any computer programs developed by or for
Author, either prior to or subsequent to the Effective Date, which are included
within the Functional Definition of the Works and which Licensor controls to the
extent of being able to grant Licensee the rights contemplated hereunder. In
addition, "Derivative Works" shall also include any
1.
<PAGE> 2
computer programs developed by or for Licensee subsequent to the Effective Date
which are included within the Functional Definition of the Works and which
Licensee controls to the extent of being able to grant Licensor the rights
contemplated hereunder. Licensor and Licensee hereby agree to exercise their
respective best efforts to obtain, exercise, and maintain the control referred
to in this Section 1.3 and Sections 1.4 and 1.5 with respect to Derivative Works
for so long as this provision of this Agreement shall remain in effect.
1.4 LICENSOR IMPROVEMENTS. Derivative Works to the extent that such
Works are created by or for Author and which Licensor controls to the extent of
being able to grant the rights contemplated hereunder.
1.5 LICENSEE IMPROVEMENTS. Derivative Works to the extent that such
Works are created by Licensee and are not created by or for Author within the
meaning of Section 1.4 above.
1.6 WORKS. The Original Works, Licensor Improvements, and Licensee
Improvements, collectively.
1.7 COMMERCIAL SOFTWARE VERSION. Any specific version of the Works
which is marketed generally by Licensee for commercial purposes and which may be
differentiated from other Commercial Software Versions according to any
combination of functional specifications, performance specifications, or the
associated type of computer hardware.
1.8 ACADEMIC SOFTWARE VERSION. Any specific version of the Works which
is made available pursuant to this Agreement by Licensor for Non-Commercial Use
and which may be differentiated from other Academic Software Versions according
to any combination of functional specifications, performance specifications, or
the associated type of computer hardware.
1.9 NON-COMMERCIAL USE. Academic research or educational use which is:
(1) not-for-profit; (2) not conducted or funded by an entity engaged in the
commercial use or exploitation of works similar to the Works; and (3) not
intended to Produce works for commercial use.
1.10 LICENSED WORKS. The Original Works and Licensor Improvements,
collectively.
2. LICENSE.
2.1 GRANT OF EXCLUSIVE LICENSE. Licensor hereby grants Licensee an
exclusive (even as of Licensor), perpetual, worldwide license (sublicenseable
at any level) under and to Licensor's patents, patent applications, copyrights,
know-how, and other
2.
<PAGE> 3
intellectual property and rights of all kinds to: (i) use, reproduce,
distribute, and sell or otherwise dispose of the Works; and (ii) create
Derivative Works. The license granted in this Section 2.1 may be revoked only as
expressly provided in this Agreement.
2.2 GRANTBACK OF RIGHTS. Licensee grants to Author the non-exclusive
right to use the Works and to develop Derivative Works (but not reproduce or
distribute except as otherwise expressly provided under this Agreement) solely
for Non-Commercial Use.
2.3 OWNERSHIP. Title to the Licensed Works shall remain the exclusive
property of Licensor. All rights in Licensee Improvements shall be held
exclusively by Licensee; Licensor may not use, reproduce or distribute Licensee
Improvements in any manner except as otherwise expressly provided under this
Agreement.
3. PROVISION OF PRODUCT BY LICENSEE FOR NON-COMMERCIAL USE.
3.1 LOANER COPY TO LICENSOR. During the term of this Agreement,
Licensee shall grant to Licensor, on the terms and conditions set forth in
Exhibit C hereto (including ongoing maintenance) but without fee, a license to
use Licensee's then-current Commercial Software Versions, on such
Licensee-supported types of machine configurations as Licensee may from time to
time select, exclusively for Non-commercial Use (the "Loaner Copy"). Licensee
reserves the right to limit the number of machine configuration versions
installed at Licensor's site at any one time to two (2) and to require sixty
(60) days written notice in order to replace any version with another.
3.2 DISTRIBUTION.
(a) Licensor shall have the right to distribute copies of the
Academic Software Versions solely for Non-Commercial Use to each person
designated by Author; provided, however, that (i) such copies shall be
distributed only to responsible parties at accredited universities who shall
have first entered into written license agreements with Licensor in the form of
Exhibit D, or such other written form as may from time to time be agreed in
writing between Licensor and Licensee; (ii) the recipients of such Academic
Software Versions under this subsection 3.2(a) shall not be entitled to any
maintenance service, enhancements, or upgrades from Licensee, except as may be
otherwise agreed in writing between a recipient and Licensee in any particular
instance. Such copies shall be distributed at no charge other than the marginal
cost of media, copying and distribution. Licensor shall provide Licensee with
prompt written notice of the costs charged and of any changes thereto over time.
Any changes to such charge shall be as agreed in writing between Licensor and
Licensee. No recipient of copies under this Section 3.2 shall be eligible to
receive another copy under this Section until the first copy shall have been
returned to Licensee. Licensee shall have the right to require Licensor to
comply with the reporting, recordkeeping and audit Provisions of Section 7,
generally, in order to
3.
<PAGE> 4
determine Licensor's compliance with the provisions of this Section 3.2.
Licensor shall furnish Licensee with written notice of the identity and location
of each recipient of a copy of the Academic Software Version and an executed
copy of the applicable license agreement no later than thirty (30) days
following the date of distribution to such recipient.
(b) Licensor shall have the right to direct the distribution
of copies by Licensee of the Commercial Software Versions solely for
Non-Commercial Use to each person designated by Author; provided, however, that
(i) Works which are computer programs shall be distributed only in binary object
code format ("Object Form"); (ii) such copies shall be distributed only to
responsible parties at accredited universities who shall have first entered
written license agreements with Licensor in the form set forth in Exhibit D, or
such other written form as may from time to time be agreed in writing between
Licensor and Licensee, and have delivered an executed copy thereof Licensee;
(iii) the recipients of such software under this subsection 3.2(b) shall not be
entitled to any maintenance service, enhancements, or upgrades from Licensee,
except as may be otherwise agreed in writing between a recipient and Licensee in
any particular instance; and (iv) such copies shall only be distributed in
accordance with Licensee's commercial release schedule. Such copies shall be
distributed at no charge other than the marginal cost of media, copying and
distribution, which costs are currently estimated at U.S. $500.00 for points
within the continental United States. Any changes to such charge shall be as
agreed in writing between Licensor and Licensee. No recipient of copies under
this Section 3.2(b) shall be eligible to receive another copy under this Section
until the first copy shall have been returned to Licensee. Licensee shall notify
Author of each copy distributed pursuant to this Section.
(c) The parties agree that no distribution under the
provisions of subsection 3.2(a) shall be permitted in source code form unless
the recipient shall have previously established to the satisfaction of Author
the specific lines or modules of the source code to be distributed are necessary
or desirable in order to permit the attainment of academic research or
educational objectives. The parties further agree to cooperate technically with
a view toward eliminating the functional necessity in the future for the
distribution of all or any portion of the Academic Software Versions in the form
of source code.
(d) The parties recognize that users of Works distributed
pursuant to Section 3.2 (b) may require the ability, for research purposes, to
interface user or third party-developed software to the Commercial Software
Versions or to replace certain subsystems included within the Commercial
Software Versions with user or third party-developed subsystems. The parties
agree to cooperate on the development of specifications for enhancements to the
Commercial Software Versions which (although all Works distributed in accordance
with Section 3.2(b) which are computer programs
4.
<PAGE> 5
will be distributed solely in Object Form) will operate to facilitate such
interfacing or subsystem substitution activities in a manner that will not
compromise the functional integrity or supportability of the Commercial Software
Versions as installed in the field. Such enhancements would include, but not
necessarily be limited to, the ability to substitute certain types of
user-defined force field parameters, the ability to invoke certain functions of
the Commercial Software Versions at subroutine level, and the production of
documentation describing mechanisms whereby certain defined ASCII data file
formats can be passed to and from the Commercial Software Versions or to and
from certain functional subsystems included within the Commercial Software
Versions.
4. PRODUCT DELIVERY AND ACCEPTANCE.
4.1 INITIAL DELIVERY. Within fifteen (15) days after the Effective
Date, Licensor shall deliver to Licensee a copy of the Original Works.
4.2 DELIVERY OF DERIVATIVE WORKS. Licensor shall promptly deliver to
Licensee a copy of all Licensor Improvements created during the term of this
Agreement. Nothing in this Agreement shall obligate Licensor to create Licensor
Improvements.
5. IMPROVEMENT AND COMMERCIAL EXPLOITATION.
5.1 TECHNICAL DEVELOPMENT BY LICENSEE. Licensee shall use its best
efforts to meet the technical development goals, listed on Exhibit G hereto,
relating to enhancing the Works within the target dates set forth on Exhibit G.
5.2 LICENSEE MARKETING OBLIGATIONS. Licensee agrees to use its best
efforts to promote the Works in the normal course of Licensee's business, as
Licensee shall deem commercially appropriate.
5.3 CONTROL OF MARKETING AND DISTRIBUTION. Subject to the provisions of
Section 5.2 hereof, all aspects of the distribution and marketing of the Works
shall be in Licensee's sole control, including without limitation the methods of
marketing, pricing, naming, packaging, labelling, and advertising, the terms and
conditions of sale and/or license, and the collection of fees. Licensee agrees
that all advertising material shall be in good taste and avoid product
Performance claims which are untruthful or materially misleading. Licensee may
distribute the Works through any combination of direct marketing, distributors,
representatives, original equipment manufacturers, and other means, and either
alone or in combination with other products. Licensee shall, in distributing the
Commercial Software Versions, use a form of End-User License Agreement which is
similar in substance to that attached hereto as Exhibit E.
5.4 PROMOTIONAL USE. It is expressly understood that, pursuant to
Section 5.3, Licensee may, without incurring any royalty pursuant to Section 6
hereof: (i) make copies
5.
<PAGE> 6
of the Works available to potential customers without charge for periods not in
excess of [*]; and (ii) make copies of any corrected or updated works and
distribute them without charge to all previous customers for the works which
were so corrected or updated.
5.5 REFERRAL OF INQUIRIES. Licensor shall refer any inquiries received
by it regarding the commercial use of the Works to Licensee and shall notify
Licensee of each such referral.
5.6 TECHNICAL COMMUNICATIONS. For the first [*] that this Agreement
remains in effect and so long the royalty provisions of Section 6 remain in
force, Author agrees to cooperate with Licensee in the joint solicitation,
collection and collation from recipients of Academic Software Versions no less
frequently than annually their oral and written comments, requests for
enhancements, software report and other technical matters of interest their use
of the Academic Software Version (hereinafter "Technical Communications") and to
present such Technical Communications to Licensee in a forum open to licensed
users of the Academic and Commercial Software Versions where, review and
discussion of these Technical Communications can be promoted with a view toward
improving the quality, functionality and technical standards of the Works. In
organizing such forums, each party shall be responsible for its own costs, and
every effort will be made to ensure the forum is self-supporting on the basis of
admission charges to attendees. Author may elect to discontinue Participation in
the activities contemplated under this Section 5.6 upon written notice to
Licensee at any time after this Agreement has been in effect for [*]. In the
event of such a discontinuance, and provided that the total aggregate royalties
paid to Licensor pursuant to this Agreement equals or exceeds the Maximum
Royalty specified on Exhibit F, Licensee's obligation to pay any royalties
pursuant to this Agreement shall immediately terminate, the licenses granted
pursuant to Section 2.1 and 8.1 shall then immediately become irrevocable and
Licensee's obligations under Sections 5.1 and 5.2 shall terminate.
6. ROYALTY PAYMENTS TO LICENSOR.
6.1 ROYALTY AMOUNT. Licensee shall pay to Licensor royalties equal to
the product of the Royalty Rate applicable to each Commercial Software Version
and the Net License Fees applicable to such Commercial Software Version.
6.2 NET LICENSE FEES.
(a) Subject to the remainder of this Section 6.2, the "Net
License Fees" shall be the aggregate License Fees (as described on Exhibit F)
received by the licensee for each Mainframe or Workstation Configuration
installation of the Commercial Software Versions, less the following deductions
to the extent such deductions are
* CONFIDENTIAL TREATMENT REQUESTED
6.
<PAGE> 7
directly attributable to such installation and are stated separately in the
applicable invoice or in a later statement:
(i) Trade or quantity discounts allowed and
taken by customers, including advertising allowances and marketing fees or
commissions any kind.
(ii) Actual credits to customers on account of
any returns of such Commercial Software Versions.
(iii) Any of the following, when charged to
customers:
(x) transportation and insurance costs from
place of shipment to point of delivery;
(y) excise, sales, value-added, property and
use taxes; and
(z) import and export duties, taxes and
surcharges.
(b) If any Works are distributed with other products in a
package for a single charge, the Net License Fees attributable to such Works
shall be determined by prorating the receipts from the sale or license of the
package according to the published list charges established by Licensee for the
separate products contained in the package whether or not such products are
distributed separately, but shall not exceed the Licensee's published list
License Fee for the applicable Commercial Software Version.
(c) Amounts received by Licensee as deposits or advances shall
not be deemed to have been received until installations of Commercial Software
Versions have occurred with respect to such deposits or advances. If Licensee
receives a Partial Payment for any invoice which includes both the Works and
other products, Licensee shall calculate Net License Fees by Prorating
Licensee's actual receipts over the published list charges established by
Licensee for the separate products included in the invoice.
6.3 ROYALTY RATES. The "Royalty Rate" for Commercial Software Versions
shall be as set forth on Exhibit F.
6.4 MAXIMUM ROYALTY.
(a) In the event that (i) the total aggregate royalties paid
to Licensor pursuant to this Agreement equals or exceeds the Maximum Royalty
specified on Exhibit F and (ii) Licensor shall have elected not o or shall have
failed or been unable to comply with the provisions of Section 5.6 hereof, and
(iii) this Agreement shall have been in effect for [*], then Licensee's
obligations to pay any royalties pursuant to this Agreement shall immediately
terminate, the licenses granted pursuant to Sections 2.1 and
7.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 8
8.1 shall then immediately become irrevocable, and Licensee's obligations under
Sections 5.1 and 5.2 shall terminate.
(b) Notwithstanding the provisions of subsection (a) above, in
the event of and from the date that the conditions of subsections (a)(ii) and
(iii) above are satisfied, Licensee shall have the option thereafter to pay the
balance of the Maximum Royalty amount then unpaid, whereupon Licensee's
obligations to pay any royalties pursuant to this Agreement shall immediately
terminate, the licenses granted pursuant to Sections 2.1 and 8.1 shall then
immediately become irrevocable, and Licensee's obligations under Sections 5.1
and 5.2 shall terminate.
6.5 TAXES. Licensee shall pay or reimburse Licensor for amounts equal
to any taxes, other duties, tax penalties, or amounts in lieu thereof however
designated, now or hereafter levied or based on payments due under this
Agreement, exclusive of taxes based upon Licensor's net income. In lieu thereof,
Licensee may provide to Licensor an exemption certificate acceptable to the
taxing or levying authority.
7. PAYMENTS AND RECORDS.
7.1 QUARTERLY REPORTS AND PAYMENTS. Licensee shall deliver written
reports to Licensor within 30 days after the last day of each calendar quarter
stating the number and type of Commercial Software Versions that were installed
during such quarter, the Net License Fees attributable thereto, and the
royalties thereon, and enclosing Payment of royalties due for such quarter.
7.2 RECORDS. Licensee agrees that it shall maintain complete, clear and
accurate records sufficient to establish the royalties payable pursuant to
Section 6.
7.3 AUDIT. Licensor shall have the right, upon reasonable notice and
during normal business hours, to have independent certified public accountants
acceptable to Licensee examine, at Licensor's expense except as set forth below,
Licensee's records relating to the royalties payable pursuant to this Agreement;
provided, that such accountants must agree in advance in writing to maintain in
confidence and not to disclose to any party any information obtained during the
course of such examination, other than a disclosure to Licensor of the amounts
of fees that should have been paid for the period covered by the examination. It
is agreed that Licensor may utilize its internal auditing staff to perform any
examinations permitted hereunder except that in the event of any dispute,
Licensee may elect by notice in writing to require an examination by independent
certified public accountants acceptable to Licensee. Any errors discovered
during such examination shall be corrected by the appropriate party. In no even
shall any such adjustment be made more than 3 years after the end of the period
in error. In the event such an audit reflects an underpayment of ten percent or
more of the amount that
8.
<PAGE> 9
should have been paid to Licensor for the period examined, then the expense of
such examination shall be borne by Licensee.
8. PROPRIETARY RIGHTS.
8.1 TRADEMARK RIGHTS. Licensor hereby grants to Licensee the right to
use the name "Hydra" for purposes of marketing and promoting the Works. Licensee
shall have no right to use the name "The University of York" without the express
written permission of York, which York may grant, or withhold in its entire
discretion. Licensee may, if it so elects, market the Works under a name of its
own choosing.
8.2 COPYRIGHT AND PROPRIETARY NOTICES. Licensee shall reproduce and
include copyright and proprietary notices on all copies of the Licensed Works in
the same form and manner that such copyright and proprietary notices are
included on the original copies thereof or in such other form and manner as may
be agreed to by Licensor; provided, however, that Licensee may add its own
copyright and proprietary notices to the Licensed Works. Licensee shall use its
best efforts to ensure compliance herewith by all of Licensee's distributors.
8.3 REGISTRATIONS. Licensor agrees to cooperate with Licensee in
obtaining in Licensor's name for Licensee as exclusive licensee any patent,
copyright, or other statutory protections for the Licensed Works in any country.
Licensee agrees to reimburse Licensor for ordinary and necessary out-of-pocket
expenses incurred by Licensor in connection with such cooperation.
9. INFRINGEMENT BY OTHERS.
9.1 NOTIFICATION. Each party shall notify the other of any
infringements of rights in the Licensed Works that come to such party's
attention.
9.2 ACTIONS. In the event of any infringement of any rights granted to
Licensee hereunder, Licensee shall have the first option to bring any action for
such infringement on behalf of itself and Licensor, and Licensor shall cooperate
fully with Licensee in such action. Licensee agrees to reimburse Licensor for
ordinary and necessary out-of-pocket expenses incurred by Licensor in connection
with such cooperation. In such event, Licensee shall bear the expenses of the
action and shall retain any sums recovered in the action. If Licensee declines
in writing to bring any such action, Licensor may proceed and shall bear all
expenses of the action, and shall be entitled to retain all proceeds of such
action.
10. PROTECTION OF CONFIDENTIAL INFORMATION. Licensor shall not disclose any
information received from Licensee pursuant to Section 7 to any party without
Licensee's prior written consent, excepting financial information in such form
as may be required by
9.
<PAGE> 10
and for Licensor's independent certified public accountants or as may be
required in order to comply with governmental reporting requirements. The
restrictions of this Section 10 shall not apply to information which: (a) is, at
the time, in the public domain through no act of Licensor; or (b) is lawfully
known by Licensor from a source other than Licensee with no restriction of
confidentiality.
11. OWNERSHIP WARRANTY AND INDEMNIFICATION.
11.1 WARRANTY. Except as discussed in Section 11.2, Licensor represents
and warrants of Licensee that: ( i ) the Licensed Works are original with
Licensor; (ii) to the best of its knowledge, the Licensed Works do not infringe
upon any patent, copyright, trade secret or other proprietary rights of others;
(iii) to the best of its knowledge, Licensor is the sole and exclusive owner of
the Licensed Works, all rights therein, and the rights granted herein to
Licensee; (iv) Licensor has not previously or otherwise granted any other rights
in the Licensed Works to any third party which conflict with the rights herein
granted to Licensee; (v) Licensor has full power to enter into this Agreement,
to carry out its obligations herein contained, and to grant the rights herein
granted to Licensee.
THE FOREGOING WARRANTY IS THE SOLE WARRANTY OF LICENSOR TO LICENSEE AND
IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OR MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
11.2 EXCEPTIONS. It is understood that Author has made all or portions
of the Original Works available pursuant to non-exclusive licenses to [*]
and [*]. Licensor agrees to use its best efforts to have its
rights in such licenses assigned to Licensee. In addition, it is understood that
Licensor has made all or portions of the Original Works available, for
Non-commercial Use only, to the persons named on Exhibit H pursuant to
non-exclusive licenses. Licensor agrees to use its best efforts to have such
licenses terminated in favor of licenses granted pursuant to Section 3.3 above.
11.3 INDEMNIFICATION BY LICENSEE. Licensee agrees to indemnify, hold
harmless and defend York, its trustees, officers, faculty, employees and agents
against any and all claims, damages, losses or liabilities with respect to death
or injury to person or damage to property resulting from negligence or breach of
warranty by Licensee in connection with the possession, use, operation, or
application of the Works by the Licensee, or Licensee's sublicensees and to pay
(including attorneys' fees) any costs, damages, or expenses arising from any
such claim, damage, loss or liabilities, provided that Licensor promptly informs
Licensee in writing of any such claim, damage, loss or liabilities, and, at
Licensee's request and expense, provides Licensee with all available
* CONFIDENTIAL TREATMENT REQUESTED
10.
<PAGE> 11
information, assistance and authority to enable Licensee to defend the same.
Licensee shall indemnify Licensor for such costs, damages, and expenses as they
are incurred.
11.4 INDEMNIFICATION BY LICENSOR. Licensor agrees to indemnify, hold
harmless and defend Licensee and its officers, employees and agents against any
claims, damages, losses or liabilities resulting from a breach of any of the
warranties set forth above in Section 11.1 and to pay (including attorneys'
fees) any costs, damages, or expenses arising from any such claim, damage, loss
or liabilities, provided that Licensee promptly informs Licensor in writing of
any such claim, damage, loss or liabilities, and, at Licensor's request and
expense, provides Licensor with all available information, assistance and
authority to enable Licensor to defend the same. Licensor shall indemnify
Licensee for such costs, damages, and expenses as they are incurred.
11.5 PROCEDURES. Following notice of a claim or demand or a threatened
or actual suit, Licensor shall, at its own expense, either: first, exercise its
best efforts to procure for Licensee the right to continue the use of the
Licensed Works subject to such claim, damage, loss or liabilities; or, secondly,
having failed to obtain such right, replace or modify such Licensed Works to
make them non-infringing or thirdly, having failed to replace or modify the
Licensed Works, refund no Licensee any royalties paid hereunder. If Licensor
elects to replace or modify any of the Licensed Works, such replacement or
modification shall substantially meet the Performance and interface
specifications of the replaced or modified Licensed Works. Licensee may elect,
upon written notice to Licensor, to replace or modify a portion of the Licensed
Works in which case Licensee shall be entitled to set off Licensee's actual
costs incurred in connection with such replacement or modification against any
royalties otherwise due Licensor hereunder subsequent to the date of such
notice, except that if the entire amount of such costs are not recovered within
one (1) year of such notice, Licensee shall be entitled to recover such charges
thereafter by setting off one-half of the amount of the unrecovered costs
against future royalties and the remaining one-half by way of a refund of
royalties paid to Licensor prior to such notice.
11.6 COMBINATIONS. Licensor shall have no liability for any claim of
infringement based on Licensee's combination of the Licensed Works with programs
or data not supplied by Licensor hereunder, if such claim would have been
avoided by the use of the Licensed Works without such specific program or data.
11.7 SURVIVAL. The warranties and indemnities stated in this Section 11
shall survive the expiration or termination of this Agreement. The foregoing
states Licensor's exclusive liability to Licensee for breach of the warranties
set forth in Section 11.1.
11.
<PAGE> 12
12. TERM AND TERMINATION.
12.1 TERM. This Agreement shall continue until terminated by written
mutual consent of the parties unless earlier terminated as provided herein.
12.2 TERMINATION FOR NON-MARKETABILITY. If Licensee determines that due
to changes in market conditions or for any other reason Licensee will not, or
will not continue to, market or distribute the Licensed Works, Licensee may
terminate this Agreement at any time upon thirty (30) days' written notice to
Licensor.
12.3 TERMINATION FOR BREACH; BANKRUPTCY. If either party materially
breaches or fails to perform any obligation under this Agreement and fails to
remedy such breach within thirty (30) days after receiving written notice of the
breach from the other party, or if either party makes any assignment for the
benefit of creditors, or if any bankruptcy, reorganization, or other proceeding
under any bankruptcy or insolvency law is initiated by it, or is initiated
against it and not dismissed or stayed within thirty days, the other party may
terminate this Agreement effective upon notice.
13. EFFECT OF TERMINATION.
13.1 TERMINATION OF LICENSE. Upon termination of this Agreement, all
rights and licenses to the Licensed Works granted to Licensee hereunder shall,
subject to Sections 5.6 and 6.4, automatically cease, except that for a period
not longer than [*], Licensee may continue to license pursuant to the terms of
this Agreement a number of copies of the Works in Licensee's inventory at the
time of termination which does not exceed [*] of the number of copies licensed
in the preceding six-month period and, except further, that Licensee may retain
and use copies of any version of the Works for the purpose of providing support
to its then-existing customers.
13.2 SURVIVAL OF OBLIGATIONS. The provisions of Sections 1, 2.3, 6.4,
8.3, 9.2, 10, 11, 12, 13, and 14 (and, if provided by Section 6.4, Sections 2.1
and 8.1) shall survive termination of this Agreement and shall continue in full
force and effect thereafter.
13.3 SURVIVAL OF CUSTOMERS' RIGHTS. All rights and licenses granted by
Licensee to third parties prior to termination shall continue indefinitely in
full force and effect.
13.4 OPTION TO ACQUIRE COMMERCIAL SOFTWARE VERSION. In the event this
Agreement is terminated by Licensee pursuant to Section 12.2 or there is a final
adjudication that this Agreement has been lawfully terminated by Licensor
pursuant to Section 12.3, Licensor may elect by notice in writing to Licensee to
transfer to itself and assume or to arrange for the transfer and assumption of
the responsibility for the
* CONFIDENTIAL TREATMENT REQUESTED
12.
<PAGE> 13
marketing and support for the Commercial Software Version, in which case
Licensee shall grant to Licensor a license to all Licensee Improvements included
in the most recent Commercial Software Version. Such license shall be in
substance identical to that originally granted to Licensee except that royalty
obligations in favor of Licensee shall be determined from the date of any such
transfer as if Licensee were Licensor hereunder, based upon the proportion that
the Licensee Improvements then bear to the whole of the Commercial Software
Version.
14. GENERAL.
14.1 NOTICES. All notices, demands or consents required or permitted
hereunder shall be in writing and shall be delivered, sent by telegram or telex,
or mailed to the respective parties at the addresses set forth below or at such
other address as shall have been given to the other party in writing for the
purposes of his clause. Such notices and other communications shall be deemed
effective upon the earliest to occur of (i) actual delivery, (ii) five days
after mailing, addressed and postage prepaid, return receipt requested, or (iii)
one day after transmission by telex or telegram.
14.2 WAIVER AND AMENDMENT. No waiver, amendment or modification of any
provision hereof shall be effective unless in writing and signed by the party
against whom such waiver, amendment or modification is sought to be enforced. No
failure or delay by either party in exercising any right, power or remedy
hereunder shall operate as a waiver of any such right, power or remedy.
14.3 ASSIGNMENT. Either party may assign this Agreement to an entity
which acquires, directly or indirectly, substantially all of its assets or
merges with it. Except as set forth herein, neither this Agreement nor any
rights hereunder, in whole or in part, shall be assignable or otherwise
transferable by either party without the express written consent of the other
party. Subject to the above, this Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the parties hereto.
14.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with English law.
14.5 INTEGRATION. This Agreement, including any attached Exhibits,
constitutes the final, complete and exclusive agreement of the parties
concerning the subject matter hereof, and supersedes any other communication
related thereto.
14.6 SEVERABILITY. In the event that any provision of this Agreement
shall be unenforceable or illegal, such provision shall be deemed modified or,
if necessary, deleted so that the entire Agreement shall not fail, but shall
continue in force and effect.
13.
<PAGE> 14
14.7 ARBITRATION.
(a) With the exception of an action seeking injunctive relief
for breach of Section 10 hereof, any dispute, controversy or claim arising out
of or relating to this Agreement, including the interpretation, performance,
breach or termination hereof, may at the instance of any of the parties hereto
be referred to arbitration by service of notice of arbitration upon each of the
other parties hereto. In the event such a notice of arbitration is served, the
matter in dispute shall be resolved exclusively by arbitration conducted in the
English language in London, England, by a sole arbitrator and otherwise in
accordance with the commercial arbitration rules and supplementary procedures
for international commercial arbitration of the American Arbitration Association
(the "AAA rules").
(b) The sole arbitrator shall be appointed by agreement of the
parties. In the event that the parties fail to agree upon the appointment of the
sole arbitrator within thirty (30) days after service of notice of arbitration
upon each of the other parties has been completed, then the arbitrator shall be
selected and appointed pursuant to the AAA rules.
(c) The parties agree to exclude any right of application or
appeal to the English courts in connection with any question of law arising in
the course of the arbitration or with respect to any award made, except for the
purposes of enforcing the award.
(d) Judgment upon any award made in such arbitration may be
entered and enforced in any court of competent jurisdiction.
14.8 ARBITRATION COSTS. The prevailing party in any arbitration or
judicial action brought to enforce or interpret this Agreement or for relief for
its breach shall be entitled to recover its costs (including its share of
arbitration fees) and its reasonable legal costs incurred in connection
therewith.
14.9 EXPORT.
(a) Licensor is familiar with and agrees to comply with the
rules and regulations of both he United Kingdom and the United States relating
to the export of technical data and equipment and product(s) produced therefrom
(including without limitation in the case of the United Kingdom the Export of
Goods (Control) Order 1985 and the rules, regulations, orders and licenses
promulgated thereunder and in the case of the United States the Export
Administration Regulations of the United States Department of Commerce and other
relevant United States government regulations) which are applicable to the
parties or any of them with regard to any distribution under
14.
<PAGE> 15
Section 3.2(a) hereof by Licensor or any distribution under Section 3.2(b)
hereof which is directed by Licensor.
(b) Licensor shall provide to Licensee all assistance
reasonably necessary to obtain any requisite United Kingdom or United States or
third country import or export licenses or permits relating to the Works.
14.10 RIGHTS AND REMEDIES CUMULATIVE, The rights and remedies herein
provided shall be cumulative and not exclusive of any other rights or remedies
provided by law or otherwise.
14.11 HEADINGS. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
14.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
THE UNIVERSITY OF YORK AGREED:
/s/ [signature illegible] /s/ Roderick E. Hubbard
Authorized Signature Roderick E. Hubbard
Name: [illegible] Address for notices:
Title: Finance Officer Chemistry Department
Address for notices: University of York, Heslington Hall
University of York York Y015DD
Heslington Hall
York Y015DD
POLYGEN (UK) LIMITED
/s/ [signature illegible]
Authorized Signature
Name: [illegible]
Title: Managing Director
Address for notices:
c/o Polygen Corporation
100 Fifth Avenue
Waltham, MA 02154
15.
<PAGE> 16
EXHIBIT A DESCRIPTION OF DELIVERABLE DOCUMENTATION
1. On line help accessed interactively within HYDRA via the VMS help system
routines.
ALL.HLP --- ascii help file
ALL.HLB --- VMS Librarian help file
2. Tutorial
TUTORIAL.RNO
OUTPUT.RNO
3. Descriptions
SELECT.DOC --- description of atom selection and colouring
routines.
SURFACE.DOC --- description of HYDRA interface to external
molecular surface files.
INTRO.DOC --- introduction to HYDRA describing the overall
structure of the program.
DATAFORM.DOC --- description of the data formats and files
used by HYDRA. Definition of external data
formats currently supported.
CASE.HIS --- case histories which are examples of how to
combine commands in HYDRA for certain
applications.
*.TXT --- Edited version of the help libraries
suitable for listing and use as a manual.
1.
<PAGE> 17
EXHIBIT B SOFTWARE SPECIFICATIONS
The HYDRA release tape includes the following files:
PS300 FUNCTION NETWORKS
HYDRAUWF.FOR - initialise PS300 and download user written functions
HYDRANET.FOR - Load HYDRA onto the PS300
PARAMETER FILES
DICT.DNA - dictionary for nucleic acids
DICT.PRO - dictionary for amino acids and proteins
PARAM.PRO - parameters for nucleic acids and proteins
HYDRA SOURCE CODE
BLDCON.FOR - build molecular connectivity
CHANGE.FOR - change running parameters for the program
CHNGHD.FOR - change the head
CNTDRA.FOR - contour a molecular surface
COLAT.FOR - colour atoms
COLMOD.FOR - access property file information
DADCLC.FOR - interactive distance, angle and dihedral calculation
DATHED.FOR - the data head
DELAT.FOR - delete atoms on screen
DICT.FOR - read dictionary and parameter files
DOCK.FOR - the dock head
DRAMOL.FOR - construct molecular structures on PS300
DRASTK.FOR - draw molecular structures on a raster device
DYNAMO.FOR - the dynamics head
FIX.FOR - fix and shade/ghost dynamics display
HARDIS.FOR - initialise HYDRA
HBCALC.FOR - calculate hydrogen bonding
HBEDIT.FOR - edit the hydrogen bond lists
HELP.FOR - access the VMS help libraries
HOST.FOR - establish correct connections between VAX and PS300
HYDAT.FOR - utility routines for handling the HYDRA data format
HYDRA.FOR - the main routine
ID.FOR - identify atoms on screen
IDOUT.FOR - identify atoms in dynamics; display hydrogen bonds or nominated
contacts
INCORP.FOR - incorporate extra information into the HYDRA data format
2.
<PAGE> 18
LISTIT.FOR - list atomic information
LOADAT.FOR - assign type numbers to atoms using dictionary
LSQCHD.FOR - set up least squares through keyboard input
LSQIHD.FOR - the comparison head
LSQINT.FOR - set up least squares interactively
LSQMEN.FOR - handle least squares interactive cues
MODEL.FOR - the model head
MOLCUL.FOR - Mol head for background object generation
MOLSUB.FOR - utility routines for MOL
MOVIE.FOR - the movie head
MUTATE.FOR - mutate protein residues
NAYBR.FOR - display nearest neighbours to atoms
ONEMOL.FOR - the main and second head
ORIGIN.FOR - set the origin of the display
PICKIT.FOR - wait for input from the ps300
PLOT.FOR - produce hard copy plotting files
PLTP.FOR - utility routines for hard copy
PSDRAW.FOR - draw molecules on the ps300
RASTER.FOR - the raster head
RBITS.FOR - raster utility routines
RCONST.FOR - read and write the constants file
RDRAW.LUN - raster head drivers for the LUNDY (Sigmex) terminal
RDRAW.MET - raster head drivers for the Metheus terminal
READIN.FOR - read and write binary files
SELECT.FOR - atom selectionr outines
SET.FOR - set global parameters for running hydra
SHOW.FOR - show the current running parameters for HYDRA
STORVW.FOR - store and retrieve display transformations in a file
SURFACE.FOR - display molecular surfaces
SYMSUB.FOR - symmetry subroutines
SYS.FOR - create a sub-process
TORS.FOR - rotation about a bond
UTIL.FOR - general utility routines
3.
<PAGE> 19
EXHIBIT C
LICENSE QUOTATION
[FORM OF LICENSE QUOTATION]
4.
<PAGE> 20
WITNESSETH
1.1 WHEREAS, POLYGEN developed certain proprietary Software (as that item is
defined under this Agreement) which, when used with Equipment (as that term is
defined under this Agreement), functions as a system for the design and analysis
of chemical structures.
1.2 WHEREAS, POLYGEN is willing to license the use of such Software to Customer
solely upon the terms and conditions set forth in this Agreement, with the
understanding that Customer shall thereby enter into a confidential relationship
with POLYGEN with respect to the subject matter of the Software, and
1.3 WHEREAS, the respective parties hereto warrant that they have full authority
to enter into this Agreement,
TERM
2.1 This Agreement is made for an initial term of two (2) years commencing on
the earlier of the date first written above or execution of the attached
"Licensee Statement of Acceptance" (Appendix B), and shall be deemed renewed
from year to year thereafter unless terminated by either party upon at least
thirty (30) days written notice given by one party to the other prior to the end
of the initial or any renewal term hereof.
CONTENTS OF THE AGREEMENT
3.1 This Agreement constitutes the entire agreement and understanding between
the parties in reference to the subject matter of this Agreement. Any and all
discussions, promises, representations or understandings related to the subject
matter of this Agreement, whether written or oral, shall be void and without
effect to the extent not expressly set forth herein. The following Appendices
are incorporated herein by reference and shall be considered an integral part of
this Agreement:
Appendix A: Acceptance Test Procedure
Appendix B: Licensee Statement of Acceptance
Appendix C: License/Employee Statement of Return
Appendix D: Polygen License Quotation
Appendix E: Polygen Training Policy
Appendix F: Required Minimum Equipment Configuration
Appendix G: Polygen Software Price Schedule
Appendix H: CPU Identification Schedule
3.2 This Agreement, as hereinabove defined, shall be known and designated as the
"Polygen Standard Software License Agreement (U.S.) Rev. 85.1."
5.
<PAGE> 21
EQUIPMENT DEFINITION
4.1 The required configuration of computer hardware and associated peripheral
devices with respect to which (a) the Software is licensed for use by Customer
hereunder and (b) upon or in which Polygen is obliged to install the Software
shall be as set forth in the attached "Required Minimum Equipment Configuration"
(Appendix G) which shall hereinafter be defined and referred to as "Equipment".
Customer agrees to make available for the installation of the Software
at Customer's Design Site or Sites identified in the attached "CPU
Identification Schedule" (Appendix H) within sixty (60) days following execution
of this Agreement, or, if different, the installation date specified in the
attached "Polygen License Quotation" (Appendix D), either (a) solely those items
of Equipment described in the attached "Required Minimum Equipment
Configuration" (Appendix F) or (b) solely those items of Equipment described in
any different or alternative equipment configuration which shall have been
agreed to in writing by the parties by way of a modification made to Appendix F
of this Agreement in accordance with the procedures set forth in Paragraph 17.1
hereof no later than fifteen (15) days following execution of this Agreement, or
ten (10) days prior to any installation date scheduled pursuant to Paragraph
12.1 hereof, whichever date occurs first.
Customer agrees to place the Equipment under POLYGEN or applicable
manufacturers' authorized on-site maintenance arrangements at its own expense
effective no later than the date on which Customer gives POLYGEN written notice
of installation site readiness pursuant to the provisions of Paragraph 12.1
hereof.
SOFTWARE DEFINITION
5.1 Only those software programs which are identified in the Polygen License
Quotation (Appendix E) in the form described by the applicable Program Reference
Guide(s) identified at Paragraph 5.2 below, are being licensed for use by
Customer solely under the terms of and subject to the conditions of this
Agreement, and shall be collectively referred to and defined hereunder as
"Software".
5.2 The Program Reference Guides referred to in Paragraph 5.1 above are as
follows:
A. The CHEMX(TM) System User Reference Guide (C) 1985 Polygen
B. The CHARMM(TM) System User Reference Guide (C) 1985 Polygen
C. The HYDRA(TM) System User Reference Guide (C) 1985 Polygen
D. The DBMS System User Reference Guide (C) 1985 Polygen
6.
<PAGE> 22
LICENSE
6.l POLYGEN grants to Customer a non-exclusive non-transferable license to use
the Software as herein defined (including any and all enhancements to or
revisions thereof released generally by POLYGEN to Software licensees during the
term of this Agreement) in connection with the Equipment as herein defined for
the design and analysis of chemical structures in the manner set forth in the
applicable Program Reference Guide(s), subject to the following conditions and
limitations:
(a) Customer shall use he Software only in connection with the Central
Processing Unit(s) whose serial number(s) is (are) identified in the attached
"CPU Identification Schedule" (Appendix H) (hereinafter referred to as "CPU").
With respect to all CPU's upon which Software is installed, Customer shall
provide POLYGEN with thirty (30) days advance written notice of Customer's
transfer of the use of such Software and CPU(s) to a different Design Site and
the specific location thereof.
(b) Customer shall not copy, reproduce, or duplicate the Software or
any documentation relating thereto by any means whatsoever except for archive or
emergency restart purposes, without having first obtained POLYGEN'S written
consent. Notwithstanding the foregoing, any such otherwise authorized copy,
reproduction, or duplication of the Software or any documentation relating
thereto shall be deemed unauthorized and shall constitute a breach of this
Agreement, unless all POLYGEN copyright, trademark and proprietary notices
contained upon or within the original Software or documentation are incorporated
therein.
(c) Customer shall not permit or suffer the use of the Software by any
person, firm, or corporation, other than by a corporation more than 50% of whose
voting stock is owned by Customer (hereinafter referred to as "Affiliated
Company"), or by any otherwise POLYGEN-licensed user of the Software, in which
case Customer may provide such Affiliated Company or POLYGEN-licensed user with
time-sharing or batch-service use of the Software only.
(d) Customer shall not modify or suffer the modification of the
Software by any person, firm, or corporation, whether or not an Affiliated
Company, parent, or subsidiary of Customer, nor shall Customer otherwise
disclose the contents of the Software to any person, firm, or corporation other
than employees of Customer who are on Customer's premises for purposes
specifically related to Customer's otherwise authorized use of the Software
(e) Customer shall not _______________________________ connection with
the operation of what is known in the trade as a "commercial service bureau."
7.
<PAGE> 23
(f) Customer shall not add to, expand, after, or modify the Equipment
with respect to which the Software was originally installed without POLYGEN'S
prior written consent.
(g) Customer agrees that use of the Software shall be subject to the
terms of the "Polygen Software Price Schedule" (Appendix G) regarding Customer's
liability for payment of initial and Monthly License Fees and that Customer
shall acquire no right to use the Software upon or in connection with any CPU,
except in accordance with this Agreement and in particular, but no by way of
limitation, upon Customer's timely payment to POLYGEN of those Initial and
Monthly License Fees then applicable to the use of the Software upon or in
connection with each such CPU.
TRAINING
7.1 POLYGEN shall provide training to Customer in the use of the Software
licensed under this Agreement in accordance with the terms of the attached
"Polygen Training Policy" (Appendix E).
WARRANTY
8.1 POLYGEN warrants (a) that it has the right to enter into this Agreement; (b)
that the Software and all improvements thereto, including but not limited to
Software enhancements and revisions, will operate in accordance with the
applicable Program Reference Guide(s), as the same may be reviewed from time to
time; (c) that Customer's use of the Software solely in accordance with the
terms of this Agreement will not in and of itself infringe or violate any third
party's rights under any patent, copyright, trademark, or trade secret; and (d)
that the Software shall be capable of performing the then current "Acceptance
Test Procedure" applicable to the Software which is in effect for purposes of
initial acceptance under the then current form of standard Polygen software
license agreement, provided such Software is installed upon and used in
connection with Equipment which is operating in accordance with equipment
manufacturers' specifications.
8.2 In the event it is determined that the Software contains a "bug", POLYGEN
shall devote its best and continuous effort to providing Customer, at the
earliest practicable date, with a "workaround" procedure that will allow the
Software to operate in such a manner as will permit the achievement of results
which are substantially similar in functional content to those described in the
applicable Software specification identified in Paragraph 5.2 hereof,
notwithstanding the existence of the "bug" POLYGEN shall follow a general policy
of correcting of the context of succeeding standard Software releases, but
notwithstanding the foregoing, the content and/or frequency of any such Software
8.
<PAGE> 24
release(s) shall be at all times committed to the sole and absolute discretion
of POLYGEN.
8.3 EXCEPT FOR THE FOREGOING EXPRESS WARRANTY, POLYGEN DISCLAIMS ALL WARRANTIES,
EITHER EXPRESS OF IMPLIED, WITH RESPECT TO THE SOFTWARE, INCLUDING BUT NOT
LIMITED TO ANY WARRANTIES AS TO MERCHANTABILITY OF THE SOFTWARE OR THE FITNESS
OF THE SOFTWARE FOR A PARTICULAR USE. POLYGEN SHALL NOT BE LIABLE FOR ANY
SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF SOFTWARE
BY THE CUSTOMER UNDER ANY CIRCUMSTANCES WHATSOEVER. CUSTOMER AGREES TO INDEMNIFY
POLYGEN AND HOLD IT HARMLESS FROM ANY DAMAGE TO PERSON OR PROPERTY ARISING OUT
OF OR IN CONNECTION WITH CUSTOMER'S USE OF THE SOFTWARE. CUSTOMER'S SOLE AND
EXCLUSIVE REMEDY FOR ANY BREACH OF THE WARRANTIES SET FORTH IN PARAGRAPHS 8.1 AN
D8.2 ABOVE SHALL CONSIST OF CUSTOMER'S RIGHT TO TERMINATE THIS AGREEMENT
PROSPECTIVELY ON THIRTY (30) DAYS WRITTEN NOTICE TO POLYGEN WHEREUPON THE
PROVISIONS OF PARAGRAPH 13.2 OF THIS AGREEMENT SHALL THEN APPLY.
8.4 In the event that any party commences an action, claim, or proceeding
(hereinafter referred to as "claim") against Customer and/or POLYGEN alleging
that the Software or Customer's use thereof in accordance with this Agreement
directly infringes any patent, copyright, or trademark, or violates the trade
secret rights of a third party, Customer may, at its option, cease all payment
of any license fees hereunder upon condition that Customer also ceases all use
of the Software until such time as POLYGEN satisfactorily resolves any such
claims to the end that Customer's use of the Software in accordance with this
Agreement is thereafter unencumbered and free of any such claim. POLYGEN shall
have the affirmative obligation to defend, or at POLYGEN'S option, to settle,
any such claim adversely affecting Customer's use of the Software at POLYGEN'S
expense, provided such sue is in accordance with the terms and conditions of
this Agreement. During the pendency of any such claim referred to above, POLYGEN
may, at its sole option, substitute fully equivalent non-infringing or
non-violative Software, modify the Software so that it no longer infringes or
violates but remains equivalent, or obtain or shall give prompt written notice
to the other of the institution of any such claim, and Customer shall cooperate
fully with POLYGEN in the defense or settlement thereof. The provisions of this
Paragraph 8.4 state the entire liability of POLYGEN and Customer's exclusive
remedy for any such infringement or violations.
8.5 Customer acknowledges that it has either (a) inspected the Software on
POLYGEN premises during the course of a "benchmark" demonstration "thereof or
(b) declined in writing to obtain such an inspection, and agrees that it is
licensing the
9.
<PAGE> 25
Software hereunder subject to any and all defects therein that were apparent (or
would have been apparent in the event (b) applies) as a result of such an
inspection.
OWNERSHIP
9.1 Notwithstanding any other provision of this Agreement to the contrary, it is
hereby agreed that this Agreement constitutes only a license for the use of the
Software by Customer and that nothing contained herein shall operate to convey
to Customer any title to or ownership interest of any kind or nature whatsoever
in the Software or any Polygen Proprietary Information, including, but not
limited to, Program Reference Guide(s). All materials which would disclose all
or any portion of the content of the Software or any Polygen Proprietary
Information shall be returned to POLYGEN OR Customer upon termination of this
Agreement. Notwithstanding anything to the contrary contained herein, POLYGEN
expressly reserves to itself any and all copyright and/or industrial property
rights in and to the licensed Software arising under the law of the United
States or any foreign jurisdiction, except that nothing herein is intended or
shall be construed as constituting or permitting a publication or disclosure of
the licensed Software under the copyright and/or industrial property laws of the
United States or any foreign jurisdiction.
NO OFFICER, EMPLOYEE, OR AGENT OF POLYGEN IS CAPABLE OR TRANSFERRING OR
AUTHORIZING THE TRANSFER OF ANY OWNERSHIP INTEREST IN OR TO THE SOFTWARE OR
POLYGEN PROPRIETARY INFORMATION OR ANY PORTION THEREOF, TO ANY PERSON, FIRM,
CORPORATION, OR GOVERNMENTAL AUTHORITY WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF POLYGEN'S BOARD OF DIRECTORS.
9.2 Any modifications, improvements, and/or enhancements to the Software which
are developed by POLYGEN shall be considered the sole property of POLYGEN,
regardless of whether any such modification, improvement and/or enhancement of
the Software is developed [illegible] to initiate any such development.
9.3 Any software or program developed by Customer at its own expense which
constitutes a "Pre-Processor" or "Post-Processor" shall be the property of
Customer. A "Pre-Processor" shall mean software which produces data which is
suitable in content and format for use as standard input to the licensed
Software, and does not require any modification to the licensed Software in
order to operate. A "Post-Processor" shall mean software which accepts as input
the standard data output of the licensed Software, and does not require any
modification to the licensed Software in order to operate.
9.4 Customer shall not subject or suffer the subjection of the Software or any
Polygen Proprietary Information to any form of attachment, sequestration, claim,
lien, or encumbrance of whatsoever kind or nature other than those imposed
thereon by Polygen.
10.
<PAGE> 26
Any voluntary or involuntary act of Customer purporting to create any such
attachment, sequestration, claim, lien, or encumbrance shall be void and without
effect.
CONFIDENTIALITY
10.1 This Agreement has been entered into by POLYGEN in express reliance upon
Customer's representation to POLYGEN that Customer shall, and by these presents
Customer hereby does, agree to treat the Software and any written material or
electronic storage media, including, but not limited to, magnetic tapes or
disks, Program Reference Guide(s), training materials, or other materials which
describe the nature, operation, or use of the Software, including the contents
thereof, which are received by Customer from POLYGEN pursuant to or in
connection with this Agreement and which have been physically marked or
otherwise designated by POLYGEN as "Proprietary" and/or "Confidential"
(collectively referred to in this Agreement as a "Polygen Proprietary
Information") as strictly confidential and as a POLYGEN trade secret.
Without limiting the generality of the foregoing or any other provision
of this Agreement relating to Customer's confidentiality obligations, Customer
shall, upon the receipt of any such Polygen Proprietary Information, and during
and subsequent to the term of this Agreement, prevent the disclosure of any
Polygen Proprietary Information to any person, firm, or corporation (other than
employees of Customer while on Customer's premises for purposes specifically
related to Customer's authorized use of the Software); Customer shall not permit
any Polygen Proprietary Information to be copied, reproduced, or duplicated by
any means or under any circumstances whatsoever, including, but not by way of
limitation, any transfer of the Software to any form of electronic storage media
other [illegible] identified in the attached "CPU Identification Schedule"
(Appendix H), except to the extent otherwise expressly provided under Paragraph
6.1 of this Agreement; Customer shall not discharge its duties under this
Agreement at any time with any less care than that employed by Customer in
protecting the confidentiality of Customer's own trade secrets or proprietary
information; Customer shall take appropriate action, by instructions, agreement,
or otherwise, with any persons permitted access to Polygen Proprietary
Information so as to enable Customer to satisfy its confidentiality obligations
under this Agreement.
10.2 Notwithstanding the foregoing, Customer's confidentiality obligations
hereunder with respect to Polygen Proprietary Information do not extend to
information which:
(a) becomes publicly available without fault of Customer and without
the fault of any person, firm, or corporation having apparent authority to act
for Customer
(b) is rightfully obtained by Customer from a third party without
restrictions as to disclosure,
11.
<PAGE> 27
(c) is shown by written record to be developed by Customer,
independently of POLYGEN,
(d) is shown by written record to have been known or available to
Customer without restriction as to disclosure at the time of receipt from
POLYGEN, or
(e) is generally furnished to others by POLYGEN without restriction on
disclosure.
10.3 Customer acknowledges that POLYGEN shall be entitled to preliminary
injunctive relief in order to enforce the provisions of this Agreement relating
to the confidentiality of Polygen Proprietary Information in addition to and not
by way of limitation upon any other legal or equitable remedies available to
POLYGEN under the circumstances.
SOFTWARE LICENSE FEES
11.1 So long as this Agreement remains in effect, and subject to the provisions
of Paragraph 11.2 hereof, Customer shall pay to POLYGEN on the first day of each
month a Monthly License Fee in the amount specified in the attached "Polygen
License Quotation" (Appendix D) with respect to each of the applicable Software
products described therein, the first such payment to become due and payable in
United States dollars on the first day of the month which is the same as or
first follows the date on which Customer has or is deemed to have accepted the
Software pursuant to the provisions of Paragraph 12.2 of this Agreement.
Customer shall be liable for a pro rata Monthly License Fee with respect to the
period of time that elapses between Customer acceptance and the first day of the
month following such acceptance, which amount shall become due and payable at
the time Customer's [illegible] POLYGEN the initial License Fee(s) in the amount
specified in the attached "Polygen License Quotation" (Appendix D) with respect
to each of the applicable Software products described therein, which payment(s)
shall become due and payable in United States dollars as of the date on which
Customer has or is deemed to have accepted the Software pursuant to the
provisions of Paragraph 12.2 of this Agreement.
11.2 The Monthly and Initial License Fees described in Paragraph 11.1 above
shall remain in effect for a period of twelve (12) calendar months following the
date of execution of the attached "Licensee Statement of Acceptance" (Appendix
B), whereupon POLYGEN shall thereafter have the unilateral right to increase the
license fees on an annual basis, provided that any such increase shall be
applied in uniform manner to all POLYGEN licensees. POLYGEN shall provide
Customer with three (3) months advance written notice of any increase in the
amount of the Monthly or Initial License Fees hereunder, which increase shall
take effect with respect to the Monthly License Fees due
12.
<PAGE> 28
on the first day of the month which is three (3) months following the date on
which the Customer is furnished with the notice referred to above.
SOFTWARE INSTALLATION AND ACCEPTANCE
12.1 Following execution of this Agreement and POLYGEN'S receipt of written
notification from Customer that the Equipment is available for installation,
POLYGEN installation personnel will install the Software upon or within the
CPU(s). Installation shall be scheduled during normal working hours (8:00 a.m.
to 6:00 p.m.) on normal working days (Monday through Friday), excepting POLYGEN
or Customer observed holidays. Customer shall pay to POLYGEN an installation fee
in the amount specified in the attached "Polygen License Quotation" (Appendix
D).
Customer agrees to permit complete shut-down of the computer system
component of the Equipment and dedication to Software installation for all
periods of time during which actual installation activities occur. Customer
shall allow POLYGEN full and free access to the installation site during
installation. Waiver of liability or other restrictions shall not be imposed by
Customer as a site access requirement. Customer will allow POLYGEN to use
necessary machines, communication facilities and other equipment (except as
normally supplied by POLYGEN) at no charge. Customer shall provide POLYGEN
installation technicians with reasonable working facilities including, but not
limited to, secure storage space, a designated work area with adequate heat and
light, and access to a telephone line, upon request of and at no charge to
POLYGEN. Customer agrees to provide at no charge to POLYGEN suitable storage and
scratch media (including spare tapes and disk packs as [illegible]
12.1 POLYGEN installation personnel will subject the Software, as installed upon
or within the CPU(s) physically located at Customer's Design Site or Sites
identified in the attached "CPU" Identification Schedule" (Appendix A).
Successful execution of the Acceptance Test Procedure by the Software, or
Customer's use of Software for design activities other than user training or
testing purposes, shall be conclusively deemed to constitute acceptance of the
Software by Customer, and Customer agrees that a duly authorized representative
of Customer agrees that a duly authorized representative of Customer shall
thereupon confirm such acceptance to POLYGEN in writing as to each CPU on which
the Software is installed by execution and delivery of the attached "Licensee
Statement of Acceptance" (Appendix B).
12.3 No modification or alteration of or to the Software acceptance criteria of
whatsoever kind or nature shall be effective unless and until agreed to in
writing by POLYGEN and Customer and set forth in full as part of the "Acceptance
Test Procedure" (Appendix A).
13.
<PAGE> 29
TERMINATION AND DEFAULT
13.1 Customer's failure to pay to POLYGEN any license fees when due hereunder,
or Customer's failure to adhere to any of the terms and conditions of this
Agreement, or Customer's failure to perform any of its obligations hereunder
shall constitute a breach of this Agreement and an event of default hereunder
which shall give POLYGEN the right (in addition to, and not by way of limitation
upon POLYGEN'S rights to obtain any other legal or equitable relief available to
POLYGEN under the circumstances) to terminate this Agreement in the event of any
such default remains uncured for more than thirty (30) days following receipt of
written notice thereof from POLYGEN. Receipt of any such notice shall be deemed
to occur on the next day following the wiring of any such notice, or on the
fifth (5th) business day following the mailing of any such notice, to Customer's
address as provided in Paragraph 19.1 of this Agreement.
13.2 Upon termination of this Agreement, the license granted to Customer this
Agreement shall terminate and Customer shall immediately pay to POLYGEN any then
outstanding license fees or other amounts owed to POLYGEN, and Customer shall
(a) return to POLYGEN management control by physical delivery each and every
item of Polygen Proprietary Information furnished to Customer pursuant to,
arising out of, or in connection with this Agreement, (b) delete by total
erasure or destruction any Polygen Proprietary Information embodied on or in any
disk or other form of electronic storage media located upon Customer's premises
or under the supervision, control, or custody of Customer, (c) warrant to
POLYGEN that no Polygen Customer in any form whatsoever, (d) execute and deliver
to POLYGEN a "Employee/Licensee Statement of Return" (appendix C), and (e) take
appropriate action by instructions, agreement, or otherwise to ensure that every
employee of Customer who shall have had access to Polygen Proprietary
Information during the course of his or her employment with Customer complies
with the substance of the provisions contained in the "Employee/Licensee
Statement of Return" (Appendix C).
13.3 In the event that Customer is otherwise entitled to use the Software
pursuant to more than one valid and subsisting license agreements with POLYGEN,
and any one or more of such agreements shall remain in effect following the
termination of this Agreement with respect to Software running on a CPU
identified in the "CPU Identification Schedule" (Appendix H) or any successor
Design Site otherwise permitted under the provisions of Paragraph 6.1(a) of this
Agreement, then the provisions of Paragraph 13.2 above shall only apply and
relate to Polygen Proprietary Information furnished to Customer in connection
with this Agreement.
BUSINESS TERMINATION
14.
<PAGE> 30
14.1 In the event that either party shall cease conducting business in the
normal course, become insolvent, make a general assignment for the benefit of
creditors, suffer or permit the appointment of a receiver for its business or
assets, or shall avail itself of, or become subject to, any proceeding under the
Bankruptcy Reform Act (other than a proceeding under Chapter 11 of Title 1 of
such Act) or any other statute or any governing authority relating to insolvency
or the protection of rights of creditors, then at the option of the other party,
this Agreement shall be deemed to have terminated and the provisions of
Paragraphs 13.2, 13.2, and 13.3 of this Agreement, as applicable, shall then
apply. This Paragraph 14.1 will not be construed to modify any part of all or
Paragraphs 20.1 and 20.2 of this Agreement.
SUCCESSORS IN INTEREST
15.1 All covenants, stipulations, and promises in this Agreement shall be
binding upon and insure to the benefit of the parties hereto and their
respective successors in interest, assignees, and legal representatives. Neither
party shall have the right to assign or otherwise transfer its rights or
obligations under this Agreement without the prior written consent of the other
party; provided, however, that a successor in interest to a party by merger, by
operation or law, or by assignment, purchase, or otherwise, of the entire
business of either party, shall acquire all the rights and be subject to all the
obligations of such party hereunder, without the necessity of obtaining such
prior written consent, provided, however, that nothing herein shall prevent
POLYGEN from assigning this Agreement to a wholly-owned subsidiary of POLYGEN or
from assigning the license fees payable to POLYGEN under this Agreement. On
receiving written notice on any such assignment from POLYGEN, Customer shall
make payment of such license fees as POLYGEN shall direct in writing. Any such
payment by Customer to POLYGEN'S assignee in accordance with POLYGEN directions
shall be treated as payment to POLYGEN for all purposes of this Agreement.
CONSTRUCTION
16.1 Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but in any
provision of this Agreement shall be prohibited by or be invalid under
applicable law, such provision shall be ineffective only to he extent of such
prohibition or invalidity without invalidating the remainder of such provision
of the remaining provisions of this Agreement. The singular and plural forms of
words used in this Agreement may be used interchangeably to conform to the
factual situation described. Headings used in this Agreement are included solely
for purposes of reference, and are to be ignored in the construction thereof.
MODIFICATIONS, AMENDMENTS, AND WAIVERS
15.
<PAGE> 31
17.1 No modifications, amendments, or waivers of any of the provisions or terms
of this Agreement shall be effective unless the same shall be made in a writing
and manually signed by an officer of POLYGEN and a duly authorized
representative of Customer which shall be conspicuously marked as follows:
"MODIFICATION to Polygen Standard Software License Agreement (U.S.) Rev. 85.1."
NON-WAIVER
18.1 No delay of failure of either party in exercising any right hereunder, and
no partial or single exercise thereof, shall be deemed to constitute a waiver of
such right or any other rights hereunder. Any consent by either party to, or
waiver of, a breach by the other, whether express or implied, shall not
constitute a consent to, waiver of, or excuse for any other different or
subsequent breach.
NOTICES
19.1 All notices, requests, and demands given to or made upon either party shall
be in writing and be delivered or mailed to the other party at its address as
specified below:
If to Customer: At the address set forth in the attached Polygen
License Quotation
(Appendix D)
If to POLYGEN: Polygen Corporation
Attn: Contracts Administration
100 Fifth Avenue
Waltham, MA USA 02154
Either party may designate a changed address by giving appropriate written
notice to the other party.
SOFTWARE DOCUMENTATION
20.1 POLYGEN agrees to maintain the Software source code in both human readable
and machine readable form, and all releases, updates, revisions, improvements,
add-ons, enhancements, and other changes thereto (hereafter collectively
referred to as "Software Documentation" in a secure off-site storage location
and in the event that POLYGEN dissolves, ceases to do business in the normal
course, becomes insolvent, makes an assignment for the benefit of creditors, or
becomes a party voluntarily to any proceeding under the Bankruptcy Reform Act
(excepting any proceeding under Chapter 11 of Title 1 of such Act), POLYGEN
shall be obligated, on Customer's written demand to transfer to Customer such
Software Documentation for the sole purposes of enabling Customer to
16.
<PAGE> 32
continue to use the Software without interruption, in accordance with this
Agreement and for no other purpose whatsoever.
20.2 In the event of a transfer to Customer of the Software Documentation under
the circumstances described above, the Customer shall continue to be bound by
all of the terms and conditions of this Agreement, including, without
limitation, the provisions of Paragraphs 10.1, 10.2 and 10.3 hereof relating to
the confidentiality of Polygen Proprietary Information.
TAXES
21.1 Unless otherwise specifically stated on any invoices, the license fees
payable to POLYGEN under the terms of this Agreement are net of and shall not be
reduced by any use tax, sales tax, property tax imposed upon or with respect to
this license, import tax, duty, export fee, withholding tax, gross receipts tax,
turn-over tax, value-added tax, or other tax or charge of a like or similar
nature, other than a tax upon POLYGEN'S net business income, to which such
license fee, POLYGEN or Customer shall be subject to under the laws or
administrative practice of any governmental jurisdiction. Customer agrees to
report and pay any such tax or charge imposed upon Customer or upon the license
fees due POLYGEN and hold POLYGEN harmless therefrom. Customer agrees to pay
POLYGEN for any such tax or charge upon presentation of POLYGEN'S invoice with
respect thereto.
ENFORCEMENT
22.1 The parties hereby agree that any and every controversy arising out of or
relating to this Agreement, or any breach thereof, shall be subject to the
exclusive jurisdiction of the United States District Court for the Eastern
District of Massachusetts. Any and all objections or defenses as to proper forum
or venue are hereby waived.
GOVERNING LAW
23.1 This Agreement shall be governed, construed, and enforced in accordance
with the laws of the Commonwealth of Massachusetts of the United States of
America.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their undersigned duly authorized representatives.
Polygen Corporation ______________________________
(Customer)
By: _______________________ By:___________________________
Title:_____________________ Title:________________________
17.
<PAGE> 33
Date_______________________ Date__________________________
18.
<PAGE> 34
MODIFICATION to Polygen Standard Software License Agreement (U.S.)-Rev. 85.1
1. Paragraph 3.1 - Strike Appendices A, B, C, D, E, F, G, in their entirety
2. Paragraph 4.1 - It is agreed that the definition of "Equipment" shall consist
of a valid Digital Equipment Corporation VAX configuration
3. Paragraph 5.2 - Strike Subparagraphs A, C, and D
4. Paragraph 6.1(g) - Strike in its entirety.
5. Paragraph 7.1 - Strike in its entirety.
6. Paragraphs 10.1, 10.2, and 10.3 - Strike in their entirety, and replace with
the following text:
"Customer agrees that the Software constitutes Polygen Proprietary Information
and shall exercise the same standard of care with respect to protecting
Polygen's ownership interest therein as Customer does with respect to its own
proprietary information. To this end, Customer agrees to provide effective
notice to all authorized persons who are permitted access to the Software of
Polygen's exclusive ownership rights therein.
Notwithstanding the foregoing, Polygen Proprietary Information does not include
information which:
(a) becomes available without fault of Customer and without the fault of any
person, firm, or corporation having apparent authority to act for Customer;
(b) is rightfully obtained by Customer from a third party without restrictions
as to disclosure;
(c) is shown by written record to be developed by Customer, independently of
Polygen;
(d) is shown by written record to have been known or available to Customer
without restriction as to disclosure at the time of receipt from Polygen, or
(e) is generally furnished to others by Polygen without restriction on
disclosure."
7. Paragraphs 11.1 and 11.2 - Strike in their entirety.
8. Paragraph 22.1 - Strike in its entirety.
9. In the event of any conflict between this Agreement and that certain Software
License Agreement by and between Polygen, University of York, and Dr. Roderick
E.
19.
<PAGE> 35
Hubbard dated ___, __, 1986 (the "University of York-Polygen Agreement"), it is
agreed that the terms of the York-Polygen Agreement shall prevail.
20.
<PAGE> 36
Appendix A to
Polygen Standard Software
License Agreement (U.S.) Rev. 85.1
ACCEPTANCE TEST PROCEDURE
[This material is in preparation and will consist of a user-observable procedure
for verifying that all object code modules have been installed and are
functional on the host configuration]
21.
<PAGE> 37
Appendix B to
Polygen Standard Software
License Agreement (U.S.) Rev. 85.1
[Form of Licensee Statement of Acceptance]
22.
<PAGE> 38
Appendix C to
Polygen Standard Software
License Agreement (U.S.) Rev. 85.1
[Form of Employee/Licensee Statement of Return]
23.
<PAGE> 39
Appendix E to
Polygen Standard Software
License Agreement (U.S.) Rev. 85.1
POLYGEN TRAINING POLICY
Customer is credited with the following number of training credits:
The CHEMX(TM)System 2 Training Credits per licensed Workstation CPU
The CHARMM(TM)System 2 Training Credits per licensed Workstation CPU
4 Training Credits per licensed Mainframe CPU
The HYDRA(TM)System 2 Training Credits per licensed Workstation Display
Training includes use of necessary Polygen computer equipment, resources for lab
work and one(1) copy each per attendee of applicable user Software
documentation. Courses include Basic User Training, Advanced User Training,
System Administrator Training, and Central Support Site Training (for which
completion of certain prerequisites is required).
24.
<PAGE> 40
Appendix F to
Polygen Standard Software
License Agreement (U.S.) Rev. 85.1
[Form of Required Minimum Equipment Configuration]
25.
<PAGE> 41
Appendix H to
Polygen Standard Software
License Agreement (U.S.) Rev. 85.1
[Form of CPU Identification Schedule]
26.
<PAGE> 42
EXHIBIT D
ACADEMIC SOFTWARE VERSION LICENSE AGREEMENT
Dear:
In consideration of $(U.S.)/(Pound) (U.K>) ____ to be paid with a check made
payable to University of York and sent to me (hereinafter referred to as the
"LICENSOR"), and upon receipt of a copy of this license duly signed by your
institution (hereinafter referred to as the "LICENSEE"), one copy of the
Academic Software Version of HYDRA (Copyright 198_ (indicate year) by Dr. R.E.
Hubbard), Version __ (indicate version no.), a computer program for graphical
modelling of macromolecules, will be delivered to you. The computer programs and
the magnetic tape on which the programs are delivered, as well as any
modifications or derivative works made by the LICENSEE, are hereinafter referred
to collectively as the "SOFTWARE"; an approximate descriptive list of the
information contained on the magnetic tape is given in Appendix A (attached).
TERMS
1. A nonexclusive nontransferable license is granted to the LICENSEE to install
and use the SOFTWARE on a __________ (indicate machine type) or compatible
computer system located at LICENSEE's institution to which the LICENSEE has
authorized access. Use of the SOFTWARE is restricted to the LICENSEE and
collaborators at his institution who have agreed to accept the terms of this
license.
2. The LICENSOR retains exclusive ownership of all materials (including SOFTWARE
and documentation) delivered to the LICENSEE. Any modification or derivative
works based on the SOFTWARE are considered part of the SOFTWARE and ownership
thereof is retained by the LICENSOR. Annual reports or such modification or
derivative works are to be made to the LICENSOR.
3. The LICENSEE shall not use the SOFTWARE for any purpose (research or
otherwise) that is supported by a "for profit" organization without other
materials delivered to the LICENSEE shall be returned to the LICENSOR or
destroyed by the LICENSEE if so desired by the LICENSOR.
To evidence your acceptance of the terms and conditions set forth above, please
sign in the indicated space and return this letter to the undersigned.
Sincerely ours,
27.
<PAGE> 43
Dr. R.E. Hubbard
Molecular Design Centre
Univeristy of York
READ AND APPROVED
_____________________________Licensee Organization
_____________________________Name and Signature
_____________________________Title
_____________________________Date
28.
<PAGE> 44
EXHIBIT E
[Form of License Quotation]
29.
<PAGE> 45
WITNESSETH
1.1 WHEREAS, POLYGEN developed certain proprietary Software (as that item is
defined under this Agreement) which, when used with Equipment (as that term is
defined under this Agreement), functions as a system for the design and analysis
of chemical structures.
1.2 WHEREAS, POLYGEN is willing to license the use of such Software to Customer
solely upon the terms and conditions set forth in this Agreement, with the
understanding that Customer shall thereby enter into a confidential relationship
with POLYGEN with respect to the subject matter of the Software, and
1.3 WHEREAS, the respective parties hereto warrant that they have full authority
to enter into this Agreement,
TERM
2.1 This Agreement is made for an initial term of two (2) years commencing on
the earlier of the date first written above or execution of the attached
"Licensee Statement of Acceptance" (Appendix B), and shall be deemed renewed
from year to year thereafter unless terminated by either party upon at least
thirty (30) days written notice given by one party to the other prior to the end
of the initial or any renewal term hereof.
CONTENTS OF THE AGREEMENT
3.1 This Agreement constitutes the entire agreement and understanding between
the parties in reference to the subject matter of this Agreement. Any and all
discussions, promises, representations or understandings related to the subject
matter of this Agreement, whether written or oral, shall be void and without
effect to the extent not expressly set forth herein. The following Appendices
are incorporated herein by reference and shall be considered an integral part of
this Agreement:
Appendix A: Acceptance Test Procedure
Appendix B: Licensee Statement of Acceptance
Appendix C: License/Employee Statement of Return
Appendix D: Polygen License Quotation
Appendix E: Polygen Training Policy
Appendix F: Required Minimum Equipment Configuration
Appendix G: Polygen Software Price Schedule
Appendix H: CPU Identification Schedule
30.
<PAGE> 46
3.2 This Agreement, as hereinabove defined, shall be known and designated as the
"Polygen Standard Software License Agreement (U.S.) Rev. 85.1."
EQUIPMENT DEFINITION
4.1 The required configuration of computer hardware and associated peripheral
devices with respect to which (a) the Software is licensed for use by Customer
hereunder and (b) upon or in which Polygen is obliged to install the Software
shall be as set forth in the attached "Required Minimum Equipment Configuration"
(Appendix G) which shall hereinafter be defined and referred to as "Equipment".
Customer agrees to make available for the installation of the Software
at Customer's Design Site or Sites identified in the attached "CPU
Identification Schedule" (Appendix H) within sixty (60) days following execution
of this Agreement, or, if different, the installation date specified in the
attached "Polygen License Quotation" (Appendix D), either (a) solely those items
of Equipment described in the attached "Required Minimum Equipment
Configuration" (Appendix F) or (b) solely those items of Equipment described in
any different or alternative equipment configuration which shall have been
agreed to in writing by the parties by way of a modification made to Appendix F
of this Agreement in accordance with the procedures set forth in Paragraph 17.1
hereof no later than fifteen (15) days following execution of this Agreement, or
ten (10) days prior to any installation date scheduled pursuant to Paragraph
12.1 hereof, whichever date occurs first.
Customer agrees to place the Equipment under POLYGEN or applicable
manufacturers' authorized on-site maintenance arrangements at its own expense
effective no later than the date on which Customer gives POLYGEN written notice
of installation site readiness pursuant to the provisions of Paragraph 12.1
hereof.
SOFTWARE DEFINITION
5.1 Only those software programs which are identified in the Polygen License
Quotation (Appendix E) in the form described by the applicable Program Reference
Guide(s) identified at Paragraph 5.2 below, are being licensed for use by
Customer solely under the terms of and subject to the conditions of this
Agreement, and shall be collectively referred to and defined hereunder as
"Software".
5.2 The Program Reference Guides referred to in Paragraph 5.1 above are as
follows:
A. The CHEMX(TM) System User Reference Guide (C) 1985 Polygen
B. The CHARMM(TM) System User Reference Guide (C) 1985 Polygen
31.
<PAGE> 47
C. The HYDRA(TM) System User Reference Guide (C) 1985 Polygen
D. The DBMS System User Reference Guide (C) 1985 Polygen
LICENSE
6.l POLYGEN grants to Customer a non-exclusive non-transferable license to
use the Software as herein defined (including any and all enhancements to or
revisions thereof released generally by POLYGEN to Software licensees during the
term of this Agreement) in connection with the Equipment as herein defined for
the design and analysis of chemical structures in the manner set forth in the
applicable Program Reference Guide(s), subject to the following conditions and
limitations:
(a) Customer shall use he Software only in connection with the Central
Processing Unit(s) whose serial number(s) is (are) identified in the attached
"CPU Identification Schedule" (Appendix H) (hereinafter referred to as "CPU").
With respect to all CPU's upon which Software is installed, Customer shall
provide POLYGEN with thirty (30) days advance written notice of Customer's
transfer of the use of such Software and CPU(s) to a different Design Site and
the specific location thereof.
(b) Customer shall not copy, reproduce, or duplicate the Software or
any documentation relating thereto by any means whatsoever except for archive or
emergency restart purposes, without having first obtained POLYGEN'S written
consent. Notwithstanding the foregoing, any such otherwise authorized copy,
reproduction, or duplication of the Software or any documentation relating
thereto shall be deemed unauthorized and shall constitute a breach of this
Agreement, unless all POLYGEN copyright, trademark and proprietary notices
contained upon or within the original Software or documentation are incorporated
therein.
(c) Customer shall not permit or suffer the use of the Software by any
person, firm, or corporation, other than by a corporation more than 50% of whose
voting stock is owned by Customer (hereinafter referred to as "Affiliated
Company"), or by any otherwise POLYGEN-licensed user of the Software, in which
case Customer may provide such Affiliated Company or POLYGEN-licensed user with
time-sharing or batch-service use of the Software only.
(d) Customer shall not modify or suffer the modification of the
Software by any person, firm, or corporation, whether or not an Affiliated
Company, parent, or subsidiary of Customer, nor shall Customer otherwise
disclose the contents of the Software to any person, firm, or corporation other
than employees of Customer who are on Customer's premises for purposes
specifically related to Customer's otherwise authorized use of the Software
32.
<PAGE> 48
(e) Customer shall not [illegible] connection with the operation of
what is known in the trade as a "commercial service bureau."
(f) Customer shall not add to, expand, after, or modify the Equipment
with respect to which the Software was originally installed without POLYGEN'S
prior written consent.
(g) Customer agrees that use of the Software shall be subject to the
terms of the "Polygen Software Price Schedule" (Appendix G) regarding Customer's
liability for payment of initial and Monthly License Fees and that Customer
shall acquire no right to use the Software upon or in connection with any CPU,
except in accordance with this Agreement and in particular, but no by way of
limitation , upon Customer's timely payment to POLYGEN of those Initial and
Monthly License Fees then applicable to the use of the Software upon or in
connection with each such CPU.
TRAINING
7.1 POLYGEN shall provide training to Customer in the use of the Software
licensed under this Agreement in accordance with the terms of the attached
"Polygen Training Policy" (Appendix E).
WARRANTY
8.1 POLYGEN warrants (a) that it has the right to enter into this Agreement; (b)
that the Software and all improvements thereto, including but not limited to
Software enhancements and revisions, will operate in accordance with the
applicable Program Reference Guide(s), as the same may be reviewed from time to
time; (c) that Customer's use of the Software solely in accordance with the
terms of this Agreement will not in and of itself infringe or violate any third
party's rights under any patent, copyright, trademark, or trade secret; and (d)
that the Software shall be capable of performing the then current "Acceptance
Test Procedure" applicable to the Software which is in effect for purposes of
initial acceptance under the then current form of standard Polygen software
license agreement, provided such Software is installed upon and used in
connection with Equipment which is operating in accordance with equipment
manufacturers' specifications.
8.2 In the event it is determined that the Software contains a "bug", POLYGEN
shall devote its best and continuous effort to providing Customer, at the
earliest practicable date, with a "workaround" procedure that will allow the
Software to operate in such a manner as will permit the achievement of results
which are substantially similar in functional content to those described in the
applicable Software specification identified in Paragraph 5.2 hereof,
notwithstanding the existence of the "bug" POLYGEN shall follow a general policy
of correcting of the context of succeeding standard Software releases, but
33.
<PAGE> 49
notwithstanding the foregoing, the content and/or frequency of any such Software
release(s) shall be at all times committed to the sole and absolute discretion
of POLYGEN.
8.3 EXCEPT FOR THE FOREGOING EXPRESS WARRANTY, POLYGEN DISCLAIMS ALL WARRANTIES,
EITHER EXPRESS OF IMPLIED, WITH RESPECT TO THE SOFTWARE, INCLUDING BUT NOT
LIMITED TO ANY WARRANTIES AS TO MERCHANTABILITY OF THE SOFTWARE OR THE FITNESS
OF THE SOFTWARE FOR A PARTICULAR USE. POLYGEN SHALL NOT BE LIABLE FOR ANY
SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF SOFTWARE
BY THE CUSTOMER UNDER ANY CIRCUMSTANCES WHATSOEVER. CUSTOMER AGREES TO INDEMNIFY
POLYGEN AND HOLD IT HARMLESS FROM ANY DAMAGE TO PERSON OR PROPERTY ARISING OUT
OF OR IN CONNECTION WITH CUSTOMER'S USE OF THE SOFTWARE. CUSTOMER'S SOLE AND
EXCLUSIVE REMEDY FOR ANY BREACH OF THE WARRANTIES SET FORTH IN PARAGRAPHS 8.1 AN
D8.2 ABOVE SHALL CONSIST OF CUSTOMER'S RIGHT TO TERMINATE THIS AGREEMENT
PROSPECTIVELY ON THIRTY (30) DAYS WRITTEN NOTICE TO POLYGEN WHEREUPON THE
PROVISIONS OF PARAGRAPH 13.2 OF THIS AGREEMENT SHALL THEN APPLY.
8.4 In the event that any party commences an action, claim, or proceeding
(hereinafter referred to as "claim") against Customer and/or POLYGEN alleging
that the Software or Customer's use thereof in accordance with this Agreement
directly infringes any patent, copyright, or trademark, or violates the trade
secret rights of a third party, Customer may, at its option, cease all payment
of any license fees hereunder upon condition that Customer also ceases all use
of the Software until such time as POLYGEN satisfactorily resolves any such
claims to the end that Customer's use of the Software in accordance with this
Agreement is thereafter unencumbered and free of any such claim. POLYGEN shall
have the affirmative obligation to defend, or at POLYGEN'S option, to settle,
any such claim adversely affecting Customer's use of the Software at POLYGEN'S
expense, provided such sue is in accordance with the terms and conditions of
this Agreement. During the pendency of any such claim referred to above, POLYGEN
may, at its sole option, substitute fully equivalent non-infringing or
non-violative Software, modify the Software so that it no longer infringes or
violates but remains equivalent, or obtain or shall give prompt written notice
to the other of the institution of any such claim, and Customer shall cooperate
fully with POLYGEN in the defense or settlement thereof. The provisions of this
Paragraph 8.4 state the entire liability of POLYGEN and Customer's exclusive
remedy for any such infringement or violations.
8.5 Customer acknowledges that it has either (a) inspected the Software on
POLYGEN premises during the course of a "benchmark" demonstration "thereof or
(b)
34.
<PAGE> 50
declined in writing to obtain such an inspection, and agrees that it is
licensing the Software hereunder subject to any and all defects therein that
were apparent (or would have been apparent in the event (b) applies) as a result
of such an inspection.
OWNERSHIP
9.1 Notwithstanding any other provision of this Agreement to the contrary, it is
hereby agreed that this Agreement constitutes only a license for the use of the
Software by Customer and that nothing contained herein shall operate to convey
to Customer any title to or ownership interest of any kind or nature whatsoever
in the Software or any Polygen Proprietary Information, including, but not
limited to, Program Reference Guide(s). All materials which would disclose all
or any portion of the content of the Software or any Polygen Proprietary
Information shall be returned to POLYGEN OR Customer upon termination of this
Agreement. Notwithstanding anything to the contrary contained herein, POLYGEN
expressly reserves to itself any and all copyright and/or industrial property
rights in and to the licensed Software arising under the law of the United
States or any foreign jurisdiction, except that nothing herein is intended or
shall be construed as constituting or permitting a publication or disclosure of
the licensed Software under the copyright and/or industrial property laws of the
United States or any foreign jurisdiction.
NO OFFICER, EMPLOYEE, OR AGENT OF POLYGEN IS CAPABLE OR TRANSFERRING OR
AUTHORIZING THE TRANSFER OF ANY OWNERSHIP INTEREST IN OR TO THE SOFTWARE OR
POLYGEN PROPRIETARY INFORMATION OR ANY PORTION THEREOF, TO ANY PERSON, FIRM,
CORPORATION, OR GOVERNMENTAL AUTHORITY WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF POLYGEN'S BOARD OF DIRECTORS.
9.2 Any modifications, improvements, and/or enhancements to the Software which
are developed by POLYGEN shall be considered the sole property of POLYGEN,
regardless of whether any such modification, improvement and/or enhancement of
the Software is developed [illegible]
35.
<PAGE> 51
EXHIBIT F
ROYALTY RATE
1. Royalty Rate.
A "Workstation Configuration" shall be defined as a central processing
unit which has access to a single copy of the Licensed Works at any one time and
is intended to provide computing capabilities to a single user, which
incorporates an interactive graphics display, and is of a type upon which the
Licensee's interactive molecular graphics software can be installed and operate
in accordance with its specifications. For purposes of this definition, the
Digital MicroVax2 and VaxMate; Sun Microsystems 3/50 and 3/160; and IBM PC and
AT computers shall each be considered a Workstation Configuration.
A "Mainframe Configuration" shall be defined as a central processing
unit which is intended to provide general purpose computing capabilities to
multiple batch or interactive users through the medium of alphanumeric
terminals. For purposes of this definition, the VAX 11/780, 11/785 and 8600;
IBM 43XX and 3XXX; Cray; and CDC Cyber computers shall each be considered a
Mainframe Configuration.
The parties agree to cooperate in determining the proper classification
of any central processing unit, other than those mentioned above, upon which
Licensee may choose to commercially distribute the Licensed Works, based upon
the general criteria described above.
The Royalty Rate shall be determined by application of the following
table:
<TABLE>
<CAPTION>
<S> <C> <C>
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
</TABLE>
Notwithstanding the foregoing, there shall be a Minimum Royalty due under this
Agreement in the sum of [*] per year, which shall be payable thirty (30) days
following the end of the first and subsequent anniversaries of the
* CONFIDENTIAL TREATMENT REQUESTED
36.
<PAGE> 52
Effective Date hereof. The Minimum Royalty shall be fully credited against any
royalties otherwise payable hereunder.
2. License Fees.
License Fees include all initial and ongoing fees for the right of use of the
Commercial Software Versions, on the assumption that Licensee's pricing policy
is based on a single license fee inclusive of the provision of right of use,
software maintenance, application support and software enhancements and
upgrades. In the event that Licensee's pricing policy were to exclude or make
optional the provisions of software maintenance, application support and/or
software enhancements or upgrades (for or in exchange for which additional or
separate sums were to be charged by Licensee), then the License Fees received
for copies of the Commercial Software Versions installed upon Workstation or
Mainframe Configurations would be treated as being [*] of the License Fees as
otherwise calculated.
3. Maximum Royalty.
The Maximum Royalty shall be [*].
4. Royalty Rate on the Documentation.-..
The Royalty Rate on the materials listed on Exhibit A and all Derivative Works
derived from such materials shall be [*].
5. Examples.
(a) For purposes of Section 2, should Licensee offer a permanent
paid-up sublicense of the first Mainframe Configuration installed for say, the
lump sum price of [*], the applicable royalty rate would be [*] (less any
deductions allowable in computing Net License Fees). Should Licensee offer a
sublicense on the basis of an initial license fee of[*] plus an additional
monthly charge of [*] a month for maintenance application support, etc. then the
applicable royalty rate would be [*] (less any deductions allowable in computing
Net License Fees).
(b) In a case where [*] of royalties have been paid, the Royalty Rate
on the next Workstation and mainframe configuration installed would be [*] and
[*], this would then result in more than [*] of royalties having been paid and
the Royalty Rate applicable to the next Workstation and Mainframe Configuration
installed would be [*] and [*] respectively.
* CONFIDENTIAL TREATMENT REQUESTED
37.
<PAGE> 53
(c) In a case where [*] of royalties have been paid, the total
royalty payable on the next Mainframe or Workstation configuration installed
could not exceed [*]. Thereafter all future installations would be royalty
free, the Maximum Royalty having been reached.
* CONFIDENTIAL TREATMENT REQUESTED
38.
<PAGE> 54
Exhibit G Technical Development Goals
The development program will include but not be limited to the following
developments.
1. Integration with CHARMM and CHEMNOTE,.
2. Conversion and implementation on a raster workstation.
3. Improvement of surface representations, for example to display electrostatic
potential and surfaces accessible to solvent.
4. Incorporate energy minimistation routines within HYDRA.
4. Extension of interactive docking routines to simulate multi system
interactions.
5. Design and implementation of generalized user extensibility of the program,
including the development of a macro programming environment accessible through
high level routines.
6. Improve documentation and tutorial.
7. Develop a version of the program suitable for a 16 bit micro with appropriate
graphics resources.
39.
<PAGE> 55
Exhibit H Non - commercial users
[*]
[*]
[*]
[*]
* CONFIDENTIAL TREATMENT REQUESTED
40.
<PAGE> 56
Exhibit I Functional Description of the Software
HYDRA is a system for the interactive geographical representation,
display, manipulation and analysis of macromolecular systems in real time.
This system includes (but is not limited to) the following features.
The program HYDRA has been developed as a general purpose molecular
structure representation, analysis and modelling system. The name reflects the
overall design of the program which has a central "body" of utility routines and
data structure and a collection of "heads". Each of the heads is used for
different aspects of molecular graphics and modelling. For example the COMPARE
head includes all the functions required for the comparison of two molecules,
whereas the MOVIE head contains all the routines for making movies. This modular
approach makes the program easier to learn as the user is only presented with
the subset of commands necessary for his particular application. This design
also facilitates the development and maintenance of the software as it is
relatively straightforward to add new "heads".
The Main Features of HYDRA
Representation of Structure ----- Very flexible atom selection and atom
colouring routines lie at the heart of HYDRA so that any selection of atoms can
be made. This allows the user to put just the atoms and residues he wants to see
on screen, thus decluttering the picture to reveal features of interest.
Representation of Chemical and Physical Properties ---- HYDRA has its own data
format that allows many forms of information to be associated with the molecule
and this extra information can be used as a criterion in selecting or colouring
atoms. In this way important atomic and molecular properties such as surface
accessibility, immunogenicity or crystallographic thermal parameters can be
represented both effectively and easily.
Hydrogen Bonds --- The program contains a hydrogen bond generating routine which
calculates the appropriate bonds for the selected atoms. These are represented
as dashed lines between donor and acceptor. This type of representation is
particularly effective when looking at secondary structure and also when
attempting to rationalise the folding of a protein or its interaction with
substrates.
Representation of Surfaces --- HYDRA can use the output from the Connolly
surface program to produce "dot" representations of the molecular surface. In
the RASTER head it is also possible to produce static shaded representations of
the shaded molecular surface.
41.
<PAGE> 57
Representation of Dynamics --- A unique aspect of HYDRA is the DYNAMICS head for
the display of many structures, for example those calculated by energy
minimisation or molecular dynamics. This is extremely useful for interactive
visualisation and analysis of the results of these types of calculations.
Comparison of Structures ----- HYDRA uses an implementation of the Kabsch
algorithm for optimising the overlap between two structures. Flexible routines
allow the user to easily nominate which parts of the structures are to be fitted
to each other and extensive facilities are provided for analysing the resulting
fit between the two structures.
Docking Two.Molecules ----- The DOCK head allows the user to move and rotate one
molecule relative to another, with real distance and energy calculations
reporting the consequences of this modelling,
Making -Movies ----- The movie head contains extensive facilities for making
movies on the PS300. Here, it is possible to drive all the interactive graphics
functions by commands, and in this way develop a script for the scenes of a
movie.
Interface to CHARMM ----- HYDRA is compatible with the program CHARMM, the
macromolecular mechanics and dynamics package of the Karplus group at Harvard.
Standardisation ----- HYDRA is written in standard FORTRAN-77 and has been
successfully and rapidly installed to run under UNIX and other operating
systems. The program will also operate in a limited way on Sigmex (Lundy) and
Metheus raster terminals.
42.
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.30
SOFTWARE LICENSE AND RESEARCH AGREEMENT
WHEREAS, the parties have had a prior Agreement which the parties now wish to
renew. This Software License and Research Agreement (the "Agreement") is entered
into as of the date last signed below (the "Effective Date") between TIMOTHY F.
HAVEL, Ph.D., an individual with offices at the Department of Biological
Chemistry and Molecular Pharmacology, Harvard Medical School, 240 Longwood
Avenue, Boston, Massachusetts 02115 ("Havel") and BIOSYM Technologies, Inc., a
California Corporation ("BIOSYM") with offices located at 9685 Scranton Road,
San Diego, California 92121-3752 U.S.A., with reference to the following facts:
RECITALS
A. WHEREAS, HAVEL has developed the computer software described in Exhibit "A"
(the "Software"); and
B. WHEREAS, BIOSYM desires to license the Software in order to sublicense, use,
modify, produce, and distribute copies of the Software, and HAVEL desires to
license the Software to BIOSYM on the terms and conditions set forth in this
Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing promises and mutual terms,
covenants and conditions contained herein, the parties agree as follows:
1. Definitions.
(a) "Affiliate" shall mean any corporation or other business entity which
directly or indirectly controls, is controlled by, or is under common control
with BIOSYM. Control means ownership or other beneficial interest in fifty
percent (50%) or more of the voting stock or other voting interest of a
corporation or other business entity.
(b) "Bundled Software" shall mean the merger and/or combination of the
Software with other software developed or licensed by BIOSYM as described in
Exhibit B, as modified from time to time by the parties.
(c) "Confidential Information" shall mean, without limitation, information
concerning invention, confidential know-how, copyrights and trade secrets.
(d) "Derivative Software" shall mean modifications, enhancements
derivatives of and/or portings of the Software.
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<PAGE> 2
(e) "Distributor" shall mean any corporation or other business entity
which is not an Affiliate, and which is authorized by BIOSYM to license or
sublicense BIOSYM Software products to end users.
(f) "Joint Improvements" shall mean any modifications, improvements or
enhancements to the Software arising as result of the collaboration of HAVEL and
BIOSYM.
(g) "Net License Fees" shall mean all monies invoiced by BIOSYM from
sales, sublicenses or transfers of the Software, Derivative Software, and/or the
Bundled Software for BIOSYM excluding maintenance fees and net of any
distributor commissions, taxes, import duties, rebates, customary discounts,
credits, refunds and shipping and handling costs.
(h) "Support Services" shall mean such technical and consulting support to
be provided by HAVEL in order to assist BIOSYM in marketing, developing and
supporting the Software, including without limitation, maintenance,
modification, enhancement, installation, consulting and training.
2. Grant of License.
(a) Subject to the terms and conditions of this Agreement, HAVEL hereby
grants BIOSYM a worldwide, non-exclusive, perpetual, irrevocable and
transferable license to use and modify the Software in both source and object
code form, and all enhancements thereto. Further, subject to the terms and
conditions of this Agreement, HAVEL hereby grants BIOSYM and BIOSYM's Affiliates
and Distributors a worldwide, exclusive (except as provided herein), perpetual
(subject to the provisions of Section 14), and transferable license to produce
and distribute the Software and all enhancements and modifications thereto in
object code and executable form only whether by sublicense or otherwise. Havel
may license no more than [*] copies of the Software to colleagues at
academic institutions who are not affiliated with BIOSYM's competitors for use
for non-commercial purposes only. Such licenses made by HAVEL will clearly state
that BIOSYM Technologies, Inc. is not responsible for any support, maintenance,
documentation or updates of the Software. HAVEL shall obtain, from any such
colleagues, in writing and in a form approved by BIOSYM an Agreement not to use,
sublicense, or distribute the Software for commercial purposes nor to
disseminate it or to disclose details of its operation to others.
(b) BIOSYM grants HAVEL the right to install development versions of any
HAVEL Software to be used by academic and non profit institutions at a national
resource computing facility which will be mutually agreed upon by both parties.
Any legally licensed user would be able to use this Software at the facility.
Academic and
* CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 3
nonprofit users of the development versions of Software may use this Software
free of charge, until it becomes commercially available from BIOSYM, at which
point, a license must be obtained from BIOSYM for its usage.
3. Delivery.
In accord with the prior Agreement between HAVEL and BIOSYM, HAVEL has
delivered to BIOSYM master copies of the source code of that version of the
Software appropriate for compiling, linking, building and execution on Silicon
Graphics and for any other platforms on which it currently runs, suitable for
reproduction, together with one set of supporting documentation, including
instruction manuals for each of these Software versions.
4. Modification.
BIOSYM shall have the right to develop Derivative Software and Bundled
Software. The Derivative Software and that portion of the Software included in
such Bundled Software is subject to all terms and conditions of this Agreement.
5. Workstation Enhancement.
To facilitate further Software development by HAVEL, BIOSYM will either
contribute the sum of [ * ] towards the upgrade of HAVEL's current system to a
workstation with TFP processor, or BIOSYM will provide HAVEL with a workstation
with a TFP processor. If BIOSYM provides HAVEL with a workstation with a TFP
processor, HAVEL will, in turn, convey his current workstation back to BIOSYM.
6. License Fees.
(a) Upon sale, sublicense or other transfer of the Software or Derivative
Software by or for BIOSYM to commercial or non-profit users, BIOSYM shall pay to
HAVEL a royalty equal to the greater of [ * ] of Net License Fees or [ * ] of
the then highest applicable current published retail price for the Software or
Derivative Software. Upon sale, sublicense or other transfer of the Software or
Derivative Software by or for BIOSYM to academic users, BIOSYM shall pay to
HAVEL a royalty equal to [ * ] of its Net License Fees.
(b) Bundled Software will receive royalties to set forth in the schedules
in Exhibit B.
(c) If the Software, Derivative Software, or Bundled Software is marketed
with other software products in a combined software package for a single price,
the Net
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* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 4
License Fees will be determined by prorating the license fees from the package
according to the suggested retail prices or values established by BIOSYM for the
separate products contained in the package, whether or not such products are
marketed separately, provided that such prices or values are reasonably related
to the values or marketing potential of the separate products and are consistent
with prices customarily charged in the industry.
(d) Notwithstanding the preceding paragraph, in the event that any
combined software is marketed by BIOSYM at a published retail price less than
[ * ] (or such greater amount as may be determined by multiplying [ * ] by the
average annual increase in BIOSYM's published retail price list for all BIOSYM
products as of the date of this Agreement) (Herein referred to as "Low End
Combined Software"), the royalty based on Net License Fees of such Low End
Combined Software shall be computed and payable to HAVEL as follows:
<TABLE>
<CAPTION>
Royalty Cumulative Net License Fees
------- ---------------------------
<S> <C>
[*] [ * ]
[*] [ * ]
[*] [ * ]
</TABLE>
(e) Payments and Reports. All royalties due and payable by BIOSYM
hereunder shall be paid to HAVEL in United Sates dollars, and shall be due and
payable, within forty-five (45) days after the end of each calendar quarter.
Each payment to HAVEL shall be accompanied by a report on the distribution of
all copies of the Software, Derivative Software or Bundled Software during the
quarter. Each report will specify (1) the number of copies distributed and per
copy royalty, itemized by type of hardware and type of software (i.e., Software,
Derivative or Bundled); (2) the amount of any research funds being credited
against the total Net License Fees for the period; and (3) the net amount of
royalties (if any) due HAVEL.
(f) BIOSYM shall maintain and make available to HAVEL at HAVEL's
reasonable request and expense, records sufficient to permit HAVEL to verify the
payments due. BIOSYM shall retain such records of a period of at least two
years.
7. Support Services.
(a) During the term of this contract, HAVEL shall provide Support Services
to BIOSYM with the goal of assisting BIOSYM to integrate the Software into
BIOSYM's Software in the most convenient and effective way possible, and to
assist in further development of new Software which will aid users in making the
most effective use of the Software. Time devoted by HAVEL to these activities
shall be allocated and scheduled by mutual agreement and shall not exceed in
total [ * ] man days per year not including travel time.
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* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 5
(b) To enable the development referred to in sub-section (a) HAVEL will be
available to participate with BIOSYM in scientific seminars and meetings for up
to [ * ] additional days per year. Normal and reasonable travel and out of
pocket expenses incurred by HAVEL in connection with the above Support Services
and scientific seminars will be borne by BIOSYM.
(c) HAVEL shall make available to BIOSYM, at no charge to BIOSYM, a copy
of such scientific presentations and papers relating to the Software, its
underlying science and/or their application as HAVEL may itself have published
or have acquired the right to distribute for these purposes, for use by BIOSYM
in its Software marketing effort.
8. Improvements.
(a) HAVEL and BIOSYM agree to collaborate on the continuing development of
the concepts, algorithms, and software code of the Software so as to increase
its scientific value and broaden its application and use in the scientific
market place.
Twice yearly HAVEL and BIOSYM shall meet to review the status of the
Software, to coordinate the technical and business programs, and to establish
and document a specific program of collaborative efforts designed to enhance the
Software and to broaden its use in the scientific market place. The meetings
shall be held at BIOSYM's San Diego headquarters office in April and October, or
at other places and times as the parties may agree. Days allocated by HAVEL to
these meetings shall be part of the [ * ] support service referred to in
section 7(a) and all expenses associated with such meetings, including, but not
limited to, travel and hotel expenses, shall be borne by BIOSYM. Between
meetings it shall be the responsibility of each party to notify the other of any
substantial departure from the commitments made at these meetings.
(b) To facilitate this collaboration, BIOSYM will make available, for the
duration of the contract, salary support at the rate of up to [ * ] per year
plus benefit costs not to exceed [ * ] to cover costs incurred by HAVEL
for employing a scientific programmer or research associate to assist HAVEL with
his future work. Candidates for this position will be chosen jointly by HAVEL
and BIOSYM. Work carried out by this person will be devoted at least 50% to the
BIOSYM-HAVEL joint collaborative program set forth in Section 8(a). Results
generated with the support of BIOSYM's funds under this section shall be
considered Joint Improvements under Section 8(h) and shall be reported to BIOSYM
in writing on a quarterly basis. Amounts paid under this subsection (b) shall be
non-refundable. Such amounts paid will reduce royalties earned by HAVEL by
multiplying the (1) actual royalty earned divided by the (2) actual reported Net
License Fees times the amounts paid under this subsection (b) and deducting the
result from royalties earned.
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* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 6
(c) Title to and copyright in any modifications, improvements, or
enhancements made by BIOSYM to the Software as licensed herein shall vest in
BIOSYM. For the duration of this Agreement, BIOSYM shall promptly make available
to HAVEL any such modifications, improvements, or enhancements. BIOSYM hereby
grants a non-exclusive, fully-paid worldwide license to HAVEL to use any
modifications, improvements, or enhancements in his own work, but not to
sublicense others for any purpose. BIOSYM agrees to provide, free of charge to
HAVEL, up to two (2) copies of any software containing any modifications,
improvements, or enhancements made by BIOSYM pursuant to this Section .
Copyrights on these enhancements will belong to BIOSYM. The sale, sublicense or
distribution of all such modifications, improvements, or enhancements shall be
subject to all the terms and conditions of this Agreement.
(d) Title to any modifications, improvements, or enhancements made by
HAVEL to the Software as licensed, except those (i) developed under BIOSYM
funding as set forth in Section 8(b), herein or (ii) jointly developed as set
forth in Section 8(e) herein shall vest in HAVEL, except that all such
improvements shall automatically be licensed to BIOSYM under the terms of this
Agreement. For the duration of this Agreement, HAVEL shall promptly make
available to BIOSYM any such modifications, improvements, or enhancements, and
agrees to provide, free of charge to BIOSYM, copies of any Software containing
any modifications, improvements, or enhancements made by HAVEL pursuant to this
Section . Copyrights obtained on this Software will belong to HAVEL. The sale,
sublicense or distribution of all such modifications, improvements, or
enhancements shall be subject to all of the terms and conditions of this
Agreement.
(e) Title of any modifications, improvements, or enhancements made by the
joint collaboration of HAVEL and BIOSYM to the Software as licensed herein
("Joint Improvements") including all results of work supported by BIOSYM's
funding under Section 8(b) shall vest in HAVEL and BIOSYM as tenants in common.
Each party grants to the other a non-exclusive, non-transferable right and
license to use the Joint Improvements, and to BIOSYM a worldwide, exclusive,
perpetual, irrevocable, and transferable license to license to produce and
distribute the Joint Improvements to become part of the public domain without
the prior express written authorization of the other party. Copyrights on these
improvements will be held jointly. The sale, sublicense or distribution of all
such modifications, improvements, or enhancements shall be subject to all of the
terms and conditions of this Agreement.
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<PAGE> 7
(f) Should BIOSYM re-implement the Software in BIOSYM's interactive
software environment, HAVEL shall make all subsequent modifications,
improvements, or enhancements utilizing the same interactive environment as part
of the joint collaboration with BIOSYM as set forth under Section 8(b). BIOSYM
hereby grants HAVEL a non-exclusive, fully paid worldwide license for the term
of this contract to use the software that makes up BIOSYM's interactive software
environment pursuant to this Section , but not to sublicense others for any
purpose.
(g) During the term of this Agreement, BIOSYM will, under its standard
license terms, make available without change to HAVEL up to two (2) copies of
all products offered commercially by BIOSYM, excluding those developed within
BIOSYM's industry-funded consortia, together with its standard Software
documentation and academic support services. This will include, but is not
limited to, the programs INSIGHT and DISCOVER.
(h) HAVEL agrees to promptly inform BIOSYM during the term of this
Agreement and for [ * ] after the date of termination of this Agreement of
each new computer software program (i.e., beyond the scope of normal
enhancements to the Software) which HAVEL intends to develop for sale or
licensing, and HAVEL will give BIOSYM a written notice setting forth the
specifications for each such program. HAVEL will offer BIOSYM the right to
market each such program and will negotiate the terms and conditions of such
marketing in good faith. If BIOSYM and HAVEL are unable to agree upon the terms
and conditions within ninety (90) days of HAVEL's written notice, then HAVEL
shall be free to market the program to end users, distributors, publishers or
any third party. BIOSYM agrees and understands that this right of first refusal
may be subject to the terms and conditions of HAVEL's employment with Harvard
University. Further, in the case where HAVEL collaborates with others in the
development of such program, HAVEL shall attempt, but shall not be obligated to,
secure a similar right of first refusal from such collaborator.
9. Representations and Indemnity.
(a) Conformance. HAVEL warranted that for a period of one year from the
Effective Date of the prior Agreement between the parties, the Software would
operate substantially in conformance with its description as set forth on
Exhibit A to the prior Agreement. HAVEL makes no further warranties, and the
above described warranties shall be deemed to be ongoing as a result of this
Agreement.
HAVEL DISCLAIMS ALL WARRANTIES RELATING TO THE SOFTWARE. EXPRESS OR
IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
ANY PARTICULAR PURPOSE.
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* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 8
(b) Ownership. HAVEL hereby represents and warrants that they have
and will continue to have all right, title, ownership interest and/or rights
necessary to grant the rights and licenses to BIOSYM set forth herein, that they
have not entered into agreements or commitments which are inconsistent with or
in conflict with the rights granted to BIOSYM hereunder, and that the Software
and its use does not and will not violate or infringe upon any patent,
copyright, trade secret or other property right of any other person.
Specifically, HAVEL represents that he has obtained from his pervious
employer, the University of Michigan, the right to license the Software as
prescribed by this Agreement, and that he will be solely responsible for any
compensation to which it may be entitled as a result of the activities which
this Agreement envisions. A copy of HAVEL's Agreement with the University of
Michigan is attached as Attachment C.
(c) Indemnification by HAVEL. HAVEL will indemnify BIOSYM against any
claim that the Software as delivered by HAVEL infringes any third party's
patent, copyright or trade secret under the laws of the United States. HAVEL's
obligation to indemnify BIOSYM shall be subject to the following terms and
conditions:
(i) The obligation will arise only if BIOSYM gives HAVEL prompt
notice of the infringement claim. HAVEL may, at its option, conduct the defense
and BIOSYM promises fully to cooperate with such defenses. In any case no
settlement shall be agreed to without the consent of both parties which consent
will not be unreasonably withheld.
(ii) The obligation will cover only the Software as delivered by
HAVEL and will not cover any correction, modification or addition made by anyone
other than HAVEL.
(iii) The obligation will not cover claims that the Software
infringes any third party's rights as used in combination with any software not
supplied by HAVEL or hardware specified by HAVEL if that claim could have been
avoided by the use of the Software in combination with other software or
hardware.
(iv) If any infringement claim is asserted, or if HAVEL believes one
likely, HAVEL will have the right, but no obligation, to procure at no cost to
BIOSYM a license from the person claiming or likely to claim infringement or to
modify the Software to avoid the claim of infringement. Modification for this
purpose will not materially impair the operation of the Software.
THE FOREGOING IS HAVEL'S EXCLUSIVE OBLIGATION WITH RESPECT TO CLAIMS OF
INFRINGEMENT OF PROPRIETARY RIGHTS OF ANY KIND. HAVEL WILL NOT BE LIABLE FOR ANY
SPECIAL, INCIDENTAL OR
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<PAGE> 9
CONSEQUENTIAL DAMAGES, EVEN IF INFORMED OF THE POSSIBILITY THEREOF IN ADVANCE.
IN NO EVENT WILL HAVEL'S LIABILITY IN CONNECTION WITH THE SOFTWARE OR THIS
AGREEMENT EXCEED AMOUNTS PAID TO HAVEL BY BIOSYM HEREUNDER. THESE LIMITATIONS
APPLY TO ALL CAUSES OF ACTION IN THE AGGREGATE, INCLUDING WITHOUT LIMITATION
BREACH OF CONTRACT, STRICT LIABILITY, MISREPRESENTATION AND OTHER TORTS.
(d) BIOSYM represents and warrants that (a) any Derivative Software by
BIOSYM, and/or any contribution to the Software by BIOSYM, will not infringe
upon any patent, copyright, trade secret or other proprietary rights of others;
and (b) BIOSYM has full power to enter into this Agreement, and to carry out its
obligations hereunder.
BIOSYM will indemnify, defend and hold HAVEL harmless from any loss, expense
(including reasonable attorneys' fees), damage or liability arising out of any
claim, demand or suit resulting from a breach of the warranties set forth above,
and/or arising out of BIOSYM's marketing and distribution of the Software or
Derivative Software or Bundled Software. HAVEL will provide such cooperation
with all out of pocket costs as BIOSYM may reasonably require at BIOSYM's sole
expense in the defense of any such suit or action.
THE FOREGOING WARRANTIES ARE FOR HAVEL'S EXCLUSIVE BENEFIT AND ARE
NONTRANSFERABLE. THE FOREGOING WILL BE HAVEL'S EXCLUSIVE REMEDIES FOR BREACH
OF THE FOREGOING WARRANTY BY BIOSYM. BIOSYM DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS AND IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR ANY PARTICULAR PURPOSE.
THE FOREGOING IS BIOSYM'S EXCLUSIVE OBLIGATION WITH RESPECT TO CLAIMS OF
INFRINGEMENT OF PROPRIETARY RIGHTS OF ANY KIND. BIOSYM WILL NOT BE LIABLE FOR
ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, EVEN IF INFORMED OF THE
POSSIBILITY THEREOF IN ADVANCE. IN NO EVENT WILL BIOSYM'S LIABILITY IN
CONNECTION WITH THE SOFTWARE OR THIS AGREEMENT EXCEED AMOUNTS RECEIVED BY BIOSYM
AS NET LICENSE FEES HEREUNDER. THESE LIMITATIONS APPLY TO ALL CAUSES OF ACTION
IN THE AGGREGATE, INCLUDING WITHOUT LIMITATION BREACH OF CONTRACT, BREACH OF
WARRANTY, BIOSYM'S NEGLIGENCE, STRICT LIABILITY, MISREPRESENTATION AND OTHER
TORTS.
Sub-sections (c) and (d) of this section 8 shall survive any termination of this
Agreement.
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<PAGE> 10
10. Confidentiality.
(a) Confidentiality of Disclosures. In the course of performing and in the
negotiations leading to the execution of this Agreement, HAVEL and BIOSYM may
disclose to each other information concerning their respective inventions,
confidential know-how, copyrights and trade secrets, as may be necessary to
further the purposes of this Agreement. All such Confidential know-how,
copyrights and trade secrets disclosed hereunder shall remain the sole property
of the party disclosing them and the receiving party shall have no interest in
or rights with respect thereto except as expressly set forth in this Agreement.
Without prejudice to the generality of the foregoing, the source and object code
for the Software are regarded as included in the Confidential Information by
HAVEL. This Agreement shall not, however, prevent either party from marketing
products in the future that are competitive with products marketed by the other
party, provided no Confidential Information of the other party is made use of.
(b) Nondisclosure Obligations. HAVEL and BIOSYM each agrees to take all
reasonable precautions to prevent any unauthorized disclosure of such
confidential information. The foregoing restrictions on disclosure shall survive
the termination, expiration or cancellation of this Agreement, but shall not
apply to any information which: (a) is in the public domain as of the date of
receipt by the receiving party; (b) hereafter becomes known to the public
through no fault of the receiving party; (c) is in the possession of the
receiving party at the time of disclosure; (d) is independently developed by the
receiving party's employees having no access to such confidential information;
(e) is subsequently obtained by the receiving party from an independent,
third-party source having no obligation of confidentiality directly or
indirectly to the disclosing party; (f) the disclosure of which is required by
law.
This Section 10 shall survive any termination of this Agreement.
11. Relationship of the Parties.
The relationship between HAVEL and BIOSYM under this Agreement is intended
to be that of independent contractors. Except as set forth in Section 8(e),
nothing in this Agreement is intended to be construed so as to constitute BIOSYM
and HAVEL as partners or joint venturers, or either party hereto as the employee
or agent of the other party. Except as expressly set forth herein, neither party
hereto has any express or implied right or authority under this Agreement to
assume or create any obligations on behalf of or in the name of the other party
hereto or to bind the other party hereto to any contract, Agreement or
undertaking with any third party.
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<PAGE> 11
12. Ownership of the Software.
(a) Subject to the rights granted to BIOSYM herein, HAVEL has and will
retain and maintain all ownership rights to the Software. HAVEL agrees to take
all actions required or appropriate, in BIOSYM's opinion and at BIOSYM's cost,
to protect the proprietary nature of the Software, including making copyright
filings where directed by BIOSYM.
(b) BIOSYM will, at its sole expense, take all actions reasonably required
to appropriate in HAVEL's opinion, to protect BIOSYM's proprietary rights of the
modifications, improvements and enhancements referred to in Section 6(b) of this
Agreement.
(c) The parties agree that they will take all actions required as
appropriate, in their joint opinion and at BIOSYM's cost, to protect their joint
proprietary rights in the Joint Improvements.
(d) BIOSYM will place or cause to be placed in and on each copy of
Software, Derivative Software and Bundled Software that it distributes an
appropriate copyright notice in the following form:
(i) In the case of the Software or any Derivative Software
developed by HAVEL: Copyright(C) 19__ Timothy F. Havel, Ph.D.;
(ii) In the case of any Derivative Software or Bundled Software
developed with contributions from BIOSYM, or in the case of any Derivative
Software developed by BIOSYM: Copyright(C) 19__ HAVEL and BIOSYM Technologies,
Inc.
13. Term and Termination.
(a) The prior agreement between HAVEL and BIOSYM was for a period of three
years commencing on November 15, 1990 and ending on November 15, 1993. This
Agreement shall continue for an initial period of [*] from the
November 16, 1993 and shall continue thereafter on a year-to-year basis unless
terminated by written notice by either party to the other party at least ninety
(90) days prior to the annual renewal date. All other sections of this Agreement
will survive any such termination.
Should the Agreement be allowed to lapse, however, BIOSYM will
nevertheless retain the right to market the Software together with enhancements
developed under this Agreement in its then current form as long as it continues
to pay royalties on the Net License Fees which it receives therefrom as
prescribed in Section 5(a) through 5(d). This Agreement shall be terminable at
any time upon a material breach of this Agreement, at the discretion of the
non-breaching party, upon the thirtieth (30th) day after either party
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* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 12
gives the other notice of such breach by the other, unless the breach is cured
before that day.
14. Infringement by Others.
Each party will notify the other of any infringement of rights in the
Software or Derivative Software and/or Bundled Software that comes to such
party's attention. In the event of any infringement of any rights granted to
BIOSYM hereunder, BIOSYM shall bring an action for such infringement on behalf
of itself and HAVEL, and HAVEL will cooperate fully with BIOSYM in such action.
BIOSYM will bear the expenses of the action and may recover its expenses from
any sums recovered in the action. The balance of the proceeds from such action
will be deemed to be Net License Fees from a sublicense of the Software or
Derivative Software and/or Bundled Software that is infringed and will be
divided between BIOSYM and HAVEL according to the percentage specified in
Section 4(a), provided, however, that if the infringement involves a combination
of the Software with other products, then the percentage will be prorated.
15. Miscellaneous.
(a) Amendment. This Agreement may be amended or supplemented only in
writing signed on behalf of both parties.
(b) Waiver. No waiver will be implied from conduct or failure to enforce
rights. No waiver will be effective unless in writing signed on behalf of the
party claimed to be waived.
(c) Contingencies. Neither party will have the right to claim damages or
to terminate this Agreement as a result of the other's failure or delay in
performance due to circumstances beyond its reasonable control, such as labor
disputes, strikes, act of God, or governmental action not the fault of the
non-performing party.
(d) Severability. If any party of this Agreement is found invalid or
unenforceable, it will be enforced to the maximum extent permitted by the law,
and all other parts of this Agreement will remain in force.
(e) Equitable Relief. Either party may have injunctive, preliminary or
other equitable relief to remedy any actual or threatened unauthorized
disclosure or confidential information.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
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<PAGE> 13
(g) Governing Law. This Agreement shall be governed by and construed under
the internal laws of the State of California, U.S.A., without regard to any
rules of conflicts of law applicable to agreements made and to be performed by
such state by and among residents of such state.
(h) Assignment. BIOSYM may assign this Agreement to the surviving entity
in a merger or consolidation in which its participates or to a purchaser of all
or substantial all of its assets and to any of its Affiliates or Distributors.
Otherwise, neither party may assign any rights or delegate any duties under this
Agreement without the other's prior written consent, and any attempt to do so
without that consent will be void. Subject to the foregoing, this Agreement
shall bind and inure to the benefit of the parties and their respective
successors, heirs and permitted assigns.
(i) Notices. All notices and other communications required herein shall be
in writing and shall be delivered personally (which shall include delivery by
courier or overnight delivery service) or sent by certified or registered mail,
postage prepaid, return receipt requested or sent by telex, telecopier or other
similar facsimile transmission. Items delivered personally or by telex,
telecopier or facsimile shall be deemed delivered on the day of delivery; items
sent by certified or registered mail shall be deemed delivered three (3) days
after mailing. The address of the parties for purposes of this provision are:
HAVEL: Timothy F. Havel, Ph.D.
Department of Biological Chemistry
& Molecular Pharmacology
Harvard Medical School
240 Longwood Avenue
Boston, Massachusetts 02115
BIOSYM: BIOSYM Technologies, Inc.
9685 Scranton Road
San Diego, California 92121
Attn: Todd Schmidt
Vice President, Finance and Administration
Either party may change its address by giving notice thereof as required herein.
(j) Entire Agreement. This Agreement represents the entire Agreement
between the parties relating to the Software and supersedes all prior
representations, discussions, negotiations and agreements, whether written or
oral.
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<PAGE> 14
(k) Further Assurances. Each of the parties hereto shall execute and
deliver all additional documents and shall do any and all acts and things
reasonably required in connection with the performance of the obligations
undertaken in the Agreement and to effectuate in good faith the intent of the
parties.
(l) Exhibits. All exhibits referred to herein are hereby deemed
incorporated by reference.
IN WITNESS WHEREOF, each of the parties have executed this Agreement
effective as of the date last written below:
HAVEL BIOSYM Technologies, Inc.
a California corporation
By: /s/ Timothy F. Havel By: /s/ T.W. Schmidt
--------------------------------- ----------------------------------
Title: Lecturer, HMS Title: V P Finance and Administration
------------------------------ -------------------------------
Date: 11/22/94 Date: 11/21/94
------------------------------- --------------------------------
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<PAGE> 15
EXHIBIT "A"
DESCRIPTION OF DISTANCE GEOMETRY SOFTWARE
SOFTWARE NAME: DG-II
SOFTWARE DESCRIPTION: A package of computer programs designed to assist chemists
and biochemists in the construction of three-dimensional molecular models of
essentially arbitrary molecules from constraints on the values of their
interatomic distances, together with the chirolities and/or planarities of
selected quadruples of atoms.
CODE DESCRIPTION: Modular design in C language suitable to run on Silicon
Graphics and Sun Workstations.
<PAGE> 16
EXHIBIT "B"
Royalties
BUNDLED SOFTWARE ROYALTY RATE (*) DATES
---------------- ---------------- -----
Consensus [*], with a minimum of [*]
[*] of list price
NMR Refine Complete [*] with a minimum of [*] [*]
NMR Refine DGII [*], with a minimum of [*] [*]
of list price
Converter [*], with a minimum of [*] [*]
of list price
Sketcher [*], with a minimum of [*]
[*] of list price
(*) Minimums apply to commercial users and non-profit users only
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 1
EXHIBIT 10.31
SOFTWARE LICENSE/RESEARCH AGREEMENT
between
D-MOL, INC. and BIOSYM TECHNOLOGIES, INC.
Effective February 19, 1988, this Agreement is drawn between D-Mol,
Inc., an Illinois corporation (hereinafter "D-Mol"), and BIOSYM Technologies,
Inc., a California corporation having offices at 10065 Barnes Canyon Road, Suite
A, San Diego, California 92121, U.S.A. (hereinafter "BIOSYM").
WHEREAS, D-Mol has acquired a body of technology including a valuable
and proprietary computer modeling package called "D-Mol" (Hereinafter
"Software") which includes certain computer programs and attendant documentation
relating to improved density functional quantum mechanical methods for
calculating molecular energies and charge and spin distributions; and
WHEREAS, BIOSYM is desirous of securing a license to copy, market and
sublicense Software, and D-Mol has the right to license and is willing to grant
this license to copy, market, and sublicense upon the terms and conditions
hereinafter set forth; and
WHEREAS, D-Mol and BIOSYM wish to collaborate on the further
development, application, and commercialization of this technology and the
Software program;
NOW THEREFORE, for and in consideration of the mutual covenants set
forth herein and other valuable considerations, it is agreed by and between the
parties as follows:
ARTICLE 1.0
GRANT OF LICENSE
1.1 D-Mol hereby grants to BIOSYM, upon the terms and conditions herein
specified, a non-exclusive, non-transferable 20 year license extendible by
mutual agreement to reproduce Software and all enhancements thereto, and an
exclusive, except to the extent provided for in Paragraph 1.2, worldwide license
to use and to sublicense others to use Software and all enhancements thereto
provided such sublicense is granted in writing and contains terms consistent
with those in BIOSYM's then current standard Sublicensing Agreement, a current
copy of which is attached hereto as Exhibit A. Material changes to the
Sublicensing Agreement will be subject to D-Mol's approval which shall not be
unreasonably withheld.
1.
<PAGE> 2
1.1.1 In return for the grant of the licenses hereunder,
BIOSYM shall use its best efforts to commercialize and market Software in all
territories for all commercially promising applications, including, but not
limited to, Software license and service agreements, time share use of the
Software, and research contracts, on a worldwide basis, and shall seek to
maximize the cumulative financial return for such efforts, consistent with
prudent and ethical business practice.
1.1.2 At any time within three years of the date hereof, if
opportunities exist or develop which D-Mol does not believe are being addressed
by BIOSYM in a timely and effective manner, D-Mol may ask BIOSYM to make
reasonable commitments to address such opportunities. If BIOSYM is unwilling to
make such commitments or subsequently does not substantially meet commitments
made, D-Mol upon written notification to BIOSYM's President and Board of
Directors specifying the steps D-Mol believes should be taken and provided that
BIOSYM does not effect reasonable commitments within 90 days following
notification, shall have the right to license to use and sublicense others to
use Software and all enhancements thereto with respect to such opportunities.
Where D-Mol grants such a license, D-Mol shall pay to BIOSYM twenty percent of
the compensation which it receives under the terms of said license.
1.1.3 In the event that BIOSYM shall license Software jointly
with any other product, the license fee attributable to Software shall be that
portion of the total license fee which corresponds to the proportion which the
retail license fee of Software bears to the total retail license fees of all of
the products jointly licensed.
1.2 D-Mol reserves to itself and others with whom D-Mol collaborates
directly on non-proprietary, non-commercial research, a non-exclusive, fully
paid, worldwide right to use Software but not to sublicense others, and further
reserves to itself, Arthur J. Freeman, and Bernard Delley a non-exclusive, fully
paid, worldwide right to use Software and all enhancement thereto, for all
purposes, including research contracts.
ARTICLE 2.0
REPRESENTATIONS AND WARRANTIES
2.1 D-Mol represents and warrants to BIOSYM as follows:
2.1.1 D-Mol is a corporation duly organized, validly existing,
and in good standing under the laws of Illinois.
2.1.2 D-Mol has full corporate power and authority to enter
into this Agreement and this Agreement constitutes a valid and binding
obligation of D-Mol enforceable in accordance within terms.
2.
<PAGE> 3
2.1.3 Bernard Delley, of Zurich, Switzerland, is the author of
Software, and Bernard Delley has assigned any and all of his rights in Software
to D-Mol.
2.2 Further, D-Mol warrants that to the best of its knowledge no third
party has any rights in the Software or in income generated therefrom, except
for small portions of the present code which are in the public domain.
ARTICLE 3.0
INDEMNIFICATION
3.1 D-Mol does hereby indemnify and shall hold harmless (including
reasonable attorney's fees) BIOSYM, its corporate affiliates, and any employee
or agent thereof (each of the foregoing being hereinafter referred to
individually as the "Indemnified Party") against all liability to third parties
(other than liability solely the fault of the Indemnified party) arising from
the negligence of D-Mol or its agents and the license to or use by BIOSYM of
Software, including (but not limited to) the violation of any third party's
ownership rights, trade secrets, proprietary information, trademark, copyright
or patent rights in connection with the licensing of Software. D-Mol may, at its
options, conduct the defense in any such third party action arising as described
herein and BIOSYM promises fully to cooperate with such defense. This
indemnification is limited to Software delivered to BIOSYM or as modified by
D-Mol and does not cover third party claims arising from modifications not
authorized by D-Mol.
ARTICLE 4.0
PAYMENTS
4.1 In consideration of D-Mol granting the license provided for in
Article 1.0 of this Agreement, BIOSYM agrees to pay D-Mol in United States
dollars, royalties on fees received as follows, where fees are defined as money
paid to BIOSYM as compensation under software license and service agreements or
research contracts net of any outside commission, taxes, shipping costs, or
other such reasonable and necessary expenses relating to this compensation:
4.1.1 On licensing fees paid to BIOSYM by sublicenses of
Software, [*] of fees paid within a [*] period from the date on which Software
is first offered in writing for sublicense, and [*] thereafter.
4.1.2 On fees paid to BIOSYM for time share use of Software,
[*] of fees paid within a [*] period from the date on which Software is first
offered in writing on a time share basis, and [*] thereafter.
* CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE> 4
4.1.3 On fees paid to BIOSYM for annual maintenance of
Software, [*] of fees paid to BIOSYM as long as D-Mol is actively contributing
to program enhancements, promotion or the expansion of applications. For
purposes of this paragraph, actively contributing shall mean that, during any
year, principals or employees of D-Mol shall have engaged in activities designed
to promote or demonstrate Software, write and publish or present scientific
papers or articles pertaining to Software or its uses, or develop program
enhancements or expansions. When this condition is no longer met, the royalty
shall be [*] of fees paid.
4.1.4 On fees paid to BIOSYM for contract research utilizing
Software, royalty shall be paid at the then prevailing time share royalty rate
as defined in Paragraph 4.1.2 applied to the CPU time charge assessed to the
customer for the use of Software in executing the project. Royalty shall no
longer be paid for this category of Software use when cumulative, collective
royalty paid to D-Mol under this sub-paragraph totals [*].
4.1.5 On royalty fees paid to BIOSYM under royalty bearing
research contracts in which Software was utilized, [*] of that portion of the
royalty attributed to Software for a [*] period starting with the date on which
royalty is first earned on each contract, and [*] thereafter. For purposes of
this paragraph, "royalty fees" shall include, without limitation, patent license
royalties. The determination of the portion of royalty attributable to Software
shall be determined initially by BIOSYM. BIOSYM shall provide D-Mol, in the
written report to be submitted to pursuant to Paragraph 5.1 hereof, an
explanation of the basis of such proration. D-Mol shall have thirty (30) days
after receipt of such written report in which to raise any written object to
such proration. If such objection is raised by D-Mol, the parties agree to
negotiate in good faith the resolution of such dispute. If no such resolution is
made within sixty (60) days of receipt of D-Mol's written objection, the dispute
concerning such proration shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
4.1.6 On work funded by government agencies or industry groups
where the primary purpose is program enhancement or new application development,
no royalty shall be paid to D-Mol, but D-Mol shall have the opportunity for
consulting participation on a fee basis, such fees to be based on D-Mol's
customary rates or other rates as may be established for such services between
D-Mol, BIOSYM and such government agencies or industry groups.
* CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE> 5
4.2 BIOSYM's obligation to make payments to D-Mol pursuant to Paragraph
4.1 hereof shall survive the termination of any license granted to BIOSYM
hereunder.
4.3 As an additional consideration, D-Mol shall receive a grant of
[*] shares of BIOSYM common stock conveyed to D-Mol within sixty (60) days of
the execution of this Agreement. Upon receipt of appropriate regulatory approval
and documentation including matters relating to investment suitability and
acknowledgments as to restrictions on transfer as appropriate in the opinion of
BIOSYM's counsel, D-Mol will instruct BIOSYM on the names of the principals of
D-Mol to whom the stock is to be issued. Valuation of the stock for tax purposes
shall be as determined by action of the BIOSYM Board of Directors at the time of
the grant.
ARTICLE 5
REPORTING AND RECORDS
5.1 Within thirty (30) days following the last day of the months of
March, June, September, and December, BIOSYM shall submit to D-Mol a written
report setting forth the amount owed to D-Mol pursuant to Paragraph 4.1 on fees
for which BIOSYM has been paid during the immediately preceding calendar quarter
period together with sufficient supporting data to permit D-Mol to determine the
basis on which said amount was determined by BIOSYM.
5.2 With each report referred to in Paragraph 5.1 BIOSYM shall pay to
D-Mol any royalty payment shown therein to be due.
5.3 BIOSYM shall keep such detailed records as may be necessary to
determine the payments due under this Agreement. At the request of D-Mol, BIOSYM
shall permit an independent public accountant selected by D-Mol (unless BIOSYM
has some reasonable objection to such choice of accountant) to have access
during ordinary business hours to such records as may be necessary to determine
for a period up to two (2) years prior to the time of such request:
(a) the correctness of any report and/or payment made under
this Agreement; and/or
(b) information as to the sum payable for such period in case
of BIOSYM's failure to render statements of payment pursuant to this Agreement.
* CONFIDENTIAL TREATMENT REQUESTED
5.
<PAGE> 6
ARTICLE 6
DELIVERABLE ITEMS
6.1 Within a reasonable period not to exceed thirty (30) days after
execution of this Agreement, D-Mol shall provide BIOSYM with one (1) copy of:
(a) Software Source Code,
(b) Software User's Notes,
(c) Software Documentation File.
Items (a), (b), and (c) shall be supplied "as is" in the form extant on the date
of delivery.
6.2 On or about March 31, 1988, D-Mol shall deliver to BIOSYM a new
version of Software redesigned and reorganized to assure dependable operation on
VAX equipment, efficient porting to other major computing environments, and ease
of future modification and upgrade. Details of how this shall be accomplished
shall be worked out between D-Mol and BIOSYM as the work proceeds and, to the
extent such consultation between D-Mol and BIOSYM is reasonable in its time and
scope, such consultation will be exempt from the support time limits set forth
in Paragraph 7.1.2. Notwithstanding the foregoing, if such consultation extends
beyond a 180 day period following receipt by BIOSYM of the new version of
Software for any reason, D-Mol shall be compensated by BIOSYM at D-Mol's normal
rates or at other rates as may be established for this purpose between the
parties. D-Mol and BIOSYM hereby acknowledge that the conversion of the new
version of Software to a commercially acceptable version is the primary
responsibility of BIOSYM, that such conversion shall require additional
consultations between the parties, and that the scope of such consultation in
terms of time and services required is not certain. Notwithstanding Paragraph
7.1 and subject to the availability of the principals of D-Mol to provide such
services consistent with their other business, academic, and research
commitments, D-Mol shall provide BIOSYM with reasonable technical assistance and
consulting services to develop a commercially acceptable version of the Software
on such terms and conditions as shall be mutually agreed by D-Mol and BIOSYM.
ARTICLE 7
SUPPORT
7.1 As a part of the collaborative arrangement, D-Mol shall provide
support in the following areas:
6.
<PAGE> 7
7.1.1 D-Mol shall provide to BIOSYM a total of 60 hours of
training, at no charge to BIOSYM, to designated BIOSYM personnel at a mutually
agreed upon location, in the scientific basis and use of Software as originally
delivered, and subsequently additional training for enhancements as they are
developed by D-Mol.
7.1.2 D-Mol shall provide reasonable advisory support, i.e.,
individual responses which require at most no more than [*] of work, and in
the aggregate do not exceed [*] of work in the first year, [*] of work
in the second year and [*] of work per year every year thereafter as long
as D-Mol remains active as defined under Paragraph 4.1 at no charge to BIOSYM,
in the areas of the scientific basis, code operation, algorithm enhancement, and
potential applicability of the code.
7.1.3 Work requested by BIOSYM beyond the levels set forth in
Paragraphs 7.1.1 and 7.1.2 shall be compensated as paid consulting at D-Mol's
normal rates or other rates as may be established for this purpose between the
parties.
7.1.4 D-Mol shall make available to BIOSYM, at no charge to
BIOSYM, copies of scientific presentations and papers relating to Software, its
underlying science and/or their application for use by BIOSYM in its Software
marketing effort.
7.2 Copies of beta test or commercially offered versions of Software
shall be supplied by BIOSYM, simultaneously with their release to customers,
free of charge to D-Mol for its use in its own research relating to this
collaboration. BIOSYM shall provide Software Source Code as updated periodically
by BIOSYM and as reasonably requested by D-Mol. D-Mol shall exercise due care to
ensure maintenance of BIOSYM's proprietary rights in the Software Source code
and require that access to the Source code only be provided to persons who are
principals or employees of D-Mol or who have personally signed BIOSYM's
non-disclosure agreement, a current copy of which is attached hereto as Exhibit
B.
ARTICLE 8
DATA MARKING
8.1 BIOSYM shall exercise due care to ensure maintenance of D-Mol's
proprietary rights in the information licensed to BIOSYM under Article 1.0,
which shall include, but not be limited to, marking each copy produced of
Software Code (source and/or executable), User's manual, and Documentation File,
with a notice declaring D-Mol's ownership rights in the program and limitations
on its use.
* CONFIDENTIAL TREATMENT REQUESTED
7.
<PAGE> 8
ARTICLE 9
PROPRIETARY INFORMATION
9.1 BIOSYM and D-Mol acknowledge that portions of Software (e.g.,
source code and applications knowhow) are, and modifications, improvements and
enhancements thereto shall be, of a proprietary nature and a commercial asset of
considerable value. Accordingly, BIOSYM and D-Mol mutually agree that such
proprietary information shall be used only as set forth in this Agreement and
that neither shall disclose to others, or use this information any other manner
without written permission of the other party. The obligations of this Paragraph
9.1 shall survive the termination of this Agreement except as provided in
Paragraph 9.2 Both parties agree that disclosure and access to the information
supplied under this license shall be limited to each party's and sublicensee's
employees and associates who have a need to know such information. In other
respects, each party shall exercise a standard of care the same as that used in
protecting their own information of like character.
9.2 The obligation of BIOSYM and D-Mol under Paragraph 9.1 shall not
apply to any information which (a) has become part of the public domain other
than by acts or omissions of the parties or a sublicensee; (b) has been
furnished or made known to either party by third parties as a matter of legal
right and without restriction on disclosure or use; or (c) was in the possession
of either party prior to disclosure.
ARTICLE 10
IMPROVEMENTS
10.1 D-Mol and BIOSYM agree to collaborate on the continuing
development of the concepts, algorithms, and software code of Software so as to
increase its scientific value and broaden its application. Twice yearly, if
BIOSYM requests, D-Mol and BIOSYM shall meet to review the status of the
Software program and to coordinate the technical and business programs which
depend on the collaborative efforts of the parties. The meeting shall be held at
BIOSYM's San Diego headquarters offices in July and January or at other places
and times as the parties may agree. All expenses associated with such meetings
at BIOSYM's San Diego headquarters office, including, but not limited to, travel
and hotel expenses, shall be borne by BIOSYM. Between meetings it shall be the
responsibility of each party to notify the other of any substantial departure
from the commitments made at these meetings.
10.2 Title to any modifications, improvements or enhancements made by
BIOSYM to Software as licensed in Article 1.0 herein shall vest in BIOSYM. For
the duration of this Agreement, BIOSYM shall promptly make available to D-Mol
any such
8.
<PAGE> 9
modifications, improvements or enhancements. BIOSYM hereby grants a
non-exclusive, fully-paid worldwide license to D-Mol to use any such
modifications, improvements, or enhancements in their own work, including, but
not limited to, contract research, but not to sublicense others to so use.
BIOSYM agrees to provide, free of charge to D-Mol, copies of any software
containing any modifications, improvements, or enhancements made by BIOSYM
pursuant to this Article 10.0.
10.3 Title to any modifications, improvements or enhancements made by
D-Mol to Software as licensed in Article 1.0 herein shall vest in D-Mol, except
that all such improvements shall automatically be licensed to BIOSYM under the
terms of this Agreement. For the duration of this Agreement, D-Mol shall
promptly make available to BIOSYM any such modifications, improvements, or
enhancements, and agrees to provide free of charge to BIOSYM, copies of any
software and Software Source code containing any modifications, improvements, or
enhancements made by D-Mol pursuant to this Article 10.
10.4 Title to any modification, improvements or enhancements made by
the joint collaboration of D-Mol and BIOSYM to Software as licensed in Article
1.0 herein ("Joint Improvements") shall vest in D-Mol and BIOSYM as tenants in
common. All such improvements shall automatically be licensed to BIOSYM and to
D-Mol under the same terms of paragraphs 10.2 and 10.3 as apply to improvements
made by the parties independently. The licenses granted in this Paragraph 10.4
shall survive the termination of this Agreement. Neither party shall permit the
Joint Improvements to become part of the public domain without the prior express
written authorization of the other party.
ARTICLE 11
TERMINATION
11.1 Either party shall have the right to terminate the license granted
herein upon giving written notice of such termination upon the following to
occur:
11.1.1 The material breach or default of any material
obligation of this Agreement by the other party, which default is incapable of
cure or which, being capable of cure, has not been cured within thirty (30) days
after receipt of notice of such default from the non-defaulting party; or
11.1.2 If either party hereto becomes insolvent, makes a
general assignment for the benefit or creditors, suffers or permits the
appointment of a receiver for its business or assets, becomes subject to any
proceeding under any bankruptcy or insolvency law whether domestic or foreign,
or has wound up or liquidated, voluntarily or otherwise; or
9.
<PAGE> 10
11.1.3 Any major adverse change in the business operation of
the other party occurs which shall materially and adversely affect that party's
obligations hereunder.
Termination under this Paragraph 11.1 shall be effective thirty (30) days
following the date of written notice thereof if the breaching party has not
remedied the effect of such breach within said thirty (30) days.
11.2 Upon termination of the license granted herein, BIOSYM shall no
longer have the right to market or sublicense Software. BIOSYM shall, however,
have the right to continue to use the Software code and to copy and maintain the
Software code as may be required to fulfill its contract responsibilities to
customers to whom Software has been licensed. In the event of a termination
under paragraph 11.1.2 or 11.1.3 of this Agreement, D-Mol shall have the right
to cause BIOSYM to assign to D-Mol or its nominee all of BIOSYM's rights and
obligations in and under such sublicensees as D-Mol selects. BIOSYM shall take
whatever additional actions it reasonably can to terminate its customer
responsibilities in this regard so that, in a period not to exceed three years,
all such responsibilities shall end.
11.3 Upon termination of this Agreement, D-Mol shall destroy or return
to BIOSYM all material received from BIOSYM which has been labeled by BIOSYM as
confidential and which relates to modifications, improvements or enhancements to
Software made by BIOSYM. No further use of these materials by D-Mol shall be
permitted. D-Mol shall, however, have the right to continue to use in its own
work, but not to sublicense, versions of the Software code and enhancements
thereto which may have been supplied to it by BIOSYM up to the date of
termination.
11.4 Upon termination of this Agreement, BIOSYM shall return to D-Mol
all copies of confidential material in its possession belonging to or provided
by D-Mol which has been labeled by D-Mol as confidential and which relates to
the Software or to modifications, improvements or enhancements to Software made
by D-Mol, without retaining any copies or summaries thereof or notes with
respect thereto.
11.5 D-Mol acknowledge and agrees that a material breach of any of the
terms in this Agreement will result in irreparable and continuing damage to
BIOSYM for which there will be no adequate remedy at law and in the event of any
breach of this Agreement, BIOSYM shall be entitled to injunctive and such other
and further relief, including damages, as may be proper.
10.
<PAGE> 11
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 This Agreement does not create a joint venture or partnership
relationship between D-Mol and BIOSYM. Neither party hereto shall have any right
or authority to act for or bind the other except as set forth in this Agreement
or in a written statement of the party to be bound signed by its chief executive
officer.
12.2 BIOSYM shall pay, in addition to other amounts paayable under this
Agreement, all sales, use, and other taxes, federal, state, or otherwise which
are levied or imposed by reason of the transactions contemplated by this
Agreement; provided, however, BIOSYM shall not be responsible for any tax based
on D-Mol net income.
12.3 The article headings are for convenience only and do not form part
of this Agreement for purposes of interpretation.
12.4 Any changes or modifications to this Agreement must be in writing
and executed by duly authorized representatives of the parties hereto.
12.5 Any notice or payment made pursuant to this Agreement shall be
deemed to have been made on the date mailed if mailed by certified mail, or upon
the date received if otherwise transmitted. Payments to and correspondence with
BIOSYM should be sent to:
BIOSYM Technologies, Inc.
10065 Barnes Canyon Road, Suite A
San Diego, CA 92121
With a copy to: Craig S. Andrews
Brobeck, Phleger & Harrison
225 Broadway, Suite 2100
San Diego, CA 92101
Any notice to or correspon-
dence with D-Mol should
be sent to: D-Mol, Inc.
c/o Arthur J. Freeman
824 Manticello Place
Evanston, IL 60201
With a copy to: Leland W. Hutchinson Jr.
11.
<PAGE> 12
Freeborn & Peters
11 South La Salle Street
Suite 1500
Chicago, IL 60603
12.6 This Agreement shall be binding upon and inure to the benefit of
the successors, receivers, and assigns of the parties hereto; but the respective
interests of either party in and to this Agreement may not be assigned or
pledged without the written consent of the other party except incident to a sale
or transfer of the entire business to which this Agreement pertains, which
consent shall not be unreasonably withheld.
12.7 The Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which, taken together,
shall constitute but one and the same instrument.
12.8 This Agreement shall be governed by and construed under the
internal laws of the State of California, U.S.A.
12.9 If any terms or provision of this Agreement shall be found to be
illegal or unenforceable then, notwithstanding that term, all other terms of
this Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto each have caused this Agreement
to be executed by its duly authorized representative in duplicate as of the date
and year first above written.
BIOSYM TECHNOLOGIES, INC.
a California corporation
By: /s/ [signature illegible]
---------------------------------------
Chairman and Chief Scientific Officers
---------------------------------------
Title
2/16/88
---------------------------------------
Date
D-MOL, INC.
an Illinois corporation
12.
<PAGE> 13
By: /s/ Arthur J. Freeman
---------------------------------------
President
---------------------------------------
Title
2/14/88
---------------------------------------
Date
13.
<PAGE> 14
EXHIBIT A
BIOSYM Technologies, Inc.
SOFTWARE LICENSE AGREEMENT
Agreement No.: ___________
Between BIOSYM Technologies, Inc. (BIOSYM)
a California Corporation
10065 Barnes Canyon road, Suite A
San Diego, CA., 92121, U.S.A.
And (LICENSEE)
WHEREAS, LICENSEE is desirous of obtaining the right to use licensed
Software, NOW, THEREFORE, BIOSYM and LICENSEE, for their mutual benefit, hereby
agree as follows:
ARTICLE 13
DEFINITIONS
13.1 The term "Agreement" shall mean the terms and conditions herein, as
well as the Appendix(ces) attached hereto and considered to be a part
of the Agreement.
13.2 The term "Software" shall mean the computer programs, derivative works
and support material including but not limited to documentation,
manuals, flow charts, specifications and training materials related
thereto.
13.3 The term "Designated System(s)" shall mean the specified CPU(s) on
which the Software under this Agreement is intended to run, as
specified in Appendix A.
13.4 The term "Site" shall mean a computer system or systems composed of one
or more CPU's that are located at the same physical address.
13.5 The term "Designated Purpose" shall mean the specific use of the
Software as permitted by this Agreement.
14.
<PAGE> 15
13.6 The Software, Code Format, Fees, and Designated System(s), which are
the subject of this Agreement are identified in Appendix A.
ARTICLE 14
LICENSE AND TERM
14.1 BIOSYM hereby grants to LICENSEE, and LICENSEE hereby accepts a
nontransferable, nonexclusive right to use the Software at a single
site within LICENSEE'S own organization and with the Designated System
only; provided, however, that LICENSEE may use a single backup computer
system as a substitute for the Designated System only during such
periods when the Designated System is inoperative because it is
malfunctioning or undergoing repair, maintenance or modification.
14.2 LICENSEE agrees to inform BIOSYM immediately of any changes in the
location of Software, and upon written request of BIOSYM, provide
verification of the current location and computer system on which the
Software is resident. Whenever a second computer system is permanently
substituted for a first computer system, prior to the installation of
the Software on the second computer system, an Addendum to the
Agreement shall be executed which identifies the second computer system
as the single Designated System. The License and Maintenance and
Support Fees paid for use with the first computer system shall be
applied for use with the second computer system.
14.3 Upon request at any time by LICENSEE for the right to make or install
additional copies of the Software on additional Designated Systems
within LICENSEE'S organization, and upon payment to BIOSYM of the
corresponding, then prevailing fee together with identification of the
Make and Model Number of the Designated Systems, BIOSYM shall promptly
issue an Addendum to the Agreement to reflect a corresponding extension
of the LICENSE.
14.4 LICENSEE is permitted to make such copies of the Software as are needed
for normal System Back-up. Any copy or partial copy of the Software
shall contain all the proprietary and copyright notices appearing on
the original being copied. All copyright notices are precautionary only
and do not imply publication.
14.5 Title to Software and to all copies and derivative works thereof is
permanently and irrevocably vested in BIOSYM and shall remain with
BIOSYM notwithstanding the delivery of copies to and use of Software by
LICENSEE.
14.6 The term of this Agreement shall be perpetual.
15.
<PAGE> 16
ARTICLE 15
FEES AND PAYMENT
15.1 LICENSEE agrees to pay BIOSYM the fees set forth in Appendix A. All
fees due to BIOSYM are payable in U.S. Dollars.
15.2 LICENSEE shall be invoiced for all amounts due to BIOSYM. All invoices
are due and payable within thirty (30) days of their receipt.
15.3 Any balance which remains unpaid beyond thirty (30) days shall bear
interest at the rate of one and one half percent (1 1/2%) per month.
15.4 In addition to the above license fees, LICENSEE shall pay any sales
taxes, Value Added Taxes, and any export or import taxes or duties.
ARTICLE 16
LIMITED WARRANTY
16.1 BIOSYM warrants that the Software shall conform to BIOSYM's published
product specifications in effect on the date of this Agreement, and
that the Software shall be free from defects in material and
workmanship for a period of ninety (90) days from the date of shipment.
In the event that the Software proves to be defective in material or
workmanship within such ninety (90) day period, such defect(s) shall be
remedied as follows:
Upon receipt of written notice of defect(s) in the Software design or
workmanship, BIOSYM shall use its best efforts to provide a verbal
and/or written response to LICENSEE within thirty (30) days, or sooner,
if possible, after the receipt of LICENSEE Software defect
notification. Such response typically includes the issuance of a
correction to the Software and/or the associated Software
documentation, issuance of a program operating restriction, or issuance
of a program bypass, as appropriate under the circumstance. In order
for this software warranty to be applicable, LICENSEE must promptly
provide the following information to BIOSYM in writing for any alleged
Software defects:
(a) the operating conditions under which the defect occurs
(including the specific hardware/Software configuration), and
(b) a description of what occurs vs. what should occur, and
(c) a representative example of inputs for repeating and analyzing
the problem.
16.
<PAGE> 17
This Software warranty shall not be applicable if LICENSEE has made any
unauthorized changes in the hardware comprising the Designated System or
Software or if the Software is used on a different computer system other than
the Designated System.
Further, BIOSYM does not warrant that the Software will necessarily
meet LICENSEE'S planned application, or that it will be error free, or that all
Software defects can be corrected. In the event the Software has a material
defect which cannot be corrected within one hundred eight (180) days from the
date of shipment, LICENSEE shall have the option to cancel the LICENSEE granted
in Article 2.0 and receive a cash refund from BIOSYM in the amount equal to the
original license fee for the Software, providing LICENSEE adheres to the terms
in Section 8.2.
EXCEPT AS SET FORTH ELSEWHERE IN THIS AGREEMENT, BIOSYM DISCLAIMS ALL
WARRANTIES RELATING TO THE SOFTWARE, EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED WARRANTIES AGAINST INFRINGEMENT OF THIRD PARTY PROPERTY
RIGHTS, OF MERCHANTABILTY AND FITNESS FOR A PARTICULAR PURPOSE. BIOSYM SHALL NOT
BE LIABLE FOR ANY LOSS OF USE, INTERRUPTION OF BUSINESS OR INDIRECT, SPECIAL,
INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY KIND.
BIOSYM shall not be liable for, and LICENSEE assumes all liability for,
all personal injury, loss of profit and property damage connected with or
arising out of the use of the Software or any information supplied by BIOSYM
under this Agreement.
LICENSEE agrees to defend, indemnify, and hold harmless BIOSYM from any
loss, liability, expenses, or action against BIOSYM arising out of or in
connection with any act or omission by LICENSEE resulting from LICENSEE'S use of
the Software.
16.2 BIOSYM shall defend at its own expense any claim suit or proceeding
brought against LICENSEE insofar as it is based on a claim that the
Software constitutes an infringement of a United States patent or a
United States copyright, or other proprietary rights of any third party
arising under United States law. BIOSYM shall pay all reasonable
damages, costs and expenses finally awarded to third parties against
LICENSEE but shall not be responsible for any compromise made without
its consent. BIOSYM shall have the right, at its option, either to
obtain for LICENSEE the right to continue the use of Software,
substitute other computer software with similar operating capabilities,
or modify the Software so that it is no longer infringing. In the event
that none of the above options are reasonable available, LICENSEE's
sole and exclusive remedy shall be to terminate this Agreement, to
cease using the Software, and to return to BIOSYM all copies of the
Software and to obtain a refund of the orignial license fee paid to
BIOWYM.
17.
<PAGE> 18
BIOSYM's liability for damages to LICENSEE for any cause and
regardless to the form of action, whether in contract or tort including
negligence, shall be limited to the greater of $100,000 or the fee paid
to BIOSYM. BIOSYM shall have no liability for any claim based on the
modification to the Software by LICENSEE or use of the Software in
combination with software or data not supplied by BIOSYM or use of the
Software on hardware other than the Designated System.
ARTICLE 17
MAINTENANCE AND SUPPORT
17.1 At the end of the ninety (90) day warranty period, BIOSYM shall provide
a subscription for it standard one year maintenance and support
service, for the fee set forth in Appendix A. The Warrant period shall
begin five days from the date of first shipment of Software licensed
under this Agreement.
BIOSYM's obligation to provide maintenance and support
services and LICENSEE's obligation to pay the then prevailing
maintenance and support charges shall be automatically renewed for
successive one year periods unless either party gives to the other
written notice of cancellation at least ninety (90) days prior to the
expiration of the then expiring term.
17.2 BIOSYM shall provide LICENSEE with maintenance and support service for
the Software as follows:
BIOSYM technical personnel shall provide telephone
consultation assistance during normal San Diego business hours (8:00
A.M. - 5:00 P.M., Monday through Friday) for U.S. customers. To
accommodate time differences, International customers shall be provided
an after hours service number of its equivalent to arrange for
telephone consultation;
BIOSYM technical personnel shall be available, at BIOSYM's
discretion, for on site service for problems not resolved by telephone
consultation. LICENSEE shall commit in advance to system availability
during the scheduled on site service visit; and
BIOSYM shall provide improvements and enhancements to the
Software, provided that they are not optional features for which a
separate charge is due.
17.3 Maintenance and service subscription shall be available to LICENSEE
subject to the follow conditions:
18.
<PAGE> 19
(a) LICENSEE is using the Software at the site and on the
equipment and operating system for which it is licensed;
(b) LICENSEE is using the hardware and operating system on which
the Software is running in the form supplied by the
manufacturer, without alternation; and
(c) LICENSEE is using the current version of the Software.
17.4 Written claims made by LICENSEE of the existence of errors in the
Software shall be submitted to BIOSYM in the format outlined in Section
4.1 (a.-c.).
17.5 Any changes made, by any person or agency, to the Software, without the
written permission of BIOSYM, immediately releases BIOSYM from any
responsibility to correct or maintain said Software, but in no way
alters LICENSEE's obligation to protect the Software under the terms of
this Agreement.
ARTICLE 18
LICENSEE ENHANCEMENTS
18.1 LICENSEE is permitted to make modification to enhance the software,
however it is the responsibility of the LICENSEE to integrate with new
versions any modifications made to the software by the LICENSEE. BIOSYM
technical personnel shall be available for limited telephone
consultation to assist in integrating customer enhancements in new
versions.
18.2 LICENSEE has the option to assign the rights to enhancements of mutual
benefit to BIOSYM. If BIOSYM accepts the enhancements as consistent
with its program objectives and coding standards, BIOSYM, upon
assignment, shall maintain that new feature or enhancement and include
it in new versions for a period of three (3) years or until such time
that it is agreed by both LICENSEE and BIOSYM that the feature is no
longer required.
ARTICLE 19
PROPRIETARY RIGHTS AND NON-DISCLOSURE
19.1 LICENSEE acknowledges that BIOSYM has asserted that portions of the
Software are of a proprietary nature and a commercial asset of
considerable value to BIOSYM. Accordingly, LICENSEE agrees that the
proprietary information shall be used by LICENSEE only as set forth in
this Agreement and LICENSEE shall not, without the written consent of
BIOSYM, disclose or otherwise making
19.
<PAGE> 20
available the Software or copies thereof to any third party. LICENSEE
agrees to take all responsible measures to maintain the Software in
confidence and to apply such procedures and precautions as LICENSEE
customarily uses to protect its own proprietary information. LICENSEE
shall disclose the Software only to those of its employees and
consultants as are necessary for the uses that LICENSED hereunder, and
shall notify each of such employees or consultants to such disclosure
is made in confidence. LICENSEE shall instruct such employees and
consultants to maintain such confidence and not to use the Software
except within the scope of their employment.
19.2 LICENSEE agrees to notify BIOSYM of any unauthorized use, copying,
and/or disclosure of the Software, and further agrees to take such
reasonable action as is necessary to prevent further use, copying,
and/or disclosure by any unauthorized third party which has gained
access to the Software as a result of LICENSEE having failed to comply
with covenants of this Article 7.0.
19.3 LICENSEE shall not rent, sell, lease or otherwise transfer the
Software.
19.4 LICENSEE shall not reverse assemble or reverse compile the Software.
19.5 LICENSEE agrees not to make copies to the Software in whole or in part
for archival purposes.
19.6 The obligations of LICENSEE under this Article 7.0 shall not apply to
any information which it can be demonstrated:
(a) has become part of the public domain other than by acts or
omissions of LICENSEE;
(b) has been furnished or made known to LICENSEE by third parties
(other than those acting on behalf of BIOSYM) as a matter of
legal right and without restriction on disclosure or use; or
(c) was in the possession of LICENSEE prior to disclosure by
BIOSYM, as evidenced by a written agreement, and was not
acquired directly or indirectly from BIOSYM.
19.7 This obligation of confidentiality shall continue without regard to the
termination of this Agreement until the Software becomes a part of the
public domain, without a breach of this Agreement by LICENSEE.
20.
<PAGE> 21
ARTICLE 20
TERMINATION
20.1 BIOSYM may terminate the license granted in Article 2.0 hereof if
LICENSEE breaches any of the covenants of this Agreement. Such
termination shall be effective thirty (30) days following the date of
written notice thereof if LICENSEE has not remedied the effect of such
breach within said thirty (30) day period.
20.2 Upon termination of the LICENSE granted in Article 2.0 hereof, LICENSEE
shall immediately purge all copies or partial copies of the Software
from all Designated Systems, and from any computer storage device or
medium on which LICENSEE has placed the Software, and return or destroy
all copies of support material in its possession and/or under its
control and shall provide BIOSYM with an executed certification that
all such programs, copies, and material have been destroyed. Backup or
archived copies shall be destroyed as regeneration occurs. No further
use of the Software by LICENSEE shall be permitted.
ARTICLE 21
INJUNCTIVE RELIEF/RESOLUTION OF DISPUTES
21.1 BIOSYM shall have, in addition to any other remedies available to it,
the right to injunctive relief to enjoin breaches of this Agreement.
LICENSEE hereby acknowledges that other remedies may be inadequate to
protect BIOSYM's rights.
If disputes or differences of opinion arise from this
Agreement or from provisions for its execution, both parties shall
endeavor to obtain an amicable, out-of-court settlement. Such endeavor
to reach out-of-court settlement shall be deemed to have failed when
one party advises the other party correspondingly in writing. When an
endeavor to reach out-of-court settlement has failed, the dispute shall
be settled according to the Rules of Conciliation and Arbitration of
the International Chamber of Commerce (ICC) in Paris, France by three
arbitrators nominated in accordance with said rules. Substantive law of
the State of California of the United State of America shall apply.
Place of arbitration proceedings will be Bern, Switzerland. Procedural
law of Switzerland shall be additionally applicable if the rules of the
ICC contain no applicable provisions.
The arbitrators' award shall be sustained in writing. The
court of arbitration shall also decide on the costs of arbitration
proceedings.
21.
<PAGE> 22
ARTICLE 22
MISCELLANEOUS PROVISIONS
22.1 The article headings are for convenience only and do not form part of
this Agreement for purpose of interpretation.
22.2 The preprinted portions of any purchase order other LICENSEE document
submitted in conjunction with an order for licensed Software hereunder
shall not add to or vary the terms of this Agreement.
22.3 This Agreement and its attachments constitute the sole, entire and
final Agreement between the parties hereto and with respect to the
subject matter hereof and shall supersede all previous negotiations,
commitments, writings and understandings. Any changes or modifications
to this Agreement must be in writing and executed by duly authorized
representatives of the parties hereto.
22.4 Any notice or payment made pursuant to this Agreement shall be deemed
to have been made on the date mailed if made certified mail, or upon
the date received if otherwise transmitted. Payments to and
correspondence with BIOSYM shall be sent to BIOSYM at its address set
forth above or as otherwise directed by BIOSYM in writing. Any notice
or correspondence with LICENSEE shall be sent to the address specified
in Appendix A.
22.5 This Agreement shall be binding upon and inure to the benefit of the
successors, and assigns of the parties hereto; but the respective
interests of either party in and to this Agreement may not be assigned
or pledged without the written consent of the other party except
incident to a sale or transfer of the entire business to which this
Agreement pertains, which consent shall not be unreasonably withheld.
LICENSEE consents in advance to the assignment or pledge of BIOSYM of
any amounts payable by LICENSEE under this Agreement.
22.6 The Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of
which, taken together, shall constitute but one and the same
instrument.
22.7 LESSEE agrees that neither the technical data of the Software, nor the
direct product thereof is intended to be shipped, either directly or
indirectly to Afghanistan, Albania, Bulgaria, Cuba, Czechoslovakia,
Estonia, German Democratic Republic, Hungary, Laos, Latvia, Libya,
Lithuania, Mongolian People's Republic, North Korea, People's Republic
of China, Poland, Romania, Union of Soviet Socialist Republics, or
Vietnam.
22.
<PAGE> 23
22.8 If any term or provision of this Agreement shall be found to be illegal
or unenforceable then, notwithstanding that term, all other terms of
this Agreement shall remain in full force and effect.
22.9 This Agreement shall be effective on the date of execution by the last
signator.
LICENSEE BIOSYM Technologies, Inc.
- -------------------------------------- --------------------------------------
Signature Signature
- -------------------------------------- --------------------------------------
Typed Name Typed Name
- -------------------------------------- --------------------------------------
Title Title
- -------------------------------------- --------------------------------------
Date Date
23.
<PAGE> 24
EXHIBIT B
NON-DISCLOSURE AGREEMENT
I, _________________________ understand that the source code for the
software products Insight and Discover from BIOSYM Technologies, Inc. are
proprietary and have been licensed to the Agouron Institute, 505 Coast Boulevard
South, La Jolla, California. I have read and personally agree to maintain the
terms of this license. In addition I agree to the following conditions:
a. I will not distribute the products (including source code,
executable code, or manuals) to anyone not explicitly included in the license.
b. I will not take them with me when I leave this institution or any
copy of them.
c. I am not affiliated with any commercial or non profit group which
either directly or indirectly is receiving money for molecular modeling software
other than from government funding agencies.
d. I also realize and acknowledge that these conditions apply both to
the original code and to any modified version of the code and that I gain no
ownership of the code through any modifications that I might make. I further
understand that I may not distribute any such modifications to anyone outside
this institution, even though they may be licensed for the products, without
express written permission from BIOSYM.
UNDERSTOOD AND AGREED:
BIOSYM TECHNOLOGIES, INC
--------------------------------- -----------------------------
Signature Signature
--------------------------------- -----------------------------
Typed Name Typed Name
--------------------------------- -----------------------------
Title Title
--------------------------------- -----------------------------
Date Date
24.
<PAGE> 25
AMENDMENT NUMBER ONE
TO THE
SOFTWARE LICENSE/RESEARCH AGREEMENT
BETWEEN
D-MOL, INC. and BIOSYM TECHNOLOGIES, INC.
THIS AMENDMENT NUMBER ONE TO THE SOFTWARE LICENSE/RESEARCH AGREEMENT
(the "Amendment to the Agreement) is made and entered into as of the date of the
last signature hereto, by and between BIOSYM Technologies, Inc. ("BIOSYM"), a
California corporation, and D-Mol, Inc. ("D-Mol"), an Illinois corporation.
RECITALS
WHEREAS, the parties have entered into a Software License/Research
Agreement (the "Agreement") dated February 19, 1988; and
WHEREAS, the parties wish to modify the Agreement;
NOW THEREFORE, in consideration of the promises and the mutual
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
Paragraph 1.1 is replaced in its entirety with the following:
1.1 D-Mol hereby grants to BIOSYM, upon the terms and conditions
herein specified, a non-exclusive, non-transferable 20 year
license, extendable by mutual agreement, to reproduce Software
and all enhancements thereto. D-Mol further grants to BIOSYM
an exclusive, except to the extent provided for in Paragraph
1.1.2, worldwide license to convert, or to have converted, the
Software to operate on various computer hardware lines, thus
creating products (hereinafter "Software Product(s)"). D-Mol
further grants BIOSYM an exclusive, except to the extent
provided for in Paragraph 1.2, worldwide license to use and to
sublicense others to use Software, Software Products, and all
enhancements thereto, provided such sublicense is granted in
writing and contains terms consistent with those in BIOSYM's
then current standard Sublicensing Agreement, a current copy
of which is attached hereto as Exhibit A. Material changes to
the Sublicensing Agreement will be subject to D-Mol's approval
which shall not be unreasonably withheld.
Paragraph 1.1.2 is replaced in its entirety with the following:
25.
<PAGE> 26
1.1.2 At any time within three years of the date hereof, if
opportunities, including the opportunity to create new
Software Product(s) by converting the Software to operate on
additional computer hardware lines, exist or develop which
D-Mol does not believe are being addressed by BIOSYM in a
timely and effective manner, D-Mol may provide written
notification to BIOSYM's President and/or Board of Directors
identifying the opportunities and requesting BIOSYM to make
reasonable commitments to address such opportunities. BIOSYM
shall have 180 days following such notification to make such
commitments to D-Mol. In the case of conversions of the
Software to create new Software Product(s), BIOSYM shall have
one year from the date of commitment to accomplish the
conversion. In the case of other opportunities, BIOSYM shall
have a reasonable period of time from the date of commitment
to accomplish the committed work. If BIOSYM fails to make such
timely commitments or subsequently fails to meet, in a timely
manner, commitments made, D-Mol shall have the right to
license to convert, to use, and to sublicense others to use
Software and all enhancements thereto with respect to the
neglected opportunities. Where D-Mol grants such a license,
D-Mol shall pay to BIOSYM twenty percent of the compensation
which D-Mol receives under the terms of said license.
In Paragraph 4.1.1 through 4.1.5 inclusive, in each occurrence, the
work "Software" is replaced by the words "each Software Product."
IN WITNESS WHEREOF, the undersigned have executed this Amendment to the
Agreement.
<TABLE>
<S> <C>
D-MOL, INC. GENERAL PARTNER BIOSYM TECHNOLOGIES, INC.
D-Mol Partners
By: /s/ Arthur J. Freeman By: /s/ R.W. Enoch, Jr.
----------------------------- ---------------------------------
Signature Signature
Arthur J. Freeman R.W. Enoch, Jr.
----------------------------- -------------------------------------
Typed Name Typed Name
President President and Chief Operating Officer
----------------------------- -------------------------------------
Title Title
May 18, 1990 May 16, 1990
----------------------------- -------------------------------------
Date Date
</TABLE>
26.
<PAGE> 27
AMENDMENT NUMBER 2 TO SOFTWARE LICENSE/RESEARCH AGREEMENT
This Amendment Number 2 ("Amendment") to the Software License/Research
Agreement dated February 19, 1988 between Biosym Technologies Inc. ("Biosym"), a
corporation having offices at 9685 Scranton Road, San Diego, CA and D-Mol
Limited Partnership ("D-Mol"), a limited partnership having offices at 2739
Ridge Avenue, Evanston, IL 60201 (the "License Agreement") is made this 10th day
of August, 1996, pursuant to parragraph 12.4 of the License Agreement. The
License Agreement was previously amended by Amendment Number 1 thereto dated May
16, 1990 and references herein to the License Agreement shall mean the original
License Agreement, as amended by Amendment Number. 1. All terms capitalized but
not otherwise defined herein shall have the mean is ascribed to them in the
License Agreement.
WHEREAS, Biosym and D-Mol wish to amend certain provisions of the
License Agreement;
NOW THEREFORE, BE IT RESOLVED, for good and valuable consideration,
receipt of which is hereby acknowledged, the undersigned hereby agree that the
License Agreement shall be amended by this Amendment as follows:
1. REFERENCES TO BIOSYM. All references to Biosym in the License
Agreement, as amended by this Amendment, shall be deemed to include Molecular
Simulations Incorporated ("MSI"), the parent corporation by which Biosym is
wholly-owned.
2. DEVELOPMENT AND MARKETING PLAN. Within a reasonable period of time
after execution of this Amendment, D-Mol and Biosym will prepare a plan for
development and marketing of the D-Mol(3) software, and both parties will use
their reasonable, best efforts to implement such plan. The plan will include
integration of D-Mol into Cerius2 and the development of an alpha version of
D-Mol(3). The D-Mol(3) software will be an enhanced version of the D-Mol
software incorporating aspects of the current commercial D-Mol software, the
D-Mol variant known as D-Solid, and some new algorithmic developments. The
D-Mol(3) software will be deemed to be "Software Product" as defined in the
License Agreement. MSI will promote the D-Mol(3) software as the primary code in
the application areas where such software has superior functionality. During the
period that D-Mol(3) software is being integrated into Cerius2, the fact that
the D-Mol(3) software has not been integrated into Cerius2 will not in and of
itself adversely affect assessment of the D-Mol(3) software's functionality.
3. ADJUSTMENT TO ROYALTY RATE. Upon Biosym's announced commercial
release of the D-Mol(3) software, the [*] royalty rate in effect
* CONFIDENTIAL TREATMENT REQUESTED
27.
<PAGE> 28
under Sections 4.1.1, 4.1.2, and 4.1.5 of the License Agreement shall be
[*].
4. MINIMUM ANNUAL ROYALTIES. A new Section 4.1.7 is hereby added to the
License Agreement as follows:
"4.1.7 Upon Biosym's commercial release of the
Software known as D-Mol(3) (the "Release Date"), Biosym will
begin paying D-Mol minimum annual royalties under Sections
4.1.1 through 4.1.5, collectively, of this Agreement ("Minimum
Annual Royalties") at least equal to the Minimum Target, as
such term is defined in this Section . For purposes of this
Section 4.1.7, "Minimum Target" means [*] of the average annual
royalties paid by Biosym to D-Mol pursuant to Sections 4.1.1
through 4.1.5, collectively, of this Agreement during the three
calendar years immediately preceding the year in which the
Release Date occurs. Provided that D-Mol meets the schedule in
the Development and Marketing Plan to deliver D-Mol(3) to
Biosym, the relevant years shall be 1994, 1995 and 1996. If the
Minimum Annual Royalties in any year in which the Minimum
Target applies do not equal or exceed the Minimum Target, then
D-Mol, in its discretion and upon written notice to Biosym, may
convert Biosym's exclusive license under Section 1.1 of this
Agreement to a non-exclusive license. In the event that D-Mol
converts such exclusive licenses to a non-exclusive license,
the royalty rate in effect under Sections 4.1.1, 4.1.2 and
4.1.5 of this Agreement shall [*] and Biosym's obligation to
pay Minimum Annual Royalties at or above the Minimum Target
shall no longer apply. The foregoing set forth D-Mol's
exclusive remedy in the event that Biosym does not pay Minimum
Annual Royalties equal to or exceeding the Minimum Target. For
purposes of convenience and because Biosym's fiscal year is a
calendar year, the parties agree that the Minimum Target shall
be prorated for the balance of the calendar year in which the
Release Date occurs."
5. OPTION GRANTS. In connection with the parties' execution of this
Amendment, MSI agrees to grant each of Arthur Freeman and Bernard Delley an
option to purchase [*] shares of MSI's common stock at an exercise price equal
to the fair market value at the date of grant, as determined by MSI's board of
directors. Such options shall be non-qualified stock options that vest at a rate
of 25% per year so long as the License Agreement remains in effect, starting May
1997.
Except as amended hereby, the terms and provisions of the License
Agreement shall remain in full force and effect.
* CONFIDENTIAL TREATMENT REQUESTED
28.
<PAGE> 29
This Amendment may be executed in any number of counterparts, each of
which may be executed by less than all of the parties hereto and each of which
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment to the
Agreement.
<TABLE>
<S> <C>
BIOSYM TECHNOLOGIES, INC. D-MOL, INC. GENERAL PARTNER
By: /s/ David B. Hiatt By: /s/ Arthur J. Freeman
---------------------------- ------------------------------
Title: Chief Financial Officer Title: President
--------------------------- ----------------------------
Title
MOLECULAR SIMULATIONS
INCORPORATED /s/ Arthur Freeman
--------------------------------
ARTHUR FREEMAN
By: /s/ David B. Hiatt
--------------------------------
Title: Chief Financial Officer /s/ Bernard Delley
---------------------------- --------------------------------
BERNARD DELLEY
</TABLE>
29.
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.32
SILICON GRAPHICS, INC.
VALUE-ADDED RESELLER AGREEMENT
This VALUE-ADDED Reseller Agreement is made between Molecular
Simulations, Inc., a corporation organized under the laws of Delaware (identify
by state or country) ("Reseller"), having a place of business at: 9685
Scranton Road, San Diego, CA 92121 and Silicon Graphics, Inc. a Delaware
corporation ("SGI"), having a place of business at 2011 North Shoreline Blvd.,
Mountain View, CA 94039-7311, acting on its own behalf and on behalf of
Silicon Graphics World Trade Corporation ("WTC") (see Section 1.0 below for
definitions of capitalized terms used herein) and Subsidiaries.
SGI acts hereunder as a representative for WTC and for each Subsidiary
only for the purpose of execution of this Agreement for purchases and licenses
of Product made for resale to End Users outside the U.S. and to enable
individual purchase orders of Reseller or Reseller's subsidiaries to be placed
and concluded directly with a Subsidiary or a Distributor operating in the
End-User's country. If there is no Subsidiary or Distributor in such country,
then Reseller or Reseller's Subsidiary shall place orders for that country with
WTC pursuant to this Agreement. Reseller desires to purchase SG computer
products, including computer workstations, servers and/or subsystems and
associated accessories and option items, for resale to End Users. SG hereby
agrees to provide certain of its products to Reseller for such purpose, under
the terms and conditions of sale and distribution set forth in this Agreement.
1. DEFINITIONS. As used in this Agreement:
1.1 "APPLICATION" means collectively or singularly, as the case
may be Reseller's proprietary application software product(s), identified on
Attachment B and that comply with Reseller's certification set forth in Section
3.2 below.
1.2 "ANNUAL VOLUME COMMITMENT" means the tier designated by the
parties under the caption "Annual Volume Commitment" on Attachment B and
reevaluated by SG pursuant to Section 6.7 below.
1.3 "ASSIGNED TRADING AREA" means the geographic area specified on
Attachment E in which Reseller is authorized to sell Product hereunder. The
Assigned Trading Area may be expanded from time to time upon the mutual written
agreement of SG and Reseller: provided, however, that Reseller submits a
Business Plan acceptable to SG therefor.
1.4 "BASE PRICE" means the price for Product identified in Section
6.1 below.
1.
<PAGE> 2
1.5 "BUSINESS PLAN" means the business plan that sets forth
Reseller's plans for marketing, selling, and servicing Product, and which
Reseller shall submit with its application hereunder or pursuant to Section
5.0(n), which SGI has approved.
1.6 "CONFIDENTIAL INFORMATION" means information and/or materials
containing information which concern, without limitation, SG's or Reseller's
business, plans, customers, technology or products, and are proprietary and/or
confidential in nature.
1.7 "DEVELOPER PROGRAM" means SG's developer support program, as
may be amended from time to time.
1.8 "DISTRIBUTOR" means any distributor authorized by WTC to
resell Products.
1.9 "EFFECTIVE DATE" means the date SGI signs this Agreement on
the signature page hereof, on which date the term of this Agreement will
commence.
1.10 "END USER(S)" means Reseller's customers of Product, which
shall be the ultimate end users of Product (i.e., Reseller may not market or
distribute Product through intermediates such as dealers or other
distributors). End Users shall not include any Reseller agent or any agency,
department, or entity of the U.S. Government, unless previously agreed by SGI
in writing.
1.11 "END USER WARRANTY" means SG's standard limited end warranty
for Equipment in effect on the date Equipment is initially delivered to
Reseller.
1.12 "EQUIPMENT" means hardware products offered by SG hereunder,
including, but not limited to Workstations, servers, and accessories, options
and spare parts therefor.
1.13 "LICENSE" means SG's standard from End User Software License
Agreement, and may be amended by SG from time to time, the current form of
which is attached hereto as Attachment A.
1.14 "LICENSED SOFTWARE" means software products offered by SG
hereunder, and related documentation and manuals.
1.15 "PRODUCT" means any combination of Equipment and Licensed
Software.
1.16 "RESELLER PROGRAM" means SG's marketing program for SG's
value-added resellers of Product in the U.S., Canada, Japan and certain
European countries. Participants in the Reseller Program are automatically
participants in SG's Development Program.
2.
<PAGE> 3
1.17 "RESELLER SUBSIDIARY(IES)" means any entity of which fifth
percent (50%) or more of the voting rights are owned or controlled, directly or
indirectly, by Reseller: provided, however, that such entity shall be deemed
to be a Reseller Subsidiary only for so long as such ownership or control
exists.
1.18 "RESELLER TRANSFER OF OWNERSHIP CARD" is a form which
Reseller, in accordance with Section 14.4 below, will complete and forward to
SG whenever it resells Product.
1.19 "SG" means, collectively or singularly, as the content
requires, SGI, WTC, and/or a Subsidiary.
1.20 "SUBSIDIARY" OR "SUBSIDIARIES" means any entity of which fifty
percent (50%) or more of the voting rights are owned or controlled, directly or
indirectly, by SGI or WTC; provided, however, that such entity shall be deemed
to be a Subsidiary only for so long as such ownership or control exists.
1.21 "SYSTEM" means a composite product created by Reseller by
combining the Application and any non-SG products with Product.
1.22 "TRADEMARKS" means any trademark, marks or tradename which SG
may designate, use or adopt from time to time.
1.23 "WTC" means Silicon Graphics World Trade Corporation, a
Delaware corporation, which is a wholly-owned subsidiary of SGI and SGI's
export corporation, having a place of business at 2011 N. Shoreline Blvd.,
Mountain View, CA 94039-7311.
1.24 "WORKSTATION" means a single stand-alone workstation or
computer offered by SGI hereunder.
2. ATTACHMENTS. Attachments A (Software License Agreement), B (Value
Added Reseller Application and Annual Volume Commitment), C (Reseller Program),
D (Reseller Marketing Program), E (Assigned Trading Area), and F (if
applicable) are incorporated into and form a part of this Agreement. The
original forms of all Attachments listed above are the versions of such
Attachments which are in effect as of the Effective Date. SGI may from time to
time, at its sole discretion, modify Attachments A, C and D, change any aspect
of its Reseller Program or Developer Program, or change the price of any
Product. In the event of a change to Attachment B, SGI will provide a written
notice of amendment to Reseller, which amendment will automatically become a
part of this Agreement.
3. APPOINTMENT OF RESELLER, SCOPE OF AGREEMENT.
3.
<PAGE> 4
3.1 APPOINTMENT. By this Agreement, SGI makes, and Reseller
accepts, the appointment of Reseller as an authorized, limited, non- exclusive
reseller of Product, solely in accordance with the terms and conditions of this
Agreement. Reseller agrees to resell Product only (i) as part of a stand-alone
computer system (ii) with a license for the Application to be used by the End
User, solely to End Users in the Assigned Trading Area; provided, however, that
Reseller may only sell Product in the Assigned Trading Area, where it is able
to provide adequate face-to-face support for Product and maintain a facility to
promote, demonstrate and sell Product. RESELLER ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT DOES NOT PERMIT RESELLER TO ACQUIRE PRODUCT FOR THE RENTAL OF
ANY PRODUCT TO ANY RESELLER CUSTOMER. Reseller agrees that it shall only sell
add-on or add-on options or upgrades for stand-alone systems originally sold by
Reseller (with the exception of add-ons or add-on options or upgrades for
products for which Reseller is an authorized reseller) and (ii) sell servers as
part of a network system. Reseller shall not sell or offer to sell Product
outside the Assigned Trading Area or to entities, departments, or agencies of
the U.S. Government without SGI's prior written consent. Upon the prior
written approval of SGI, Reseller shall have the right to sell SGI service
contracts to End Users.
3.2 VALUE-ADD REQUIREMENTS AND RESELLER REPRESENTATION AND
WARRANTY. Reseller warrants, represents that as of its execution of this
Agreement, the Application operates with Workstations and that it has full
power and authority to execute and deliver this Agreement and participate in
the Reseller Program. Reseller further warrants, represents, and agrees that
each Application Reseller shall sell with Product hereunder shall (i) operate
with Product and significantly enhance, in function and/or capability, the
Product with which it is sold; (ii) constitute an integral portion of the
System purchased by the End User and (iii) is of such a nature that a
reasonable End User would put the Application into productive use with the
purchased Product for at least ninety (90) days after receipt of the System.
Reseller acknowledges and agrees that SG has relied on the foregoing warranty,
representation , and covenant in entering into this Agreement and providing the
discounts hereunder. Therefore, Reseller agrees that (i) a breach of this
Section 3.2 shall constitute a material default under Section 15.1(a) of this
Agreement; and (ii) in the event of Reseller's breach of this Section 3.2,
immediately, upon SG's request, Reseller shall refund to SG an amount equal to
the discount originally granted by SG on the purchase by Reseller of the
Product sold with the Application that did not meet the requirements of this
Section 3.2.
3.3 PURCHASE ARRANGEMENTS. As used in this Section 3.3, the term
"country" shall be deemed to include the European Economic Area. Reseller
acknowledges and agrees that End Users are best served if Reseller acquires
Product from SG or a Distributor in the country where such End Users will
utilize Product, so that (i) satisfactory and responsive local service and
support can be provided to such End Users, and (ii) Product will meet such
country's particular product and regulatory requirements.
4.
<PAGE> 5
Reseller, therefore expressly agrees that it shall resell Product only to End
Users and install such Product only in the country where Reseller purchased
such Product. Reseller acknowledges that SG will not be able to provide
adequate support or service for any Product unless Reseller has purchased that
Product from SG in the country of resale and installation. Reseller further
acknowledges that, at a minimum, the cost to Reseller to have Product brought
to conforming specification prior to serviceability under local conditions may
be significant. In the event Reseller fails to purchase Product from SG in the
country of where the End User shall use the Product, unless purchased from WTC,
Reseller shall immediately upon SGI's request, pay to SG the sum of (i) the
difference between such Product's list price in the country of purchase and the
list price in the country of installation, (ii) an amount equal to the discount
originally granted by SG on the purchase by Reseller of such Product, and (iii)
a rework charge equal to ten percent (10%) of the list price of such Product in
the country of installation.
3.4 NON-EXCLUSIVITY OF PROGRAM. SG reserves the right to market
any of its products, including Product to any customer in any location,
directly or indirectly, through other resellers, and other distribution
channels, including without limitation, distributors, original equipment
manufacturers, dealers and the like. Reseller agrees that SG may offer and
sell other products through such other channels of distribution or directly to
end users, including products which may be competitive with Products, without
making them available to resellers, including Reseller. Reseller is not
entitled to receive any commission, discount or any other compensation from SG
relating to such sales. Likewise, Reseller is free to sell non-SG products.
3.5 INDEPENDENT CONTRACTORS. The relationship between SG and
Reseller established by this Agreement is that of independent contractors, and
no franchise, joint venture or partnership is established by this Agreement.
Neither party hereunder is the agent, broker, partner, employee, or legal
representative of the other for any purpose whatsoever. All sales and other
agreements between Reseller and End Users are Reseller's exclusive
responsibility, and any commitment made by Reseller to End Users with respect
to the delivery, modification, interfacing capability, performance or
suitability of Product are Reseller's sole responsibility, unless prior written
approval has been obtained from SG.
3.6 SERVICE PROVIDER. In the event Reseller desires to become an
authorized service provider for Product, each Reseller entity that will provide
service must be approved in writing by and participate in SG's program for
authorized service providers.
3.7 SUBSIDIARY PURCHASES. In the event Reseller desires that
Reseller Subsidiaries have the right to purchase Product under this Agreement,
Reseller hereby guarantees all obligations of Reseller Subsidiaries hereunder.
Reseller shall provide SG
5.
<PAGE> 6
with a written list of all Reseller Subsidiaries authorized to purchase Product
hereunder. Such list shall be incorporated herein as an Attachment.
4. TERM. The term of this Agreement shall be a period of one (1) year
after the Effective Date. This Agreement may be renewed for subsequent one (1)
year terms upon the mutual prior written agreement of the parties, under the
terms, conditions and pricing then generally made available by SG to its
reseller customers. However, each party acknowledges that this Agreement
shall always be interpreted as a definite term and that the other party has
made no commitments whatsoever regarding the duration or renewal of this
Agreement beyond those expressly stated herein.
5. RESELLER OBLIGATIONS. In consideration for the rights granted to
Reseller in this Agreement, Reseller agrees to:
(a) Purchase at least $100,000 of Product annually and exert its
best efforts to market all Product at or above its Annual Volume Commitment.
Reseller may not, with the exception of demonstration/development systems,
apply internal purchases to the Annual Volume Commitment unless SG has
otherwise previously agreed in writing as an amendment to this Agreement.
(b) Market and support Product in conformance with the Business
Plan and application submitted by Reseller.
(c) Maintain the Application to be compatible with at least one
(1) major operating system revision level offered by SG (as used herein the
term "major" means any release which provides for significant new
functionality); provided, however that the Application shall be functional.
(d) Maintain, at each Reseller sales office one (1) or more
full-time employees trained by SG, and capable of effectively marketing
Product. If Reseller has not previously sold Product, each Reseller trainee
must attend at least one SG-delivered sales training class, in the form
determined by SG, within one-hundred eighty (180) days of the Effective Date.
If Reseller has previously sold Product, each employee trainee must attend at
least one (1) SG-delivered sales training class during the term of this
Agreement. Reseller acknowledges and agrees that its customers cannot be
adequately support by telephone or a "mail order" sales and distribution
mechanism, and, therefore, agrees that, with the exception of repeat sales to
existing customers, it will sell Product only through "face-to-face" sales
activity providing for direct contact with End User.
(e) Maintain at least one (1) employee that has attended one (1)
or more technical training classes offered by SG.
6.
<PAGE> 7
(f) At the time Product is delivered to the End User, (i) furnish
to the End User a bill of sale or other sales receipt which states the date of
purchase and identifies the Product purchased, (ii) ensure that the appropriate
SG warranty statement, agreement or other materials required by SG are included
with each Product, and (iii) instruct the customer on the set-up, installation
and use of the Product.
(g) Provide SG with a valid resale tax exemption certificate for
those territories where Reseller intends to request that SG ship product
directly from SG to the End User.
(h) Promptly report to SG any suspected defects or safety problems
in Product, keep SG informed of any customer complaints relating to Product,
and cooperate with and assist SG in the implementation of any field retrofits
required by SG to correct Product defects or problems.
(i) Allow SG access to Reseller's sales officers, upon previous
notice and at reasonable times, to inspect Reseller's sales facilities, and to
observe Reseller's compliance with this Agreement.
(j) Observe and comply with all applicable laws and government
regulations and conduct business in an ethical manner.
(k) Make no false or misleading representations regarding the
function and performance of Product, make only those representations which are
consistent with SG's Product documentation, and represent Product fairly in
comparison with third party products.
(l) In each Reseller sales office at all times maintain and
present a functional display of Product in an appropriate environment.
(m) Except with SG's prior written approval, purchase Product only
as provided under this Agreement.
(n) Deliver to SG, within thirty (30) days after a written request
during the term of this Agreement, a Business Plan acceptable to SG.
6. PRICE; DISCOUNTS; AND ORDERS
6.1 BASE PRICES. The base prices for Equipment purchased and fees
for Licensed Software provided hereunder will be the list prices which are
effective on the date SG receives Reseller's orders as set forth in, as
appropriate (a) SGI's standard commercial U.S. price list for Product purchased
in the U.S.; (b) in the price list then in effect for the appropriate
Subsidiary for those countries where SG operates a Subsidiary; (c) in a
separate agreement reached between Reseller and a Distributor in those
countries
7.
<PAGE> 8
where SG sells Product through a Distributor; or (d) in its then-current
international price list for those countries having no Subsidiary or
Distributor.
6.2 PURCHASE PRICE CALCULATION. Reseller's purchase price will be
the Base Price, less a discount determined in accordance with Section 6.7
below. If Reseller is unsure of the current Base Price to use in calculating
net price to Reseller for any Product. Reseller should contact its SG sales
representative for verification. Reseller may determine the resale prices it
charges its customers in its sole discretion, and SG will not in any manner
require that any particular price be charged by Reseller.
6.3 CURRENCY. Price quotations for each purchase hereunder will
generally be made in the currency of the country in which Reseller's customer
will take delivery; provided, however, that if there is no Subsidiary or
Distributor in such country, the price quotation will be issued by WTC in U.S.
Dollars.
6.4 TAXES AND DUTIES. The Base Prices do not include sales, goods
and services, provincial, value added or similar taxes of any nature. Reseller
shall pay and indemnify SG against all sales, use, value-added, withholding and
similar taxes, including penalties and interest, levied by any governmental
authority as a result of the delivery, sale, distribution or other transfer of
Product or the resale thereof under this Agreement (other than taxes based upon
SG's net income). SG SHALL NOT SHIP PRODUCT TO ANY LOCATION FOR WHICH RESELLER
HAS NOT PREVIOUSLY SUBMITTED TAX EXEMPTION OR DROP-SHIP CERTIFICATES IN A FORM
REASONABLY SATISFACTORY TO SG.
6.5 BASE PRICE CHANGE. SG may change its Base Prices at any time.
SG will provide reasonable notice of any change in Base Price to Reseller. Any
such change will become effective immediately upon general announcement by SG,
and will apply to all orders that have not been shipped prior to such
announcement date. Reseller shall be entitled to any then-current price
protection policies provided by SG.
6.6 DISCOUNTS. Certain Product may be non-discountable or
available with a limited discount only. Reseller's discount from Base Prices
for the purchase of such items will be either the discount provided under
Attachment C, or the maximum discount level specified for that item in the
appropriate price list on the date SG accepts Reseller's order, whichever
discount level is lower. Subject to such discount limitation, SG will grant to
Reseller a volume purchase discount from Base Prices for its direct purchases
from SG under this Agreement and in accordance with the Business Plan, to be
calculated pursuant to the discount schedule an Attachment C, or an alternative
discount schedule which SG may specify from time to time during the term of
this Agreement.
6.7 DISCOUNT LEVEL DETERMINATION. SG will monitor the volume of
Reseller's purchases under this Agreement. SG shall have the right to review
the amount of
8.
<PAGE> 9
Reseller's purchases of Product to date on each six (6) month anniversary of
the Effective Date. In the event that the run-rate of Reseller's purchases of
Product (i.e. the annualized projection of Reseller's purchases) based on
purchases of Product during such calendar quarter is one hundred percent (100%)
or more of the maximum volume required by Reseller's Annual Volume Commitment,
Reseller shall be entitled to receive any appropriate greater discount listed
in the general Discount Schedules set forth in Attachment C. In the event the
run-rate of Reseller's purchases for Product in any six (6) month period is
eighty percent (80%) or less of the minimum volume required by Reseller's
Annual Volume Commitment. SG, at its sole discretion, may reduce Reseller's
discount to the appropriate lesser discount under the general Discount
Schedules set froth in Attachment C. Any such adjustments to Reseller's
discount level will not affect the price of, or discount provided on,
Reseller's previous purchases. If Reseller later returns any Product that
enabled Reseller to meet or exceed its volume commitment entitling Reseller to
a greater discount, SG may reduce Reseller's discount to its original discount
level for the remainder of the then-current term.
6.8 DISTRIBUTOR DISCOUNTS. SG makes no representation as to the
level of discount that any Distributor will provide to Reseller, as such
discount level, if any, will be determined solely by separate agreement between
Reseller and such Distributor.
6.9 ORDERS. All orders placed hereunder by Reseller will be
subject to acceptance by SG at the place of business designation herein or
otherwise by SG. Reseller will order Product for installation in the U.S. by
submitting written orders to SGI, at SGI's address set forth above. For
Product intended for installation outside the U.S., Reseller shall submit
written orders to WTC, Distributors, or Subsidiaries, as applicable. All
orders shall reference this Agreement, specify this Agreement's assigned number
(listed on the signature page hereof), and state the quantities and
descriptions of Product required, applicable list and purchase prices and
license fees, requested delivery dates and shipping instructions, and import
certificates, if any, required by the country where Reseller shall resell
Product. Reseller's orders will specify a "bill to" address which shall be the
address for Reseller above, unless an alternate billing address has previously
been approved in writing by SG. Reseller shall provide copies to WTC of all
orders submitted to Distributors and Subsidiaries. SG will not be required to
accept orders that specify delivery to any country where the U.S. Government
will not grant an export license for Product.
6.10 TIMING OF ORDERS. Reseller shall place its orders during the
term of this Agreement. Such orders may specify requested delivery dates that
are up to ninety (90) days after the order date and after the expiration of the
term hereof. For purposes of this Agreement, the order date will be the date
on which SG receives Reseller's order.
9.
<PAGE> 10
7. ORDER RESCHEDULING, CONFIGURATION CHANGES, CANCELLATION AND STOCK
ADJUSTMENT PROGRAM.
7.1 RESELLER. Reseller may cancel its orders to SG or otherwise
make changes to its orders as to either the date of shipment and/or
configuration thereof subject to the following charges, provided that Reseller
shall not change or cancel any purchase order less than fifteen (15) days
before the scheduled shipment date for such order without SG's prior written
consent:
<TABLE>
<CAPTION>
NO. OF DAYS BETWEEN DATE CHARGE AS %
NOTICE IS RECEIVED OF RESELLER'S
BY SG AND SCHEDULED PURCHASE PRICE
SHIPMENT DATE CANCELLATION CHANGE
<S> <C> <C>
15-30 10% 5%
31-60 5% 5%
</TABLE>
SG may, at its option, waiver the foregoing change charges if
Reseller's change increases the net purchase price of its order by ten percent
(10%) or more.
7.2 SG CHANGES IN DELIVERY. Although SG will use reasonable
efforts to ship Product on the originally scheduled shipment date after
Reseller changes an existing order with SG, it may be necessary for SG to
revise the scheduled shipment date after an order change. In such event, SG
will send Product as soon after the originally scheduled shipment date as
reasonable practicable.
7.3 CHANGE ORDER/CANCELLATION CHARGES. Cancellation charges for
rescheduled Product will be calculated based upon the amount of notice, if any,
provided either in the initial rescheduling of the order or in the cancellation
of the order, whichever notice period is less.
7.4 STOCK ADJUSTMENT PROGRAM. Reseller may return Product then
currently in its inventory to SGI under SGI's then-current Stock Adjustment
program, if any.
8. PAYMENT AND SECURITY TERMS.
8.1 PAYMENT FOR PRODUCT PURCHASED FROM SGI. Reseller will pay for
Product purchase from SGI under this Agreement net thirty (30) days after the
date of SGI's invoice, which SGI will issue upon shipment of Product. Although
SGI may extend credit to Reseller, SGI reserves the right to change its credit
terms at any time when, in SGI's sole opinion, Reseller's financial condition
or payment record so warrants.
10.
<PAGE> 11
8.2 PAYMENT FOR PRODUCT PURCHASED FROM WTC. Reseller shall pay
for purchases from WTC via wire transfer prepayment to WTC's U.S. bank account
(by identified account number), made at least five (5) days prior to the
scheduled shipment date, or by confirmed, irrevocable letter of credit issued
in favor of WTC at least thirty (30) days before the scheduled shipment date,
of an amount equaling: (i) one hundred percent (100%) of the price of Product
to be delivered; or, if due to any reason WTC cannot make delivery of all of
Product ordered, the amount equaling that portion thereof to be delivered, and
(ii) cancellation or rescheduling charges, if any, based upon the charges
specified in Section 7.0 for any cancellation and/or rescheduling.
8.3 PAYMENT FOR PRODUCT PURCHASED FROM SUBSIDIARIES AND
DISTRIBUTORS. Resell shall pay for orders from Subsidiaries and Distributors,
in accordance with the payment terms agreed to by the Subsidiary or
Distributor, as applicable.
8.4 SECURITY FOR EQUIPMENT PURCHASED IN THE U.S. The parties
agree that this Agreement constitutes a security agreement, whereunder SGI has
retained and claims, and Reseller hereby grants to SGI, a continuing purchase
money security interest under the California Commercial Code in the Equipment,
in any receivables generated therefrom upon Reseller's subsequent disposition
of the Equipment, and in any proceeds (as such term is defined in Section
9306(1) of the California Commercial Code) derived from the sale of the
Equipment or the collection of such receivables. In order to perfect SGI's
security interest, Reseller agrees that at any time, or from time to time (i)
Reseller will execute financing statements (e.g.: UCC-1 forms) and amendments
and supplements thereto, or other instruments that SGI, as a secured party, is
required to file in compliance with the California Commercial Code and any
other state law which is applicable to the Equipment as collateral, and (ii)
SGI may file such financing statements and this Agreement or copy of this
Agreement, with the appropriate state provincial or local authorities at any
time, alone or with other documents which SGI determines to be necessary or
desirable to perfect or protect the security interest created hereby. In cases
where Reseller has requested that SGI ship Equipment directly to Reseller's
customer, SGI, its agent or its assignee is authorized to execute for and on
behalf of Reseller (Reseller authorizes SGI or its agent to sign financing
statements in Reseller's stead or Reseller's attorney in fact with full power
of substitution) and to file such financing statements, amendments and
supplements thereof, or other instruments that SGI, as a secured party,
requires or deems desirable to comply with the California Commercial Code and
any other law of the U.S., which is applicable to the Equipment as collateral.
Payment in full of the purchase price of any Equipment shall release the
security interest on that Equipment.
8.5 SECURITY FOR EQUIPMENT PURCHASED OUTSIDE THE U.S. The parties
agree that this Agreement constitutes a security agreement under which Reseller
grants to WTC preferential rights or liens upon or the reservation of title to
Equipment purchased outside
11.
<PAGE> 12
the U.S. under this Agreement for the amount of the purchase price of such
Equipment until Reseller has fully paid for such Equipment. Such preferential
rights or liens or the reservation of title shall be effected through the
statutory system available in the country of purchase by Reseller and the
country of purchase by End User. Reseller agrees to sign all documents
required to achieve and perfect the foregoing and further agrees to and shall
obtain executed documents establishing and perfecting such preferential rights,
liens, and or reservation of title from any intermediary purchaser or End User
of Equipment. Reseller acknowledges that any security interest in Product sold
by a Subsidiary or Distributor shall be determined by separate agreement with
Reseller.
8.6 PARTIAL SHIPMENTS. Reseller agrees to accept partial
shipments and pay for Product comprising a partial shipment, net thirty (30)
days after the date of SG's invoices provided, however, that SG shall only
submit an invoice for Product which it has shipped, unless otherwise agreed to
in writing by the parties.
9. DELIVERY, RISK OF LOSS AND TITLE
9.1 DELIVERY IN THE U.S. Unless SGI has otherwise previously
agreed in writing and subject to Section 6.4 above, SGI will ship Product only
to End Users in the U.S. Delivery will be made F.O.B. origin. For purposes of
this Agreement, this means the time of delivery is the time when SGI remits
Product to the carrier at SGI's facility. In the absence of specific written
instructions from Reseller, SGI will select the carrier, but such carrier will
not be the agent of SGI, nor will SGI assume any liability with regard to the
shipment after delivery to the carrier. SGI will pack all Product shipped in
accordance with standard commercial practices. Risk of loss and/or damage to
Product will pass to Reseller on delivery. Title to Equipment will pass to
Reseller on delivery, subject to the security interest referred to in Section
8.0 above.
9.2 DELIVERY OUTSIDE THE U.S. The following terms of shipment
will apply to orders of Product purchased for resale outside of the U.S.
(a) PURCHASES FROM WTC. For WTC export
shipments, Product will be delivered FCA SG's facility (according to Incoterms
1990). Risk of loss and/or damage to Product shall pass to Reseller upon
delivery which occurs when Product is delivered to the carrier. In the absence
of specific written instruction from Reseller, WTC will select the carrier, but
such carrier shall not be the agent of WTC, nor shall WTC assume any liability
with regard to the shipment. All Product shipped shall be packed in accordance
with standard commercial practices. Equipment and Licensed Software held or
stored for Reseller by the carrier shall be held or stored at Reseller's risk
and costs. WTC shall not be liable for any damages or penalty due to delay in
delivery by the carrier. Title Equipment shall pass to Reseller upon delivery
in accordance with Section 8.5 above or local Subsidiary terms and conditions
of sale. Provided that Reseller has
12.
<PAGE> 13
furnished to WTC all required information and/or import certificates or other
documents, WTC will produce all U.S. Government export licenses required to
export Product to the ship-to-address specified in Reseller's order.
(b) PURCHASES FROM SUBSIDIARIES. For countries
where Reseller purchases Product from a Subsidiary, Product will be delivered
in the country of purchases in accordance with the Subsidiary's terms and
conditions then in effect. The Subsidiary will procure all documents required
by the U.S. Government and the government of the country of destination for
delivery of Product, including but not limited to export licenses and import
certificates.
(c) DISTRIBUTOR PURCHASES. For countries where
Resell purchases Product from a Distributor, the terms of shipment will be
determined by separate agreement between Resell and the Distributor.
(d) PURCHASES FROM SILICON GRAPHICS CANADA, INC.
Product will be delivered in Canada in accordance with SG's Canadian
Subsidiary's then-current terms and conditions. Such Subsidiary will procure
all documents required by the U.S. Government and the government of the country
or destination for delivery of Product, including but not limited to export
licenses and import certificates and will procure transit insurance to
Reseller's designated destination.
10. TRADEMARKS AND CONFIDENTIAL INFORMATION
10.1 TRADEMARKS. During the term of this Agreement, Reseller will
indicate to the public that it is an authorized reseller of Product by using
Trademarks in Reseller's advertisements for such Product. Reseller shall
submit to SG, in advance, such advertisements, and any other promotional
materials that describe or identify Product, and/or use Trademarks for SG's
approval, unless such advertising materials have been received form SG, or SG
has otherwise agreed to Reseller's use and distribution of such materials in
writing. SG reserves the right to reject and Reseller will not make use of)
any of such materials which in SG's reasonable judgment do not comply with the
SG Trademark Use Guidelines contained in SG's latest Reseller Marketing Kit, or
which are otherwise inconsistent with proper trademark usage, of poor quality,
or potentially injurious to SG's business or Product. SG grants Reseller no
title or interest in any Trademark under this Agreement. Reseller will not (i)
alter or remove any Trademark applied to or used in conjunction with, a Product
by SG, (ii) attach any additional trademark or trade designation to any
Product, (iii) use any Trademark as part of Reseller's trade name, service
mark, or trademark or in any other manner as would cause a reasonable person to
infer that Reseller has affiliation with SG other than the rights provided
under this Agreement to resell Product, or (iv) use any Trademark in a way that
implies Reseller is an agent, franchisee, representative or branch of SG,
Reseller will
13.
<PAGE> 14
immediately change or discontinue any Trademark use as requested by SG. At no
time during or after the term of this Agreement will Reseller challenge or
assist others to challenge the validly of any Trademark, or SG's ownership or
registration thereof, or attempt to use or register any trademark, servicemark,
or tradename which is confusingly similar to any Trademark. Reseller will, on
expiration or termination of this Agreement, cease indicating to the public
that it is an authorized reseller of Product, cease the use of Trademarks and
destroy all existing literature referencing same.
10.2 CONFIDENTIAL INFORMATION. Reseller and SGI acknowledge that,
by reason of their relationship under this Agreement, they will have access to
Confidential Information. Each party hereto agrees that Confidential
Information is a trade secret of the other, and agrees not to disclose or use
any Confidential information for any purpose except as contemplated by this
Agreement. Each party hereunder agrees to limit the use of and access to
Confidential Information to such employees as have a need to know such
information for the purposes of carrying out such party's obligations under
this Agreement. Each party hereto will bind its personnel receiving
Confidential Information in writing to the obligations of confidentiality
specified in this Section 10.2.
10.3 EXCLUSIONS. A party hereunder shall have no obligation as to
Confidential Information that (i) is not provided in a tangible form and
labeled as confidential or proprietary, or if provided orally, designated as
confidential or proprietary at the time of disclosure, (ii) is known to the
receiving party at the time of disclosure, as evidenced by documentation in the
receiving party's possession at the time of such disclosure, (iii) is
independently developed by the receiving party (provided the receiving party
can show that such development was accomplished by or for the receiving party
without the use of or any reference to Confidential Information), (iv) becomes
rightfully known to the receiving party from another source without restriction
on subsequent disclosure or use, (v) is or becomes part of the public domain
through no wrongful act of the receiving party, or (vi) is furnished by the
disclosing party to a third party without a similar confidentiality
restriction. A receiving party may disclose Confidential Information pursuant
to any competently authorized judicial or governmental request, requirement or
order provided that the receiving party takes reasonable steps to give the
disclosing party sufficient prior notice to contest such request, requirements
or order and/or to seek a protective order therefor.
10.4 NOTICE OF DISCLOSURE. A receiving party shall promptly notify
the disclosing party in writing of any unauthorized disclosures of Confidential
Information. Such notices shall include a detailed description of the
circumstances of the disclosure and the parties involved therewith.
10.5 INJUNCTIVE RELIEF. The parties acknowledge and agree that in
the event of an unauthorized use, reproduction, distribution or disclosure of
any Confidential
14.
<PAGE> 15
Information, the disclosing party will not have an adequate remedy at law, and
therefore, injunctive or other equitable relief may be appropriate to restrain
such use, reproduction, distribution or disclosure, threatened or actual.
10.6 NO RIGHT TO COPY. Product is offered for sale and sold by SG
subject in every case to the condition that such sale does not convey any
license, expressly, by implication, estoppel, or otherwise to manufacture,
duplicate or otherwise copy or reproduce any Product. Reseller shall take
appropriate steps to assure compliance wit the restrictions contained in this
Section.
10.7 NEWS RELEASES. Except as may be required by law or
regulation, no news release, public announcement or advertising material
concerned with the Agreement shall be issued by either party without prior the
written consent of the other party.
10.8 DISPOSAL OF MEDIA. Before disposing of any media or storage
apparatus containing Confidential Information, a party hereunder shall ensure
that it has completely erased or otherwise destroyed any such Confidential
Information.
10.9 PRODUCT ANNOUNCEMENTS. Reseller will constrain discussion and
all business activity relating to Product solely to those products announced by
SG. Reseller will not provide information on unannounced SG products to any
third party or accept deposits for the purchase of unannounced SG products.
Reseller will not misrepresent the scope of Reseller's authority with regard to
Product under this Agreement.
11. LICENSED SOFTWARE AND ITS DISTRIBUTION.
11.1 LICENSED SOFTWARE. The sale of Product to Reseller and the
transfer of title to Reseller for each purchased Product will not include a
sale of, or transfer of title to, any Licensed Software, whether included with
Product or not. Title to Licensed Software will remain with SG and its
suppliers, regardless of any references or usages to the contrary with respect
to Product in this Agreement.
11.2 RESELLER'S USE OF LICENSED SOFTWARE. Reseller may only use
the Licensed Software provided under this Agreement in accordance with
Attachment A, and only in support of its internal Application development,
marketing and support activities. Reseller shall provide Licensed Software to
End Users solely in accordance wit Section 11.3 below.
11.3 DISTRIBUTION OF LICENSED SOFTWARE TO END USERS. Reseller will
"pass through" the Licensed Software supplied to End Users. For purposes of
this Agreement "pass through" means that Reseller will provide the Licensed
Software to End Users exactly as ordered and received from SG, and Reseller
will in no circumstances remove, modify or otherwise tamper will the License,
any package containing Licensed Software,
15.
<PAGE> 16
any other document provided with the Licensed Software, or any labeling on any
physical media containing Licensed Software. Except as an end user of the
Licensed Software pursuant to Section 11.2 above, this Agreement grants to
Reseller no right to use, modify, copy or sublicense the Licensed Software. SG
will provide to End Users, solely under the terms and conditions specified in
the License, a license to use (i) the then-current (on the date of shipment)
release of the Licensed Software appropriate for the Equipment configuration
purchased by the End User, and (ii) any Licensed Software option items ordered
for use with such Equipment. End Users will indicate acceptance of the License
terms and conditions by signed agreement as well as by opening and using the
media and/or manuals package, or using the Licensed Software.
11.4 WARRANTY. The terms of the Licensed Software warranty and
patent/copyright infringement protection provided hereunder to Reseller and End
Users with respect to Licensed Software are specified in Attachment A, and are
limited by the terms and conditions therein.
12. Limited Patent And Copyright Protection.
12.1 INFRINGEMENT CLAIMS. SG will defend any suit or proceeding
brought against Reseller or any End User, but only to the extent such suit or
proceeding is based on a claim that the Equipment, solely as furnished by SG to
Reseller under this Agreement, constitutes direct infringement of any (i)
issued U.S. patent or (ii) registered copyright in the country use by an End
User. SG will pay all settlements and costs finally awarded therein against
Reseller or its customer with respect to such matter, provided that Reseller
(i) promptly informs SG thereof, and furnishes to SG a copy of each
communication, notice or other action relating to the alleged infringement,
(ii) gives SG the authority, information and assistance necessary to settle,
compromise or litigate such suit or proceeding, and (iii) does not settle, or
agree to settle, any such suit without the express written permission of SG.
If the Equipment is held in any such suit to infringe and the use of the
Equipment is enjoined. SG will have the option, at its own expense, to procure
for End Users the right to continue using the Equipment, or replace same with
non-infringing Equipment; or modify same to make it non-infringing; or refund
the depreciated value of such Equipment, and accept the return of same.
12.2 EXCEPTIONS. SG will not be obligated to defend or be liable
for costs and damages if infringement, or a claim of infringement, arises out
of (i) compliance with Reseller's specifications, incorporation of Reseller or
third party equipment or software in or with the Equipment, (ii) a modification
made to the Equipment by Reseller or a third party, or (iii) other fault,
action of inaction of Reseller or its customer. SG may decline to make further
shipments to Reseller under this Agreement if infringement caused by any such
action has been alleged, or has occurred.
16.
<PAGE> 17
12.3 LIMITATION. THE FOREGOING STATES THE ENTIRE LIABILITY OF SG
FOR PATENT, COPYRIGHT OF OTHER INTELLECTUAL PROPERTY INFRINGEMENT BY THE
EQUIPMENT FURNISHED UNDER THIS AGREEMENT.
13. Liability
13.1 RISK ALLOCATION. This Agreement allocates the risks of the
marketing, sales and use of Product between SG and Reseller. SGI and Reseller
recognize and acknowledge such allocation as fair, and adequately reflected in
the purchases price of the Equipment and license fees for Licensed Software
provided under this Agreement. Except as otherwise provided in this Agreement,
SG will not be liable, in whole or in part, for any claims or damage arising
from Reseller's marketing, resale, or distribution of Product by Reseller or
its customers, and Reseller agrees to indemnify, defend (with counsel approved
in writing in advance by SG) and hold SG harmless against any claims for cost,
damage, expenses or liability arising out of or in connection with any
negligent resale or installation of Product by Reseller or its customers or use
of the Application in connection therewith, whether alone or in combination
with Product or any other product or service (provided, however, that Reseller
shall not be obligated to indemnify SG for negligent installation of Product by
its customers where Reseller has provided installation information to its
customers that is consistent with SG's written specifications therefor). With
respect to the foregoing risks thus assumed, Reseller shall maintain a policy
of liability insurance covering Comprehensive General Liability, including
Completed Operations, Contractual Liability, Broad Form Property Damage and
Product Liability, with a minimum combined single limit of $2,000,000.00. Such
policy shall be with an insurer reasonably satisfactory to SG and shall contain
a requirement that no material modification or cancellation of coverage may
occur unless thirty (30) days prior written notice thereof has been provided to
SG. Upon SG's request, Reseller shall cause its insurer to provide to SG a
certificate evidencing such coverage within fifteen (15) days after the
Effective Date, and cause SG to be named as an additional insured on its
policy.
13.2 LIMITATION OF LIABILITY. IN NO EVEN SHALL SG BE LIABLE TO
RESELLER OR END USERS FOR EXEMPLARY, INCIDENTAL INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING WITHOUT LIMITATION LOSS OF PROFIT,
LOSS OF USE SAVINGS OR REVENUE, OR THE CLAIMS OF THIRD PARTIES INCLUDING END
USERS, WHETHER OR NOT SG HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS,
HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, ARISING OUT OF THIS AGREEMENT OR
THE RELATIONSHIP OF RESELLER AND SG.
13.3 LIMITATION IN AMOUNT. EXCEPT AS PROVIDED IN SECTION 12 ABOVE,
THE LIABILITY OF SG ARISING OUT OF THESE TERMS AND CONDITIONS OF SALE AND/OR
SALE OR USE, INCLUDING WITHOUT
17.
<PAGE> 18
LIMITATION ANY AND ALL CLAIMS COMBINED, WILL NOT EXCEED THE AMOUNT OF THE
PURCHASE PRICE/LICENSE FEE OF PRODUCT PROVIDED UNDER THIS AGREEMENT AND HAVING
CAUSED SG'S LIABILITY. IN NO EVENT WILL SG BE LIABLE FOR THE COST OF
PROCUREMENT OF SUBSTITUTE GOODS BY RESELLER, END USERS OR ANY OTHER PERSON OR
ENTITY.
13.4 FAILURE OF ESSENTIAL PURPOSE. THE LIMITATIONS IN THIS SECTION
SHALL APPLY NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY.
13.5 NUCLEAR AND AVIATION APPLICATION. Product is not specifically
designed, manufacture or intended to application in connection with the use of
handling of nuclear material or the design, construction, maintenance,
operation or use in (i) any nuclear facility, or (ii) aircraft, aircraft
communication or aircraft ground support equipment. Reseller warrants that it
shall not use Product, or offer Product for resale to End Users for use for
such purposes unless Reseller or an End User has general and product liability
insurance of the kind and amount deemed in SG's sole discretion to be
commercially appropriate coverage for Reseller's or its End User's use of such
Product. Except as otherwise provided herein, SG shall not be liable, in whole
or in part, for any claims or damages arising from such use or sale. Reseller
agrees to indemnify and hold SG harmless from any claims for loss, cost,
damage, expense, cause of action, or liability arising out of or in connection
with the use and performance of the Equipment and License Software in such
nuclear and aviation application if Reseller or its customers use the Equipment
or Licensed Software for such applications.
13.6 LIMITATION TO BRING SUIT. Except for actions relating to
Reseller's failure to perform its obligations under Section 8.0 of this
Agreement, no action arising out of or in connection with this Agreement, may
be brought by SG or Reseller more than eighteen (18) months after the cause of
action has accrued, or, in the event of Reseller's failure to perform its
obligations under Section 10.0 of this Agreement, more than eighteen (18)
months after the date of discovery of such failure.
13.7 DISTRIBUTORS. A Distributor's limitation of liability will be
in accordance with the terms and conditions agreed between Reseller and such
Distributor. Distributors are not acting as agents or employees of SG, and all
sales and other agreements between Distributors and Reseller are exclusive
responsibilities of such Distributors and Reseller and shall have no effect on
this Agreement or the obligations of SG or reseller hereunder. SG SHALL NOT BE
LIABLE FOR ANY ACTION OR INACTION, NEGLIGENT OR OTHERWISE BY ANY DISTRIBUTOR,
AND SG PROVIDES NO INDEMNIFICATION TO RESELLER HEREUNDER FOR ANY DAMAGE, COST,
LOSS INCLUDING LOSS OF PROFITS OR EXPENSE, HOWEVER CAUSED,
18.
<PAGE> 19
ARISING OUT OF RESELLER'S RELATIONSHIP WITH DISTRIBUTORS, OR RESELLER'S
PURCHASE OF PRODUCT FROM SUCH DISTRIBUTORS.
14. LIMITED WARRANTY.
14.1 RESELLER'S LIMITED EQUIPMENT WARRANTY. For purchases from SGI
and WTC, SGI warrants to Reseller that the Equipment delivered hereunder will
be free from defects in materials and workmanship. Equipment will be of new
manufacture, but may include used parts and/or components which match or exceed
the performance and reliability of new parts and/or components. This warranty
to Reseller is effective for sixty (60) days after the date of original
shipment of the Equipment, or expires on the sale of the Equipment to the End
User, if such sale occurs before the end of such period. After sale to the End
User, the End User Warranty becomes effective in accordance with Section 14.3,
below. The terms and conditions of warranty for Product Reseller purchases
from Subsidiaries and Distributors shall be, respectively, (i) those specified
as in effect by the applicable Subsidiary or the date such Subsidiary ships
Reseller's order and (ii) determined by separate agreement between the
applicable Distributor and Reseller.
14.2 EXCLUSIVE REMEDY. Provided that Reseller has notified SG of a
defect during the warranty period, as Reseller's exclusive remedy for breach of
warranty, SG will at its sole discretion and at no charge to Reseller, repair
or replace any such Equipment which SG confirms to be defective. The foregoing
warranty shall not apply to Equipment which has been (i) damaged by accident,
act of God, shipment, improper installation, misuse or misapplication or (ii)
modified without SG's express written acceptance of such modification for
warranty purposes and such modification is responsible for the defect, in which
case the warranty herein shall be null and void.
14.3 END USER LIMITED EQUIPMENT WARRANTY. SG reserves the right to
amend the terms and conditions of the End User Warranty from time to time. The
End User Warranty statement shipped with Equipment will specify the terms and
conditions of SG's then-current End User Warranty (as of the date when the
Equipment is packed and shipped by SG). If SG changes the terms and conditions
of its standard End User Warranty, such change shall not affect the End User
Warranty on Equipment previously delivered. Reseller will ensure that the End
User Warranty statement included with Equipment is passed through with the
Equipment to End Users.
(a) FOR THE U.S. SGI will include, with all
Equipment shipped under this Agreement, a copy of its standard End User
Warranty statement. The End User Warranty is solely for the benefit of the End
User purchasing the Equipment from Reseller, and is a "manufacturer's" warranty
provided directly by SGI to the End User, effective on the End User's date of
purchase.
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(b) FOR COUNTRIES OTHER THAN THE U.S. WTC or the
applicable Subsidiary will provide a warranty to the End User equal to the
warranty provided to Reseller by WTC or the Subsidiary pursuant to WTC's or the
Subsidiary's terms and conditions then in effect.
14.4 RECORD OF PURCHASERS. To facilitate Product warranty and
maintenance support to End Users, Reseller agrees to notify SG of the names and
addresses of End Users, and Product configuration and serial numbers purchased
by such End Users by providing to SG, within ten (10) days after shipment of
Product to the End User, a completed copy of the Reseller Transfer of Ownership
Card for all Product provided to End Users.
14.5 DISCLAIMER. THE FOREGOING WARRANTIES ARE IN LIEU OF, AND SG
DISCLAIMS, ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR OTHERWISE, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
15. Default; Termination.
15.1 DEFAULT. The occurrence of any of the following acts or
events will constitute default of this Agreement:
(a) in the case of Reseller:
(i) failure to pay any invoice when due;
(ii) if in any case Reseller sells,
transfers or otherwise conveys any Product to anyone not in conjunction with
the issuance of a license for, or sale of, an Application;
(iii) becoming insolvent, suffering the
appointment of a receiver, or making an assignment for the benefit of
creditors; commencement of proceedings against it under any bankruptcy,
insolvency or debtor's relief law, if such proceeding is not vacated or set
aside within sixty (60) days after the date of commencement thereof;
(iv) subject to the provisions of Section
16.9 below, a material change in ownership of Reseller or a sale or transfer of
all, or substantially all, of Reseller's assets; and
(v) a breach of the warranties and
representations set forth in Section 3.2;
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(b) in the case of either party, the failure by
such party to observe or perform any material covenant or obligation under this
Agreement.
15.2 TERMINATION. In the case of any event of default specified in
Section 15.1(a) above, SGI may terminate this Agreement at any time after such
default by providing written notice of termination to Reseller. In the case of
an event of default under Section 15.1(b) above, if such default has not been
cured within thirty (30) days after a party has received a written notice of
default from the other party, the party giving notice may terminate this
Agreement by written notice at any time thereafter.
15.3 RETURN OF CONFIDENTIAL INFORMATION. In any event of
termination or expiration of this Agreement, each party will promptly return to
the other party such party's Confidential Information in its possession or
control.
15.4 SG'S RIGHT TO CHANGE CREDIT TERMS UPON TERMINATION. If either
party gives the other notice of termination or advises the other of its intent
not to renew this Agreement, SG may, at its sole discretion, (i) require that
Reseller pay cash in advance for subsequent purchases, regardless of Reseller's
credit status, (ii) withhold all shipments until Reseller pays its existing
balance, (iii) stop shipments in transit to Reseller, and/or (iv) repossess
Product which is in Reseller's possession, but has not yet been paid for.
15.5 NO LIABILITY. In the event of termination by either party in
accordance with any of the provisions of this Agreement, neither party will be
liable for such termination to the other for compensation, reimbursement or
damages on account of the loss of prospective profits or anticipated sales or
on account of expenditures, inventory, investments, leases or commitments in
connection with the business or goodwill of SG or Reseller.
15.6 SURVIVAL. The parties' obligations under Sections 7.0, 8.0,
9.0, 10.0, 11.0, 12.0, 13.0, 14.0, 15.3, 15.5, 15.6 and 16.0, and Attachment A
shall survive any termination and/or expiration of this Agreement.
16. General
16.1 MODIFICATION. Except as provided in Section 2.0, this
Agreement may only be modified by the prior written approval of a duly
authorized representative of each party. The terms and conditions specified in
this Agreement (with the exception of any agreement between Reseller and a
Distributor or Subsidiary) will take precedence over any provisions in
Reseller's purchase orders or other Reseller or SG business forms, and will
apply to all purchases made by Reseller form SG. Commencement of performance
and/or delivery under this Agreement will not be considered to be acceptance of
SG's or Reseller's additional or different terms and conditions, which will be
of no force or effect whatsoever in respect to Reseller's purchases under this
Agreement.
21.
<PAGE> 22
16.2 FORCE MAJEURE. Except for Reseller's obligation to make
payment for its purchases under this Agreement, neither party hereto shall be
liable to the other for delays or non-delivery or non-fulfillment of any orders
or failure to perform any part of this Agreement for any reason or unforeseen
circumstance beyond the affected party's reasonable control, including, but not
limited to, acts of God, fire, labor disputes of any nature, inevitable
accident, insurrection, delays in transportation, delivery by carrier, or
supply.
16.3 NO RIGHTS TRANSFERRED. Except as otherwise expressly provided
in this Agreement, no license or rights in SG hardware design, software or
other intellectual property are provided under this Agreement, either expressly
or by implication, estoppel or otherwise.
16.4 EXPORT. Reseller understands that Product is subject to
regulation by agencies of the U.S. Government, including the U.S. Department
of Commerce, which prohibits export or diversion of Product to certain
countries and parties, and agrees it will not knowingly assist or participate
in any such diversion or other violation of applicable U.S. laws and
regulations. Reseller warrants that it shall not sell any Product to End Users
not approved to receive controlled commodities under applicable U.S. laws and
regulations and that Reseller will abide by such laws and regulations.
16.5 GOVERNING LAW. Transactions under this Agreement shall be
governed by and interpreted in accordance with the laws of the State of
California, excluding its choice of law rules.
16.6 DISPUTE RESOLUTION. Any dispute regarding the interpretation
or validity of or otherwise arising out of, this Agreement, or relating to
Product sold, distributed or licensed by SGI and WTC under this Agreement,
shall be subject to the exclusive jurisdiction of the California state courts
in and for Santa Clara, County, California (or, if there is federal
jurisdiction, the U.S. District Court for the Northern District of California),
and SG and Reseller agree to submit to the personal and exclusive jurisdiction
and venue of these courts. Disputes regarding an agreement or purchase/license
of Product between Reseller and a Subsidiary or Distributor shall be in
accordance with such Subsidiary's or Distributor's local terms and conditions.
16.7 UNIFORM LAW ON INTERNATIONAL SALE OF GOODS. The "Convention
Relating to a Uniform Law on the International Sale of Goods" shall not be
applied to this Agreement or transactions under this Agreement.
16.8 SECTION/HEADING. Section and/or paragraph headings used in
this Agreement are for reference purposes only and will not be used in the
interpretation of this Agreement.
22.
<PAGE> 23
16.9 ASSIGNMENT. Neither this Agreement or any interest herein may
be assigned, in whole or in part, by either party without the prior written
consent of the other party, except that without securing such prior consent,
either party shall have the right to assign this Agreement and the obligations
thereunder to any successor of such party by way of merger or consolidation or
the acquisition of substantially all of the business and assets of the
assigning party relating to the Agreement; provided, however, that such
successor entity shall not be a competitor of the non-assigning party. This
right shall be retained provided that such successor shall expressly assume all
of the obligations and liabilities of the assigning party liable and
responsible to the other party hereunder, and that the assigning party shall
remain liable and responsible to the other party hereto for the performance and
observance of all such obligations.
16.10 WAIVER. The failure of Reseller or SG to enforce at any time,
or for any period of time, the provisions of this Agreement will not be
interpreted to be a waiver of such provisions or of the right of such party to
enforce each and every such provision.
16.11 NOTICES. All notices or demands hereunder will be by
certified or registered mail, return receipt requested, at the address of the
receiving party specified above (or at such different addresses as may be
designated by either party by written notice to the other party), and will be
deemed complete three (3) days after mailing. Notices to SGI will be sent to
the attention of: LEGAL SERVICES.
16.12 SEVERABILITY. In the event that any of the provisions of this
Agreement will be held by a court or other tribunal of competent jurisdiction
to be unenforceable, the remaining portions of this Agreement will remain in
full force and effect, provided that in such event SGI and Reseller agree to
negotiate in good faith substitute enforceable provisions which most nearly
effect SGI's and Reseller's intent in entering into this Agreement.
16.13 AUDIT. To ensure compliance herein, Reseller shall allow
mutually acceptable independent auditors to audit and analyze appropriate
Reseller records relating to Product. Reseller shall permit such audit to
occur within twenty (20) days of its receipts of SGIs written request to
conduct such audit during normal business hours, and at a time mutually agreed
upon. Audits shall not unreasonably interfere with Reseller's business
activities. SGI shall pay for the audits unless the audits reveal
discrepancies in excess of $1,000.00 or that Reseller is in breach of this
Agreement, in which event, Reseller shall pay for the audit.
16.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same instrument.
23.
<PAGE> 24
16.15 THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall be
for the benefit of anyone not a party to this Agreement.
16.16 INTEGRATION. This Agreement, including the attachments to
this Agreement, constitutes the entire agreement between the parties hereto,
and any and all written or oral agreements previously existing between the
parties hereto pertaining to the subject matter of this Agreement are expressly
canceled. Reseller acknowledges that it is not entering into this Agreement on
the basis of, and has not relied on, any representations not expressly
contained in this Agreement.
SILICON GRAPHICS, INC. RESELLER
By: By: /s/David B. Hiatt
--------------------------- --------------------------
David B. Hiatt
- ------------------------------ ------------------------------
Name (Print or Type) Name (Print or Type)
Chief Financial Officer
- ------------------------------ ------------------------------
Title Title
12/26/96
- ------------------------------ ------------------------------
Date Date
24.
<PAGE> 25
ATTACHMENT A
SOFTWARE LICENSE AGREEMENT
THIS IS A LEGALLY BINDING AGREEMENT BETWEEN YOU AND SILICON GRAPHICS, INC.
("SGI"). BY BREAKING THE SEAL ON THE PACKAGE CONTAINING SGI'S SOFTWARE
PRODUCT, AND/OR BY USING THE ENCLOSED SOFTWARE OR ITS DOCUMENTATION,(THE
"SOFTWARE"), YOU ARE AGREEING TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS
AGREEMENT, INCLUDING THE SOFTWARE LICENSE AND DISCLAIMER OF SOFTWARE WARRANTY
BELOW. PLEASE READ THIS DOCUMENT CAREFULLY BEFORE OPENING THE PACKAGE AND
USING THE SOFTWARE. IF YOU DO NOT AGREE WITH THE TERMS AND CONDITIONS OF THIS
AGREEMENT, YOU SHOULD PROMPTLY RETURN THE UNOPENED PACKAGE AND THE SOFTWARE TO
THE PLACE WHERE YOU OBTAINED IT, AND YOU WILL BE GIVEN A FULL REFUND OF ANY
LICENSE FEE THAT YOU PAID FOR SUCH SOFTWARE.
1. GRANT OF LICENSE; SOFTWARE USE RESTRICTIONS. In consideration for
your payment of any applicable license fee and/or your purchase of an SGI
workstation or server production (an "SGI System"), SGI hereby grants to a
personal, non-transferable (except as expressly provided in Section 4 below)
and non-exclusive right to use and execute the SOFTWARE on a single SGI System,
without right to sublicense the SOFTWARE. Under no circumstances may you
store, use or allow the use of the SOFTWARE in any manner on more than one SGI
System at one time. You agree that you will not reverse engineer, decompile or
disassemble any portion of the SOFTWARE. If you dispose of any media or
apparatus containing SOFTWARE, you will ensure that you have complete erased or
otherwise destroyed any SOFTWARE contained on such media or stored in such
apparatus. Except as expressly provide in Section 4 below, you may not
distribute, lease, transfer for profit, loan or otherwise convey the SOFTWARE
or any portion thereof to anyone.
2. COPYING RESTRICTIONS. In order to effect your license rights
hereunder, you may install the SOFTWARE by copying it onto the hard disk drive
or into the CPU memory of an SGI System for use thereof, and you may make full
or partial copies of the SOFTWARE, but only as necessary for backup or archival
purposes. You agree that (i) your use and possession of such copies shall be
solely under the terms and conditions of this Agreement, and (ii) you shall
place the same proprietary and copyright notices and legends on all such copies
as included by SGI on the media containing the authorized copy of the SOFTWARE
originally provided by SGI.
3. OWNERSHIP OF SOFTWARE AND MEDIA. You agree and acknowledge that SGI
transfers no ownership interest in the SOFTWARE, in the intellectual property
1.
<PAGE> 26
in any SOFTWARE or in any SOFTWARE copy, to you under this Agreement or
otherwise, and that SGI and its licensors reserve all rights not expressly
granted to you hereunder. After you pay any applicable license fees and/or the
purchase price of the applicable SGI System, you will own the media on which
the SOFTWARE was originally provided to you hereunder and on which you
subsequently copy the SOFTWARE but SGI and its licensors shall retain ownership
of all SOFTWARE and copies of the SOFTWARE or portions thereof embodied in or
on such media.
4. TRANSFER RESTRICTIONS. If you transfer ownership or otherwise dispose
of an SGI System, you may transfer the SOFTWARE and all licenses and rights in
the SOFTWARE granted to you under this Agreement to the transferee provided
that: (i) such transferee agrees in writing to accept the terms and conditions
of this Agreement, and (ii) you also transfer all SOFTWARE, including all
copies thereof, to such transferee. Except as provided in this Section, you
may not sublicense, transfer or assign this Agreement or any of your rights or
obligations under this Agreement, in whole or in part.
5. EXPORT RESTRICTIONS. You may not export or reexport any Software or
other technology received under this Agreement except in full compliance with
all United States and other applicable laws and regulations. In particular,
none of such Software or technology may be exported or reexported into (or to a
national or resident of) any country to which the U.S. embargoes goods, or to
anyone on the U.S. Treasury Department's list of Specially Designated Nationals
or the U.S. Commerce Department's Table of Denial Orders.
6. ENFORCEMENT OF TERMS; TERMINATION. If you fail to fulfill any of your
material obligations under this Agreement, SGI and/or its licensors may pursue
all available legal remedies to enforce this Agreement, and SGI may, at any
time after your default of this Agreement, terminate this Agreement and all
licenses and rights granted to you under this Agreement. You agree that SGI's
licensors referenced in the SOFTWARE and third-party beneficiaries of this
Agreement, and may enforce this Agreement as it relates to their intellectual
property. You further agree that if SGI terminates this Agreement for your
defaults, you will, within thirty (30) days after any such termination, deliver
to SGI or render unusable all SOFTWARE originally provided to you hereunder and
any copies thereof embodied in any medium.
7. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with California law, excluding its choice of law rules.
U.S. GOVERNMENT USERS, if the SOFTWARE is acquired by or on behalf of an entity
of government of the United States of America, the following provision applies:
U.S.. GOVERNMENT RESTRICTED RIGHTS LEGEND
2.
<PAGE> 27
Use, duplication or disclosure of SOFTWARE by the Government is subject to
restrictions as set forth in FAR 52.227-19(c)(2) or subparagraph (c)(1)(ii) of
the Rights in Technical Data and Computer SOFTWARE clause at DFARS 252.227-7013
and/or in similar or successor clauses in the FAR. or the DOD or NASA FAR
Supplement. Unpublished rights reserved under the Copyright Laws of the United
States. Contractor manufacturer is SIL.CON GRAPHICS. INC., 2011 N. Shoreline
Blvd., Mountain View, CA 94039-7311.
8. DISCLAIMER OF SOFTWARE WARRANTY. SGI PROVIDES THE SOFTWARE TO YOU "AS
IS" AND WITHOUT WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR OTHERWISE, INCLUDING
WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY ANY SGI EMPLOYEE,
REPRESENTATIVE OR DISTRIBUTOR WILL CREATE A WARRANTY FOR THE SOFTWARE, AND YOU
MAY NOT RELY ON ANY SUCH INFORMATION OR ADVICE.
9. LIMITED WARRANTY ON MEDIA. SGI warrants the media on which SOFTWARE
is recorded and provided to you under this Agreement to be free from defects in
materials and workmanship under normal use for a period of ninety (90) days
after the date of the original delivery of SOFTWARE to you. Such warranty is
solely for your benefit and you have no authority to assign, pass through or
transfer this warranty to any other person or entity. If you return any
defective media to SGI or an authorized SGI representative during the warranty
period with proof of purchase. SGI will, at its sole option, either replace
such defective media or refund the purchase price for such media. This
warranty will not apply to any media that has been damaged by abuse, accident
or misuse. THE FOREGOING WARRANTY SETS FORTH SGI'S ENTIRE LIABILITY AND YOUR
EXCLUSIVE REMEDY FOR ANY DEFECTS IN ANY MEDIA AND IS IN LIEU OF, AND SGI
DISCLAIMS, ALL OTHER WARRANTIES, EXPRESS, IMPLIED, OR OTHERWISE INCLUDING
WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
10. INTELLECTUAL PROPERTY RIGHTS PROTECTION. If any third party brings a
suit against you that is based on a claim that the SOFTWARE solely as furnished
to you under this Agreement, constitutes direct infringement of any patent
issued by, or copyright registered in, the United States, SGI shall defend such
suit or proceeding and shall pay any damages and costs finally awarded therein
against you with respect to such matter, provided that you promptly inform SGI
of any such claim, furnish SGI with a copy of each communication, notice or
other action relating to the alleged infringement and give SGI the authority,
information and assistance necessary to settle, compromise or litigate such
suit or proceeding. Following notice of a claim or a threatened or actual
suit,
3.
<PAGE> 28
SGI may, without obligation to do so, at SGI's sole option: (a) procure for
you the right to continue to use the SOFTWARE as furnished, (b) replace or
modify the SOFTWARE to make it non-infringing, or (c) discontinue your license
for the SOFTWARE and refund to you any license fee that you paid for it, less a
reasonable value for use, determined by prorating such license fee on the basis
of a thirty-six (36) month straight line depreciation method, applied to the
period of actual use. SGI shall not be obligated to defend or be liable for
costs and damages if the infringement or claim thereof arises out of: (i) use
or combination of SOFTWARE with products or data not provided by SGI, (ii) use
of other than the latest unmodified release of SOFTWARE made available to you
by SGI if such infringement would have been avoided by the use of such release
of SOFTWARE, (iii) modification of the SOFTWARE by anyone but SGI, (iv) use of
SOFTWARE after receiving notice, or having reason to believe, that SOFTWARE
infringes a patent or copyright of a third party, or (v) a claim based on any
portion of the UNIX(R) software that may be included with SOFTWARE.
THE FOREGOING STATES YOUR EXCLUSIVE REMEDY AND SGI'S ENTIRE LIABILITY WITH
RESPECT TO INFRINGEMENT OF ANY PATENT OR COPYRIGHT BY SOFTWARE, AND SGI SHALL
HAVE NO LIABILITY WITH RESPECT TO ANY OTHER INTELLECTUAL PROPERTY RIGHT.
11. LIMITATION OF LIABILITY. EXCEPT FOR MATTERS ARISING OUT OF SECTION 10
ABOVE, IN NO EVENT SHALL SGI OR IT LICENSORS BE LIABLE TO YOU FOR ANY SPECIAL,
CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES OF ANY KIND (INCLUDING WITHOUT
LIMITATION THE COST OF COVER, DAMAGES ARISING FROM LOSS OF DATA, USE, PROFITS
OR GOODWILL, OR PROPERTY DAMAGE), WHETHER OR NOT SGI HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH LOSS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY ARISING
OUT OF THIS AGREEMENT. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING THE
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. SGI'S LIABILITY ARISING
OUT OF THIS SOFTWARE LICENSE AGREEMENT AND/OR YOUR USE OR POSSESSION OF THE
SOFTWARE, INCLUDING WITHOUT LIMITATION ANY AND ALL CLAIMS COMBINED, WILL NOT
EXCEED THE AMOUNT OF THE LICENSE FEE FOR THE SOFTWARE PROVIDED UNDER THIS
AGREEMENT.
12. LAWS GOVERNING WARRANTIES AND LIABILITY. The law(s) of a jurisdiction
may define the scope of warranty to be provided for products or the manner in
which a supplier's liability may be limited, and such law(s) shall govern this
Agreement only to the extent a party protected by such law(s) cannot waive the
protection thereof by contract. In the U.S. and other countries, some states,
territories or other principalities do not allow the limitation or exclusion of
liability for incidental or consequential damages, or allow the exclusion of
implied warranties, so the limitation and
4.
<PAGE> 29
exclusion above may not apply to you, and you may have other rights that vary
from state, territory or principality to state, territory or principality.
5.
<PAGE> 30
ATTACHMENT B
VALUE-ADDED RESELLER
APPLICATION AND ANNUAL VOLUME COMMITMENT
Name of Application Description/Functionality
Please have a Customer Support Representative contact me to establish a Service
Program: ___________
Annual Volume Commitment:
<TABLE>
<CAPTION>
Tier U.S. Dollar Commitment
<S> <C>
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
</TABLE>
Authorization:
SGI RESELLER
By: /s/ David B. Hiatt
------------------------------- ---------------------------
Date: Date: 12-26-96
----------------------------- ----------------------
1.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 31
ATTACHMENT C
RESELLER DISCOUNT SCHEDULE
DISCOUNT SCHEDULE
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Category Net Annual Schedule 1 Schedule 2 Schedule 3 Schedule 4 Schedule 5
Purchase Volume Discount (Power Discount Discount (IRIS Discount Discount
Series Systems, (Peripheral Indigo(TM), (Application (INDY(TM),
Hardware Options, IRIS, Distribution Indigo2(TM),
Upgrades, Software, and Crimson(TM), , 3rd party Power
Hardware Networking Onyx(TM), products) Indigo2(TM),
Options, Display Products, Challenge DM, L, Challenge S,
Options, and unless and XL, and and Power
Video Options otherwise Power Challenge Challenge M
unless otherwise noted) L and XL systems,
noted) systems, unless
upgrades, otherwise
options, and noted.)
peripherals,
unless otherwise
noted)
1. $0 to $249,999 [*] [*] [*] [*] [*]
2. $250,000 to [*] [*] [*] [*] [*]
$499,999
3. $500,000 to [*] [*] [*] [*] [*]
$999,999
4. $1,000,000 to [*] [*] [*] [*] [*]
$1,999,999
5. $2,000,000 to [*] [*] [*] [*] [*]
$4,999,999
6. $5,000,000 to [*] [*] [*] [*] [*]
$9,999,999
7. $10,000,000- [*] [*] [*] [*] [*]
Demo/ All levels [*] [*] [*] [*] [*]
Dev.
</TABLE>
Note: See the applicable SG Price List for Product Schedule definition. This
Discount Schedule is subject to change as new Products, configurations of
Products and/or upgrades are introduced. Indigo is a registered trademark and
Indigo2, Crimson, Onyx, Indy, and CHALLENGE are trademarks of Silicon Graphics,
Inc.
1.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 32
ATTACHMENT D
RESELLER MARKETING PROGRAM
1.0. DEMONSTRATION/DEVELOPMENT/TRAINING EQUIPMENT. Reseller shall be
entitled to purchase demonstration and development Workstations pursuant to
SG's then-current Reseller Policy.
2.0 SOFTWARE UPDATES. In the event Reseller purchases SG's
support/maintenance services to cover any Product purchased under Section 1.0
above, SG shall provide updates of Licensed Software to Reseller for Equipment
covered by such contract at no additional charge, to the extent which such
updates are provided at no additional charge to other resellers under SG's
contractual maintenance services.
3.0 MARKETING DEVELOPMENT FUNDS (IN THE U.S. AND CANADA ONLY). Any
marketing development funds for which Reseller may be eligible shall be
distributed pursuant to SG's then-current Marketing Development Funds program.
4.0 SERVICE PROGRAMS. SG will provide end user service directly to
Reseller's customers when Reseller markets maintenance contracts or extended
warranties to End Users. Reseller will receive a discount on the level of
service Reseller delivers to End Users. Reseller must select an appropriate
service program prior to quoting a service contract to an End User. SG will
provide notice to Reseller, at least ninety (90) days before the termination of
maintenance coverage, to allow Reseller to market maintenance coverage renewals
to its End Users.
5.0 TECHNICAL TRAINING. SG will provide technical training to Reseller
through classes offered by SG's Customer Support Division at SG's then-current
discount policy, if any. Such classes are offered on a regular basis, but
attendance is limited and advanced written registration is required. Reseller
will pay a fee for each student attending a class, and will be responsible for
any travel and per diem costs associated with its employee's attendance. Upon
Reseller's written request, SG will provide detailed information on class
content, scheduling and fees.
6.0 EQUIPMENT AND TRAINING PROGRAMS. From time to time, SG may offer
promotional product and training programs to its resellers. Subject to such
programs' eligibility requirements, Reseller shall have the right, at its
discretion, to participate in such programs.
7.0 SALES SUPPORT. SG agrees to make available to Reseller, a field sales
account representative for order placement, relationship management, and the
development of joint sales and marketing strategies.
1.
<PAGE> 33
8.0 DEVELOPER PROGRAM. Upon SGI's execution of this Agreement and payment
by Reseller of the appropriate fee, Reseller shall automatically be enrolled in
the SG Developer Program and be entitled to the full benefits of SG's
then-current Developer Program.
9.0 CONFLICT. To the extent the provision of this Attachment conflicts
with the Agreement and any Attachment thereto, this Attachment shall govern.
2
<PAGE> 34
ATTACHMENT E
AUTHORIZED SALES REGION(S)
Checked box(es) designate VAR's - Texas
authorized sales Region(s): - Oklahoma
- Mississippi
- NORTHWEST REGION - Louisiana
- Colorado - Arkansas
- Idaho - (southwestern tip)
- Oregon
- Alaska - NORTHEASTERN REGION
- Montana - Massachusetts
- Washington - Vermont
- Utah - Maine
- Wyoming - New Hampshire
- Connecticut
- GOLDEN GATE REGION - Rhode Island
- Northern California - Upstate New York
- SOUTHWEST REGION - MID-ATLANTIC REGION
- Southern California - Eastern Pennsylvania
- Nevada - Delaware
- Hawaii - New Jersey
- Arizona - New York (except Upstate NY)
- New Mexico
- SOUTHEASTERN REGION
- GREAT LAKES REGION - Georgia
- Michigan - North & South Carolina
- Western Pennsylvania - Tennessee
- Ohio - Alabama
- Kentucky - Mississippi
- Indiana - Florida
- West Virginia
- CHESAPEAKE REGION
- NORTH CENTRAL REGION - Maryland
- Illinois - Virginia
- Wisconsin - Washington, D.C.
- Missouri
- Kansas - ENTIRE UNITED STATES
- Minnesota X Globally
- Iowa
- North & South Dakota - CANADA
- Nebraska - Eastern Canada
- Central Canada
- SOUTH CENTRAL REGION - Western Canada
3.
<PAGE> 35
ATTACHMENT F
PREMIER RESELLER PROGRAM
1. CRITERIA. Reseller participating in the Premier Reseller program
shall meeting the following requirements unless any such requirement has been
waived in advance by SG in writing.
(a) End user customer installations in which Reseller has licensed
the Application for use in conjunction with Workstations resold by Reseller or
purchased directly from SG due to a referral or lead passed to SG by Reseller
must be greater than or equal to $3.5 million (U.S.) worldwide.
(b) Reseller shall maintain a credit rating with SG permitting
Reseller to finance up to U.S. $350,000.
(c) Reseller shall perform significant optimization of the
Application on the SG platform.
(d) Reseller shall establish and maintain a multinational
marketing presence (e.g., establish subsidiaries or sales offices where offices
where Reseller sells Product to end Users).
2. REVENUE REPORTING. Reseller agrees that as a condition of
participation in the Premier Reseller Program, Reseller shall complete and
deliver to SG completed sell-through reports on SGI's then-current form, no
later than forty five (45) days after the close of the previous quarter.
3. MARKETING DEVELOPMENT FUNDS. SG will make available to Reseller, upon
each SG fiscal year, Marketing Development Finds subject to the following:
(a) Marketing Development Funds will be earned by Reseller sold
Application independently of Product to End Users.
(b) Marketing Development Funds will be allocated according to
SG's fiscal year and subject to the terms and conditions of the then-current
Marketing Development Fund program as published to Reseller by SG.
(c) Seller agrees that as a condition for receipt of funds,
Reseller shall deliver to SG completed sell-through reports pursuant to Section
2.0 above.
(d) Funds will be spent in accordance with the SG published
guidelines for fund usage.
1.
<PAGE> 36
4. DEMONSTRATION/DEVELOPMENT/TRAINING EQUIPMENT PURCHASE PLANS. Reseller
shall be entitled to purchase demonstration and development Workstations
pursuant to SG's then-current Premier Reseller Policy.
5. ACCESS TO SG DEVELOPER PROGRAM. SG will allow one (1) primary
Reseller contact and two (2) subscribers access to the SG's Developer Program
at no charge during the term of this Agreement.
6. TECHNICAL SUPPORT. SG will provide Reseller with access to a SG
applications engineer located at SG's facilities to assist in software product
turning, porting, and general software development support on as available
basis.
7. PREMIER RESELLER DESIGNATION. During the term of this Agreement, SG
grants Reseller a revocable, non-exclusive right to use, on appropriate Product
marketing and sales materials, the Premier Reseller logo, provided that such
use complies with Section 10.0 of Reseller Agreement.
8. CONFLICT. To the extent the provisions of this Attachment conflicts
with the Agreement and any Attachment thereto, this Attachment shall govern.
AUTHORIZATION
SGI RESELLER
By: By: /s/ DAVID B. HIATT
-------------------------- --------------------------------
Date: Date: 12-26-96
------------------------ ------------------------------
2
<PAGE> 37
Silicon Graphics, Inc.
2011 N. Shoreline Blvd.
Mail Stop 20U-105
Mountain View, CA 94309-7311
Fax No.: (415) 390-6241
ADDENDUM TO THE VALUE-ADDED RESELLER AGREEMENT
This Addendum to the Value-Added Reseller Agreement ("Addendum") is dated for
reference purposes only as ________________, 1996, and is made and incorporated
into that Value-Added Reseller Agreement of even date herewith between
Molecular Simulations, Inc., ("MSI"), a _____________ corporation and Silicon
Graphics, Inc. ("SG"), a Delaware corporation. As used herein, the term
"Addendum" shall mean the Value-Added Reseller Agreement, this Addendum and all
addenda, attachments, riders, exhibits, rules, regulations, covenants,
conditions and restrictions referred to in the Agreement Form or this Addendum.
The terms set forth herein shall have the same meanings as they have in the
Agreement.
THE PARTIES AGREE TO THE FOLLOWING:
1. DEFINITIONS.
1.2. This section is changed to read: "Annual Volume Forecast" means the tier
designated by the parties under the caption "Annual Volume Forecast" on
Attachment B and that comply with Reveler's certification set forth in Section
3.2. below."
3.0 APPOINTMENT OF RESELLER; SCOPE OF AGREEMENT.
3.1 APPOINTMENT.
MSI shall be entitled to use the Equipment for an evaluation program and
consulting services.
5.0 RESELLER OBLIGATIONS.
(B) Add the following to the end of this section: "SG agrees to cooperate
with Reseller in the development of an appropriate Business Plan solely for the
purposes of this Agreement."
(D) Delete this section in its entirety.
(E) Delete this section in its entirety.
1.
<PAGE> 38
(L) At the end of line one (1), add the word "reasonable" before the word
"previous".
(L) At line one, delete the word "each" and insert in place thereof the words
"one or more".
6.0 PRICE, DISCOUNTS AND ORDER.
6.7 DISCOUNT LEVEL DETERMINATION.
This section shall remain unchanged.
8.0 PAYMENTS AND SECURITY TERMS.
8.1 PAYMENT FOR PRODUCT PURCHASED FROM SGI.
At line three (3), after the words "Agreement net" delete "thirty (30) " and
insert in place thereof "forty five (45)".
8.4 SECURITY FOR EQUIPMENT PURCHASED IN THE US.
At line five (5), after the words "in the Equipment" delete "in any receivables
generated therefrom upon Reseller's subsequent disposition of the Equipment, and
in any proceeds (as such term is defined in Section 9306(1) of the California
Commercial Code) derived from the sale of the Equipment or the collection of
such receivables."
12.0 LIMITED PATENT AND COPYRIGHT PROTECTION
12.1 INFRINGEMENT CLAIMS.
At line six (6), delete the word "registered".
At line eight (8), after the word "costs" add "incurred by or".
At line twenty (20), after the word "non-infringing" add the words "and of
equivalent functionality".
16.0 GENERAL
16.13. AUDIT
Change the last sentence of this section to read as follows: "SGI shall pay for
the audits unless the audits reveal material discrepancies in excess of five
percent (5%) of the total amount purchased by Reseller or that Reseller is in
breach of this Agreement, in which event Reseller shall pay for the audit. In no
event, shall Reseller pay more than five
2
<PAGE> 39
thousand US dollars ($5,000.00) for the cost of such audit. The foregoing shall
in no way limit Reseller's liability for a breach of this Agreement.
DISCOUNT SCHEDULE.
SGI is currently in the process of announcing new products. SGI's Origin 2000,
Origin 2000(TM), and Onyx(TM) products shall be provided at Schedule 3
discounts. SGI's Indy and WebFORCE(TM), Products shall remain at Schedule 5
discounts. SGI's O2(TM), Products shall be provided to you at Schedule 3
discounts. The Discount Tier for Schedule 7 is D.
EFFECT OF ADDENDUM.
In the event of any inconsistency between this Addendum and/or the Value-Added
Reseller Agreement, the Attachments or Exhibits hereto, and any other addenda,
riders exhibits, rules, regulations, convenants or attachments referred to in
the Agreement, the terms of this Addendum shall prevail.
IN WITNESS WHEREOF, these duly authorized parties agree to the foregoing
provisions set forth on the date below.
SILICON GRAPHICS, INC. MOLECULAR SIMULATIONS, INC.
By: By: /s/ DAVID B. HIATT
-------------------------------- ----------------------------------
Name: Name: David B. Hiatt
------------------------------ --------------------------------
Title: Title: Chief Financial Officer
----------------------------- -------------------------------
Date: Date: 12-26-96
------------------------------ --------------------------------
3
<PAGE> 40
EXHIBIT A TO ATTACHMENT D
DIRECT RESELLER DEMO/DEVELOPMENT
DISCOUNT POLICY
Silicon Graphics, Inc., may provide specific discounts for Demo/Development
Systems. For this purpose the term "Demo/Development System(s)" is defined as
Silicon Graphics Products which are purchased for use in training,
demonstration, or development of software to support the sales of Silicon
Graphics Products.
VAR/VAD shall be entitled to the discounts set forth in the VAR/VAD
Demo/Development Discount Schedule.
VAR/VAD must purchase at least 1 (one) Silicon Graphics workstation to be used
as a Demo/Development System. Only 1 (one) workstation may be purchased at the
VAR/VAD Demo/Development discounts for each approved location per quarter.
Each policy is effective August 1, 1996.
VAR/VAD
DEMO/DEVELOPMENT DISCOUNT SCHEDULE
Demo/Dev/Schedule 1 Schedule 2 Schedule 3 Schedule 4 Schedule 5
Training
VAR/VAD [*] [*] [*] [*] [*]
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 1
EXHIBIT 10.33
LICENSE AGREEMENT
AGREEMENT dated as of July 1, 1996 between THE TRUSTEES OF COLUMBIA
UNIVERSITY IN THE: CITY OF NEW YORK, a New York corporation ("Columbia"), and
MOLECULAR SIMULATIONS INC., a California corporation ("MSI").
1. DEFINITIONS
(a) "Affiliate" shall mean any corporation or other business
entity which directly or indirectly controls, is controlled by, or is under
common control with MSI. Control means ownership or other beneficial interest in
more than 50 percent of the voting stock or other voting interest of a
corporation or other business entity.
(b) "Licensed Products" shall mean any product the
manufacture, use, sale, rental, lease or sublicensing of which requires the use
of Licensed Technical Information.
(c) "Licensed Technical Information" shall mean the DELPHI
software programs for calculating and analyzing the electrostatic interactions
of protein molecules (the "Columbia Software"), as more fully described in
Exhibit A, plus Derivatives of such software programs.
(d) "Derivatives" shall mean [*]
* CONFIDENTIAL TREATMENT REQUESTED
1.
<PAGE> 2
[*]
(e) "Gross Sales" shall mean all license fees or other
payments charged by MSI or an Affiliate for the use, sale, rental, lease or
sublicensing of Licensed Products, excluding only sales taxes and import duties.
In the case of transfers, sales, rental, lease, use or sublicensing of Licensed
Products by an Affiliate, Gross Sales shall be based upon the greater of the
total fee or payment or consideration (including stock) charged by MSI to the
Affiliate or the total fee or payment charged by the Affiliate to its customers.
If the Licensed Products are distributed by MSI or Affiliates with other
products in a package for a single charge, the license fee attributable to the
Licensed Products shall be determined by prorating the receipts (after
applicable deductions as described above) from the sale or license of the
package according to the published list prices established by MSI for the
separate products contained in the package.
2. LICENSE GRANT.
(a) Columbia grants to MSI, subject to the terms and
conditions of this Agreement, an exclusive worldwide license to manufacture,
use, sell, rent, lease or sublicense Licensed Products for the term provided
under Section 3 hereof. The term
* CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 3
"sublicense" as used herein includes the right of MSI or an Affiliate to
transfer to their. r distributors the right to grant an ultimate purchaser a
license to use Licensed Products.
(b) Columbia represents and MSI hereby acknowledges that
Columbia owns the Columbia Software and the Licensed Technical Information and
Columbia further represents that it has no knowledge of any adverse claim
pending or threatened which would affect MSI's right to use the Columbia
Software and the Licensed Technical Information. Notwithstanding anything to the
contrary herein, this Agreement shall not transfer title or ownership rights in
the Columbia Software or the Licensed Technical Information, which shall at all
times remain with Columbia. The parties agree that any Licensed Products
hereunder, including any changes, additions, modifications, improvements or
alterations thereof, whether by Columbia or MSI shall be owned by Columbia.
3. TERM OF AGREEMENT.
(a) This Agreement shall be effective as of the date set forth
above and shall continue until its expiration or termination in accordance with
the provisions of Section 8 of this Agreement.
(b) Unless terminated earlier under any provision of this
Agreement, the term of the exclusive license granted under the Licensed
Technical Information in Section 2 shall extend for [*] from the date
set forth above.
* CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE> 4
(c) Within six months prior to the expiration of the term of
this Agreement (unless terminated earlier pursuant to this Agreement), upon the
written request of MSI, the parties agree to discuss the possibility of
extending the term of this Agreement.
4. FEES AND ROYALTIES.
(a) Percentage Royalty. In consideration of the license
granted under Section 2(a) of this Agreement, MSI shall pay to Columbia a
royalty of [*] of Gross Sales.
(b) Guaranteed Minimum Royalty. MSI guarantees that it shall
pay to Columbia a minimum payment of [*] each year of this [*] Agreement. Such
minimum payments will be due and payable on or before the last day of the month
following each such twelve-month period. Failure to meet the minimum payment
shall cause the license to become non-exclusive.
5. PAYMENTS AND REPORT.
(a) MSI shall submit to Columbia written reports for the
three-month periods ending on March 31, June 30, September 30 and December 31 of
each year of this Agreement (the "Payment Reports"). Each Payment Report shall
be submitted to Columbia no later than the last business day of the calendar
month following the close of the three-month period and shall include:
* CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE> 5
(i) The total invoice price changed by MSI or by an
Affiliate during the preceding period for Licensed Products;
(ii) The number of units of Licensed Products sold,
rented, leased or sublicense during the preceding period;
(iii) The aggregate license fees, royalties or other
payments or consideration received by MSI for Licensed Products;
(iv) In the event of transfers, sales, rental, lease,
use or sublicensing of Licensed Products by an Affiliate, the quantity of such
Licensed Products, the total invoice price charged by MSI to the Affiliate and
the total invoice price charged by the Affiliate to its customers; or
(v) A calculation of the amount of royalties due
during the preceding period.
(b) Simultaneous with the submission of each Payment Report,
MSI shall make payment to Columbia of the amounts due for the three-month period
covered by the Payment Report.
(c) Upon request, MSI shall provide to Columbia such
additional information and back-up verification with respect to payments due
under this Agreement as Columbia may reasonably request.
(d) MSI shall maintain at its principal office usual books of
account and records showing its actions under this Agreement. Such books and
records shall be open to inspection and copying, during normal business hours,
by an independent certified
5.
<PAGE> 6
public accountancy firm for two years after the period to which they pertain,
for purposes of verifying the accuracy of the royalties paid by MSI under this
Agreement.
6. DEVELOPMENT OF LICENSED PRODUCTS.
(a) MSI shall deliver to Columbia written status reports, at
least quarterly, as to the state of development of Licensed Products.
(b) Upon Columbia's reasonable request, MSI shall consult with
and advise Columbia on a confidential basis as to the state of development of
Licensed Products.
(c) Columbia shall promptly deliver to MSI any changes,
additions and improvements to the Licensed Technical Information made by or for
Columbia. The parties understand that Columbia has no obligation to create any
such changes, additions or improvements.
7. USE FOR RESEARCH AND TEACHING PURPOSES.
Nothing in this Agreement prohibits or restricts in any manner the
right of Columbia to utilize the Licensed Technical Information for its own
teaching and research purposes. If any other academic institution wishes to use
the Licensed Technical Information, Columbia shall obtain from any such entity
or individual an agreement in writing not to use the Licensed Technical
Information for commercial purposes or disseminate it to others.
8. TERMINATION.
6.
<PAGE> 7
(a) This Agreement and the license granted under it may be
terminated by either party (i) upon thirty days' written notice to the other for
material breach of the Agreement and the other party's failure to cure such
material breach within such thirty days, or (ii) if either party commits any act
of bankruptcy, becomes insolvent, files a petition under any bankruptcy or
insolvency act or has any such petition filed against it which is not dismissed
within 60 days, or offers any general composition to its creditors.
(b) Without limited the generality of the foregoing, MSI shall
be in material breach of this Agreement if it fails to pay all fees and
royalties when due pursuant to Sections 4 and 5.
(c) Upon any termination of this Agreement and the license
granted under it for any reason other than a failure by MSI to cure a material
breach of this Agreement, MSI shall have the right for 12 months to dispose of
all Licensed Products or substantially completed Licensed Products then on hand,
and to complete all orders for such Licensed Products then on hand, and
royalties shall be paid to Columbia with respect to such Licensed Products as
though this Agreement had not terminated. All end- user licenses to use Licensed
Products that were previously granted by MSI shall remain in full force or
effect.
(d) Termination of this Agreement shall not terminate MSI's or
its Affiliates' or Columbia's obligations of confidentiality under Section 9,
nor MSI's obligation to pay all amounts due to Columbia which shall have accrued
hereunder, nor
7.
<PAGE> 8
give any right to MSI to recover any monetary payments to Columbia made prior to
such termination.
9. CONFIDENTIALITY.
MSI and its Affiliates will treat as confidential the Columbia Software
and all Licensed Technical Information furnished to MSI which Columbia has
designated as "Confidential". MSI and its Affiliates will not disclose or make
available the Columbia Software or Licensed Technical Information (other than in
a Licensed Product sold, rented, leased or sublicensed in accordance with the
terms of this Agreement) to any third party without Columbia's prior written
permission and MSI and its Affiliates shall protect the Columbia Software and
the Licensed Technical Information in the same manner that they protect their
own confidential and proprietary information. MSI's obligations of confidence
under this Section 9 do not apply to any information which:
(i) was known to MSI prior to receipt thereof from
Columbia;
(ii) was or becomes a matter of public information or
publicly available through no act or failure to act on the part of MSI;
(iii) is acquired by MSI from a third party entitled
to disclose the information to it; or
(iv) is independently developed by MSI without
reference to the confidential information.
Columbia will treat as confidential information which MSI has
designated as "Confidential" and shall protect such information in the same
manner that Columbia
8.
<PAGE> 9
protects its own confidential and proprietary information which Columbia
represents will be a reasonable degree of protection. Columbia's obligations of
confidence under this Section 9 do not apply to any information which:
(i) was known to Columbia prior to receipt thereof
from MSI;
(ii) was or becomes a matter of public information or
publicly available through no act or failure to act on the part of Columbia;
(iii) is acquired by Columbia from a third party
entitled to disclose the information to it; or
(iv) is independently developed by Columbia without
reference to the confidential information.
10. WARRANTY
Except as may be expressly set forth in Section 2(b) hereof, nothing in
this Agreement shall be construed as a warranty or representation by either
party that anything made, used, sold or otherwise disposed of under the license
granted under this Agreement is or will be free from infringement of domestic or
foreign patents or copyrights of other parties.
11. PROHIBITION AGAINST USE OF COLUMBIA NAME.
The use by MSI or any Affiliate of MSI of the names, insignias or
symbols of Columbia, the College of Physicians and Surgeons, and the Columbia
Presbyterian Medical Center or any variation or combination thereof, or of the
name of any trustee,
9.
<PAGE> 10
faculty member, other employee or student of Columbia, for any purpose
whatsoever without Columbia's prior written consent is prohibited.
12. COMPLIANCE WITH GOVERNMENTAL OBLIGATIONS.
(a) MSI shall comply upon reasonable notice from Columbia with
all governmental requests directed to either Columbia or MSI with regard to
Licensed Products and provide all information and assistance necessary to comply
with the governmental requests.
(b) MSI shall insure that development and marketing under this
Agreement will comply with all applicable Federal, state and local laws, rules,
regulations and orders.
13. INSURANCE.
(a) MSI shall insure with carriers licensed to do, business in
the State of New York (or approved by Columbia in writing) against the following
risks to the extent stated:
(i) Commercial General Liability Insurance, including
coverage for products liability insurance, covering MSI and its Affiliates, with
not less than coverage of $1 million combined single limit of liability for
bodily injury and property damage for each occurrence and in the aggregate.
Columbia and its trustees, officers, agents and employees shall be additionally
named insureds. Such insurance shall be primary and contributory and shall cover
claims incurred, discovered, manifested or made during or after the expiration
of this Agreement.
10.
<PAGE> 11
(ii) Workers' Compensation and Employers Liability
Insurance covering each employee of MSI and its Affiliates with respect to
activities performed under this Agreement, with a limit of liability in
accordance with applicable law in the case of Workers' Compensation Insurance,
and with a limit of liability of not less than the following in the case of
Employer's Liability Insurance:
Bodily Injury By Accident - $100,000 each Accident
Bodily Injury By Disease - $500,000 policy limit and
$100,000 each Employee
(b) As soon as practicable upon execution of this Agreement,
MSI shall deposit with Columbia's Director or Risk Management, Columbia
University, 475 Riverside Drive, Suite 401, New York, NY 10115, certificates for
the aforesaid policies of insurance. Such certificates shall provide that such
coverage may not be changed or terminated except upon at least 60 days written
notice to Columbia at the following address: The Trustees of Columbia University
in the City of New York, Risk Management Department, 475 Riverside Drive, Suite
401, New York, NY 10115, Attention: Director of Risk Management.
14. INDEMNITY.
MSI will defend, indemnify and hold harmless Columbia and its trustees,
officers, agents and employees, from and against any all actions, suits, claims,
demands, prosecutions, damages, liabilities, costs and expenses (including
actual attorneys' fees) based on or arising out of, directly or indirectly, this
Agreement or the license granted
11.
<PAGE> 12
hereunder, or the use or operation of a Licensed Product, including, but not
limited to (a) the manufacture, packaging, use, sale, rental, lease or
sublicensing of Licensed Products by MSI or its Affiliates; or (b) any
representation made or warranty given by MSI or its Affiliates with respect to
Licensed Products.
15. NOTICE.
Any notice or other communication required or permitted under this
Agreement shall be sufficient if in writing and shall be considered given when
mailed by certified or registered mail, return receipt requested, postage paid,
to the parties at the following addresses (or such other address as a party may
specify by written notice hereunder):
to Columbia:
Columbia Innovation Enterprise
Columbia University
1210 Amsterdam Avenue
Mail Code 2206
New York, NY 10027
copy to: General Counsel
Columbia University
535 West 116th Street
Mail Code 4308
New York, NY 10027
to MSI: Molecular Simulations Inc.
9685 Scranton Road
San Diego, CA 92121
Attn: Chief Financial Officer
copy to: General Counsel
Molecular Simulations Inc.
9685 Scranton Road
San Diego, CA 92121
16. FORCE MAJEURE.
12.
<PAGE> 13
Neither party shall be responsible for any failure or delay in
performance of its obligations under this Agreement because of circumstances
beyond its control including, but not limited to, acts of God, fires, floods,
wars, civil disturbances or sabotage.
17. TERMS OF SALE, RENTAL, LEASING OR SUBLICENSING.
No Licensed Product may be sold, rented, leased or sublicense to a
third party unless (a) the terms and provisions of this Agreement are met where
applicable and (b) the terms of sale, rental, lease and/or sublicensing include,
or are not inconsistent with, the obligation of confidentiality (as provided in
Section 9 hereof), the prohibition against the use of Columbia names (as
provided in Section 11 hereof) and a prohibition against the third party
changing, adding to, modifying, improving or altering the Licensed Product
without MSI's approval.
18. MISCELLANEOUS.
(a) This Agreement shall be governed by New York law
applicable to agreements made and to be performed in New York.
(b) Neither this Agreement nor any right or duty under it may
be assigned, delegated, subcontracted or otherwise transferred by either party
without the prior written consent of the other party; provided, however, that if
MSI sells or transfers its entire business to a third party, such prior written
consent may not unreasonably be withheld.
(c) This Agreement supersedes the Agreement dated as of March
1, 1988 and any subsequent extensions.
13.
<PAGE> 14
IN WITNESS WHEREOF, Columbia and MSI have duly executed this Agreement
as of the date set forth above.
THE TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW
YORK
By: /s/ [signature illegible]
---------------------------------------
MOLECULAR SIMULATIONS INC.
By: /s/ David B. Hiatt
---------------------------------------
14.
<PAGE> 15
EXHIBIT A
DELPHI II - A MOLECULAR ELECTROSTATICS MODELING PACKAGE
Delphi is a software package which calculates electrostatic potentials
in and around molecules. It accepts input Protein Data Bank (PDB) format
coordinate files and calculates the potential using a finite difference solution
to the linear/non-linear Poisson-Boltzmann (PB) equation for any given ionic
strength, solvent and molecule dielectrics. Any value for the dielectric
constant of the molecule and solvent may be specified. Periodic boundary
conditions can be used to model long periodic molecules such as DNA. Focusing
calculations, whereby one zooms in on a region of interest by gradually
increasing the grid resolution, allows more accurate potential energies to be
calculated in that region.
INPUT
Parameter file - contains names of other input/output files needed for
the program, values of dielectric constants, ionic strength, ionic and
solvent probe radii and flags/control parameters for various output
needed. Delphi uses a powerful command interpreter that allows
English-like commands to be entered in the parameter file. Commands
could be placed in any order in the file. Delphi provides default
values for most parameters. A 'Quinclude' function allows other files
with commands to be inserted in the parameter file. This feature could
be used by the user, e.g., to build his/her own set of defaults and use
it at the beginning of any subsequent parameter file.
Other files - Atom coordinates in PDB format, a size file containing
atomic radii in A and a charge file containing atomic charges.
Optimally, a site file in PDB format for points in and around molecule
where one desires potentials, a potential map file from a previous run
if one is doing a focusing calculation.
OUTPUT
Log file - contains run ,details along with various electrostatic
energies of interest and surface characteristics such as area.
Modified PDB file - has entries from PDB file along with radius and
charge assigned to each atom; provided for the user so radius/charge
assignment can be checked.
Surface file - has calculated Solvent Accessible Surface (SAS) arcs in
binary format; to be used in subsequent calculations.
15.
<PAGE> 16
Potential map - this is the principal output of the program and has
the electrostatic potentials at grid points. It is used as input for
subsequent delphi run and in visualization programs. This binary file
is not written out by default.
Dielectric boundary map - or epsmap file has format similar to the
potential map with ones or zeros at grid points indicating whether each
point is inside or outside the solvent excluded volume; can be used to
display the Molecular Surface contours. This is not written out by
default.
Site Potential file (optional) - has the potentials and electrostatic
fields at user specified points in space.
ALGORITHMS
Surface generation:
The older version of Delphi used a grid-dependent algorithm which led
to inaccuracies and variations with respect to grid-positioning. Here a separate
algorithm is employed to calculate the accessible surface arcs. The Van der
Waals surface is mapped onto the grid and the boundary points are classified as
to whether they belong to the contact or re-entrant regions. The re-entrant
boundary points are flagged and form starting points for the iterative growth of
the re-entrant volume. This is done with reference to the accessible surface
arcs. The process is very efficient requiring almost 2-5 iterations depending on
grid-resolution. The algorithm is very efficient at high grid resolutions and is
accurate at all grid resolutions. Since the accessible surface arcs need to be
calculated only once for a given system, they are stored in a binary file and
read back in for future runs on the same system resulting in further savings in
run times.
Multi-grid solver:
Delphi II uses the multi-grid algorithm combined with an inexact Newton
step for the non-linear problem. Multi-grid techniques offer considerable
speed-up over traditional methods; e.g., it provides a speed-up of 3-4 over OSOR
(used in an earlier version) for 65 grids. However, since they scale much better
with grid size, even more savings can be achieved for larger sizes. Thus, larger
problems can be tackled effortlessly. The combination of multi-grid method with
a Newton algorithm represents the best possible combination and the most stable
method for solving the Non-Linear Poisson-Boltzmann equation.
Efficient memory management:
Delphi II uses dynamic memory allocation (using calls to C function
realloc) for most of its arrays resulting in an executable that can be run on a
small work station/PC environment with as little as 16/32 MB of RAM. The memory
usage varies as the size of the problem and grid resolution desired. Also the
current version works on any grid size
16.
<PAGE> 17
from a few grids to a maximum pre-set limit (currently 257). Hence a single
version can be used, e.g., for studying small molecule transfer energies and
also the binding energy of proteins of several hundred residues. The program
conforms to strict f77 standards and has been successfully compiled/tested on a
variety of platforms including the IRIS, HP (735 series), IBM (RS06008) and the
CRAY.
17.
<PAGE> 1
EXHIBIT 10.34
OFFICE LEASE
Between
SORRENTO TECH LIMITED,
as Landlord,
and
BIOSYM TECHNOLOGIES, INC.
as Tenant
<PAGE> 2
OFFICE LEASE
This OFFICE LEASE (the "Lease") is made this _____ day of ____________,
1984, between SORRENTO TECH LIMITED, a California limited partnership (the
"Landlord"), and BIOSYM TECHNOLOGIES, INC., a California corporation (the
"Tenant").
LEASE OF PREMISES
Landlord hereby leases to Tenant and Tenant hereby hires from Landlord,
subject to all the terms and conditions set forth below, those certain premises
(the "Premises") as described in Item 1 of the Basic Lease Provisions. The
Premises are leased to Tenant on all the terms and conditions set forth in the
following Basic Lease Provisions and General Lease Provisions.
BASIC LEASE PROVISIONS
1. Premises:
(a) Rentable Area: 3,156.69 sq.ft. See Definition of Rentable Area
attached hereto as Exhibit "A-3."
(b) Location: The plaza level of that certain eight-story office
building (the "Building") as shown on the Floor Plan of the
Premises attached hereto as Exhibit "A-1." The Building is located
in a certain real estate project commonly known as "San Diego Tech
Center" (the "Project"), as shown on the Site Plan of the Project
attached hereto as Exhibit "A-2."
(c) Address: 9605 Scranton Road, Suite _____,
San Diego, CA 92121
2. Lease Term: Approximately five (5) years and 0 months, beginning on the
Commencement Date and ending on October 31, 1969.
3. Target Commencement Date: November 1, 1984. See Paragraph 1(a).
4. Rent:
(a) Initial Basic Annual Rent: (i) $75,760.56 per year
($24.00 per sq.ft.)
(ii) $6,313.38 per month
($2.00 per sq.ft.)
(b) Adjustments to Basic Annual Rent: The Basic Annual Rent shall be
increased annually on each applicable anniversary of the
Commencement Date (as defined in Paragraph 1(a)) at a rate equal
to five percent (5.0%) per annum on a compounded basis. The first
such increase shall occur on January 1, 1987. The first such
increase in the Basic Annual Rent shall cover the period between
the Commencement Date and January 1, 1987. See Paragraph 2(b).
(c) Additional Rent: See Paragraph 3.
(i) Tenant's Building Expense Percentage: 2.09%
(ii) Tenant's Project Expense Percentage: 0.65%
(d) Rent Commencement Date: November 1, 1985
5. Rent Deposit: $6,313.38, payable in cash upon Commencement Date and
applicable to the first monthly installment of Basic Annual Rent.
(i)
<PAGE> 3
6. Security Deposit: $6,313.38. See Paragraph 4(a).
7. Permitted Use: General office purposes and purposes reasonably incidental
thereto.
8. Addresses for Notices:
(a) If to Landlord:
Sorrento Tech Limited
c/o The Naiman Company
9605 Scranton Road
San Diego, CA 92121
(b) If to Tenant:
Biosym Technologies
3859-B Miramar St.
La Jolla, CA 92037
9. Address for Payments to Landlord:
All payments payable to Landlord under this Lease shall be sent to Landlord
at the address specified in Item 8(a) above or such other address as
Landlord may designate from time to time.
10. Broker(s): John Burnham & Company
11. Addenda: The Addenda consists of Paragraphs 42, 42.1, and 42.2.
12. Space Plan Approval Date: August 10, 1984. See Paragraph 7 of the Tenant
Improvement Allowance Memorandum (Exhibit "B").
IN WITNESS WHEREOF, the parties hereto have executed this Lease,
consisting of the foregoing provisions and Paragraphs 1 through 42.2 which
follow, together with Exhibits "A-l" through "A-3" and "B" through "E,"
inclusive, incorporated herein by this reference, as of the date first above
written.
<TABLE>
<CAPTION>
"Landlord" "Tenant"
<S> <C>
SORRENTO TECH LIMITED, a BIOSYM TECHNOLOGIES, INC., a
California limited California corporation
partnership
By /s/ J. T. Nagle
------------------------------
Title: President
---------------------------
By /s/ Brian Sharp By /s/ Don Mackay
--------------------------- ------------------------------
Brian Sharp
Title: Authorized Agent Title: Secretary
----------------------- ---------------------------
</TABLE>
(ii)
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PARAGRAPH: Page
<S> <C> <C>
1. Term . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Basic Annual Rent . . . . . . . . . . . . . . . . . 1
3. Additional Rent . . . . . . . . . . . . . . . . . . 2
4. Security Deposit . . . . . . . . . . . . . . . . . . 6
5. Repairs . . . . . . . . . . . . . . . . . . . . . . 6
6. Improvements and Alterations . . . . . . . . . . . . 7
7. Use of Premises . . . . . . . . . . . . . . . . . . 8
8. Utilities and Services . . . . . . . . . . . . . . . 9
9. Rules and Regulations . . . . . . . . . . . . . . . 10
10. Taxes on Tenant's Property . . . . . . . . . . . . . 10
11. Substituted Premises . . . . . . . . . . . . . . . . 11
12. Fire or Casualty . . . . . . . . . . . . . . . . . . 12
13. Eminent Domain . . . . . . . . . . . . . . . . . . . 12
14. Assignment and Subletting . . . . . . . . . . . . . 13
15. Access . . . . . . . . . . . . . . . . . . . . . . 14
16. Subordination; Attornment;
Estoppel Certificates . . . . . . . . . . . . . . . 15
17. Sale by Landlord . . . . . . . . . . . . . . . . . . 16
18. Nonliability and Indemnification of Landlord;
Insurance . . . . . . . . . . . . . . . . . . . . . 16
19. Waiver of Subrogation . . . . . . . . . . . . . . . 18
20. Attorneys' Fees . . . . . . . . . . . . . . . . . . 18
21. Waiver . . . . . . . . . . . . . . . . . . . . . . . 18
22. Notices . . . . . . . . . . . . . . . . . . . . . . 19
23. Insolvency or Bankruptcy . . . . . . . . . . . . . . 19
24. Default . . . . . . . . . . . . . . . . . . . . . . 19
25. Holding Over . . . . . . . . . . . . . . . . . . . . 22
26. Condition of Premises . . . . . . . . . . . . . . . 22
27. Quiet Possession . . . . . . . . . . . . . . . . . . 22
28. Damage to Tenant's Property . . . . . . . . . . . . 22
29. Conflict of Laws . . . . . . . . . . . . . . . . . . 22
30. Use of Common Areas; Parking . . . . . . . . . . . . 23
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
31. Successors and Assigns . . . . . . . . . . . . . . 23
32. Brokers . . . . . . . . . . . . . . . . . . . . . . 23
33. Name . . . . . . . . . . . . . . . . . . . . . . . 23
34. Examination of Lease . . . . . . . . . . . . . . . 23
35. Interest on Tenant's Obligations; Late Charge . . . 23
36. Force Majeure . . . . . . . . . . . . . . . . . . . 24
37. Time . . . . . . . . . . . . . . . . . . . . . . . 24
38. Defined Terms and Marginal Headings . . . . . . . . 24
39. Prior Agreements; Separability . . . . . . . . . . 24
40. Corporate Authority . . . . . . . . . . . . . . . . 24
41. No Light, Air or View Easement . . . . . . . . . . 25
42. Addenda . . . . . . . . . . . . . . . . . . . . . . 25
Exhibit "A-1" Floor Plan of the Premises
Exhibit "A-2" Site Plan of Project
Exhibit "A-3" Rentable Area
Exhibit "B" Tenant Improvement Allowance Memorandum
Exhibit "C" Rules and Regulations
Exhibit "D" Tenant's Certificate
Exhibit "E" Parking Agreement
</TABLE>
(iv)
<PAGE> 6
GENERAL LEASE PROVISIONS
TERM
PARAGRAPH 1
(a) Commencement Date. The term of this Lease shall be as
shown in Item 2 of the Basic Lease Provisions and shall commence on the Target
Commencement Date as shown in Item 3 of the Basic Lease Provisions or such later
date as the Premises shall be tendered to Tenant as provided in subparagraph
(b), or upon such earlier date as Tenant takes possession or commences use of
the Premises for any purpose, including construction. The date of commencement
of the term of this Lease as defined above (the "Commencement Date") shall be
confirmed by Landlord sending Tenant a memorandum of the Commencement Date. Such
memorandum shall be sent to Tenant within thirty (30) days after the
Commencement Date. In addition, Landlord shall send at least ten (10) days prior
Tenant written notice of the date on which Landlord reasonably anticipates the
Commencement Date to occur.
(b) Tenant Delays. If construction of the Tenant Improvements
is delayed or postponed by Tenant's Delay (as hereinafter defined), the start of
the term of this Lease shall be adjusted to reflect the actual amount of
Tenant's Delay. To illustrate, if the total amount of Tenant's Delay were five
days and substantial completion of construction of the Tenant Improvements were
to occur on November 8, 1984, the Lease term would commence on November 3, 1984.
Tenant's Delay shall be the amount of delay or time lost as a result of Tenant's
failure to adhere to the time table set forth in the Schedule of Approvals
contained in Paragraph 7 of The Tenant Improvement Allowance Memorandum (Exhibit
"B").
(c) Effect of Delay in Commencement. Notwithstanding the
Target Commencement Date, if for any reason the Commencement Date occurs after
the Target Commencement Date, Landlord shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease or the
obligations of Tenant under this Lease or extend the term of the Lease. Tenant's
obligation to pay Additional Rent shall be measured from the Commencement Date;
provided, however, that if the Commencement Date has not occurred within sixty
(60) days after the Target Commencement Date for reasons other than Tenant's
Delay, Tenant may, at Tenant's option, by written notice sent to Landlord within
ten (10) days after the end of said 60-day period (or such longer period as the
parties may mutually agree), cancel this Lease. Tenant's obligation to pay Basic
Annual Rent shall commence on the Rent Commencement Date, notwithstanding any
delays in the Commencement Date. If Tenant so cancels this Lease, the parties
shall be discharged from all obligations hereunder.
BASIC ANNUAL RENT
PARAGRAPH 2
(a) General. Tenant agrees to pay as initial Basic Annual Rent
for the Premises the sum shown in Item 4(a)(i) of the Basic Lease Provisions,
increased at the times and in the amounts referenced in Item 4(b) of the Basic
Lease Provisions. The Basic Annual Rent shall be payable in advance without
deduction or offset and in equal monthly installments as shown in Item 4(a)(ii)
of the Basic Lease Provisions, commencing on the Rent Commencement Date (as
hereafter defined) and continuing on the first day of each calendar month
thereafter. If the term of this Lease commences or ends on a day other than the
first or last day of a calendar month, then the Basic Annual Rent and other
items of "rent" (as hereafter defined) for such partial month shall be prorated
in the proportion that the number of days this Lease is in effect during such
partial month bears to the number of days in that calendar month. Rent shall be
paid at the commencement of such partial month. The date on which the first
installment of Basic Annual Rent is due and payable is hereafter referred to as
the "Rent Commencement Date." Unless otherwise specified in Item 4 of the Basic
Lease
<PAGE> 7
Provisions, the Rent Commencement Date shall be the first day of the first month
following the Commencement Date. The first installment of Basic Annual Rent
shall include any Basic Annual Rent accrued during any partial month between the
Commencement Date and the first day of the first month following the
Commencement Date.
(b) Increases in Basic Annual Rent. The Basic Annual Rent shall be
adjusted at the times specified in Item 4(b) of the Basic Lease Provisions. The
date on which the Basic Annual Rent is adjusted is hereafter referred to as the
"Rental Adjustment Date." The rate of the increase in the Basic Annual Rent
(hereafter referred to as the "Rental Adjustment Percentage") shall be as
specified in Item 4(b) of the Basic Lease Provisions. Each such increase in the
Basic Annual Rent shall take effect on the applicable Rental Adjustment Date.
Except as may be provided in Item 4(b) of the Basic Lease Provisions, the amount
of each increase in the Basic Annual Rent shall be equal to the Basic Annual
Rent (the "Base Rent") payable during the twelve (12) month period immediately
preceding the applicable Rental Adjustment Date multiplied by the Rental
Adjustment Percentage. The new Basic Annual Rent shall be equal to the sum of
(i) the Base Rent and (ii) the amount of the increase in the Basic Annual Rent
computed as specified in the preceding sentence. In no event shall the Basic
Annual Rent payable during any 12-month period be less than the Basic Annual
Rent payable during the immediately preceding 12-month period.
ADDITIONAL RENT
PARAGRAPH 3
(a) General.
(1) Tenant agrees to pay as Additional Rent for the Premises
Tenant's proportionate share of all "Building Operating Expenses" (as hereafter
defined) and "Project Operating Expenses" (as hereafter defined) incurred by
Landlord in the operation of the Building and the Project. Tenant's
proportionate shares thereof (hereafter, "Building Expense Percentage" and
"Project Expense Percentage," respectively) shall be the percentage obtained by
dividing the Rentable Area of the Premises for such year or portion thereof by
ninety-five percent (95%) of the total Rentable Area of the Building or the
Project, as the case may be, for the same period, and shall initially be as set
forth in Item 4(c) of the Basic Lease Provisions.
(2) After the Commencement Date and until the Rent
Commencement Date occurs, notwithstanding anything in this Lease to the
contrary, Tenant shall pay, on the first day of each month as Additional Rent $
1,010.14 per month ($ 0.32/sq. ft.), plus Tenant's share of the "Total Utility
Cost" (as hereafter defined). After the Rent Commencement Date, notwithstanding
anything in this Lease to the contrary, it is agreed that, until such time (the
"Expense Cap Date") as the sum [exclusive of the "Total Utility Cost" (as
hereafter defined)] of the Building Operating Expenses and the Project Operating
Expenses as determined pursuant to subparagraph (b) exceeds Three and 84/100
Dollars ($3.84) per square foot of Rentable Area in the Building, the only
component of Additional Rent payable by Tenant shall be its proportionate share
of the Total Utility Cost. After the Expense Cap Date, Tenant shall pay as
Additional Rent Tenant's proportionate share of the Total Utility Cost, whether
or not the Rent Commencement Date has occurred, plus Tenant's proportionate
share of Building Operating Expenses and Project Operating Expenses in excess of
$3.84 per square foot of Rentable Area in the Premises. The "Total Utility Cost"
shall be equal to the sum of the "Building Utility Cost" and the "Project
Utility Cost." The "Building Utility Cost" shall include the cost of all
utilities consumed or used in the operation and maintenance of the Building,
including, without limitation, heat, water and sewer charges, electricity, gas
and air conditioning. The "Project Utility Cost" shall include the cost of all
utilities consumed or used in the operation and maintenance of the Common Areas,
including, without limitation, heat, water and sewer charges, electricity, gas
and
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<PAGE> 8
air conditioning. Tenant's share of the Building Utility Cost shall be
determined with respect to Tenant's Building Expense Percentage. Tenant's share
of the Project Utility Costs shall be determined with respect to Tenant's
Project Expense Percentage.
(b) Annual Determination. Prior to the commencement of the
Lease term and of each calendar year thereafter, Landlord shall give Tenant a
written estimate of Building Operating Expenses, Project Operating Expenses and
Tenant's proportionate share thereof payable for the ensuing year or portion
thereof. Tenant shall pay such estimated amount to Landlord in equal monthly
installments, in advance. Within ninety (90) days after the end of each calendar
year, Landlord shall furnish to Tenant a statement showing in reasonable detail
the actual Building and Project Operating Expenses incurred by Landlord during
such period, and the parties shall within thirty (30) days thereafter make any
payment or allowance necessary to adjust Tenant's estimated payment to Tenant's
actual proportionate share as shown by such annual statement. Any amount due
Tenant shall be credited against installments next coming due under this
Paragraph 3.
(c) Interim Adjustments. If at any time during any calendar
year of the Lease term the "property taxes" (as hereafter defined) applicable to
the Building or the Project and/or the rates for any utility or janitorial
services to the Building or the Project are increased to a rate(s) or amount(s)
in excess of the rate(s) or amount(s) used in calculating the estimated Building
or Project Operating Expenses for such calendar year, Tenant's estimated share
of such Building or Project Operating Expenses shall be increased for the month
in which such increase becomes effective and for succeeding months by Tenant's
Building Expense Percentage or Project Expense Percentage of such increase as
applicable. Upon receipt of notice of such increase in rate or amount, Landlord
shall give Tenant written notice of the amount or estimated amount of increase,
the month in which effective, and Tenant's monthly share thereof. Tenant shall
pay such increase to Landlord as a part of Tenant's monthly payments of
estimated Building Operating Expenses or Project Operating Expenses as provided
in subparagraph (b) above, commencing with the month in which effective.
(d) Definition of Building Operating Expenses. The term
"Building Operating Expenses" as used herein shall include all costs of
operation and maintenance of the Building, as determined by generally accepted
accounting practices consistently applied, and shall include the following costs
by way of illustration but not limitation: real property taxes (as defined
below); personal property taxes; costs and expenses in contesting the amount or
validity of any property tax by appropriate proceedings; water and sewer
charges; insurance premiums; license, permit, and inspection fees; heat; gas;
light; power; water; steam; janitorial and security services; labor; salaries;
air conditioning; landscaping; supplies; materials; equipment; tools;
amortization of the cost of any capital improvements made to the Building by
Landlord that (i) reduce operating expenses (after taking into account and
including in operating expenses the amortized cost of such capital improvements
as described below), or that (ii) are required under any governmental law or
regulation not applicable to the Building or not in effect at the time it was
constructed (such cost to be amortized over such reasonable period as Landlord
shall determine with a return on capital at the rate of ten percent (10%) per
annum on the unamortized balance or at such higher rate as may have been paid by
Landlord on funds borrowed for the purpose of constructing such capital
improvements); and property management costs. Building Operating Expenses shall
not include depreciation on the Building or equipment therein, Landlord's
executive salaries or real estate brokers' commissions.
(e) Definition of Project Operating Expenses.
(i) The term "Project Operating Expenses" shall include all costs of
operation and maintenance of the Common Areas (as hereafter defined), as
determined by generally accepted accounting practices consistently applied, and
shall include the following costs by way of
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<PAGE> 9
illustration but not limitation: general maintenance and repairs; pest control;
resurfacing, painting, restriping, cleaning and sweeping of parking areas; trash
removal; maintenance and repair of sidewalks, curbs and signs in the Project
which Tenants and/or occupants of the Project are not obligated to repair;
irrigation systems; landscaping; painting, electrical, water, gas and other
utilities; directional signs and other traffic markers and devices; maintenance
and repair of any fire protection systems for the Project; lighting systems;
storm drainage systems and any other utility systems; real property taxes;
personal property taxes; the cost and expense of contesting the amount or
validity of any real property tax by appropriate means; amortization of the cost
of any capital improvements made to the Common Areas by Landlord that (i) reduce
operating expenses (after taking into account and including in operating
expenses the amortized cost of such capital improvements as described below), or
(ii) are required under any governmental law or regulation not applicable to the
Project or not in effect at the time it was constructed (such amount amortized
over such reasonable period as Landlord shall determine with a return on capital
at the rate of ten percent (10%) per annum on the unamortized balance or at such
higher rate as may have been paid by Landlord on funds borrowed for the purpose
of constructing such capital improvements); regular and special assessments
imposed by the Lusk/Mira Mesa Industrial Park Association, a California
non-profit corporation; police and fire protection services; depreciation and
maintenance on operating machinery and equipment (if owned) and rental paid for
such machinery and equipment (if rented); rental for electric and service rooms
based upon the average rate in the Project; any parking charges, surcharges or
any other costs levied or assessed by local, state or federal government
agencies in connection with the use of parking facilities; property management
costs; the cost of maintaining and operating the Common Area Facilities (as
hereafter defined), including without limitation all utility expenses and
salaries of all personnel - employed by Landlord in the Common Area Facilities.
Such costs and expenses shall not include any allowance for depreciation of the
Common Area Facilities or other improvements located in the Common Areas.
Landlord may cause any or all of the services described above to be provided by
an independent contractor or contractors.
(f) Definition of Common Areas. The term "Common Areas" shall
include all areas within the Project outside the exterior boundaries of the
buildings (other than the Common Area Facilities) now or hereafter situated
thereon, including, but not limited to, streets, driveways, parking areas,
parking structures, truckways, delivery passages, loading docks, sidewalks,
ramps, open and closed courts, landscaped and planted areas, exterior stairways,
bus stops, retaining and decorative walls and planters, the Common Area
Facilities, and other areas provided by Landlord and/or other owners of portions
of the Project for the common use of Landlord, such other owners and/or the
occupants of the Project, their employees, customers and invitees. Landlord
reserves the right to make changes at any time and from time to time in the
size, shape, location, number and extent of the Common Areas, or any of them,
and no such change shall entitle the Tenant to any abatement of rent.
(g) Definition of Common Area Facilities. The term "Common
Area Facilities" shall include, without limitation, any swimming pools, spas,
tennis and racquetball courts, saunas, locker rooms, exercise rooms, restaurants
and other facilities available for general use by tenants/occupants of the
Project.
(h) Definition of Real Property Taxes.
(1) General. As used in this Lease, the term "real
property taxes" shall include any form of general or special assessment, license
fee, commercial rental tax, levy, penalty, or tax (other than inheritance or
estate taxes) unforeseen as well as foreseen, imposed by any authority having
the direct or indirect power to tax, including any city, county, state or
federal government, or any school, agricultural, lighting, drainage or other
improvement district thereof, as against any legal or equitable interest of
Landlord in the
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<PAGE> 10
Premises or in the Building and/or the Project, as against Landlord's right to
rent or other income therefrom, or as against Landlord's business of leasing the
Premises or any tax imposed in substitution, partially or totally, of any tax
previously included within the definition of real property taxes, or any
additional tax the nature of which was previously included within the definition
of real property tax.
(2) Inclusions. The definition of "real property taxes" set
forth in subparagraph (1) includes without limitation:
(i) Any tax on Landlord's "right" to rent or "right"
to other income from the Premises or as against Landlord's business of leasing
the Premises.
(ii) Any assessment, tax, fee, levy or charge in
substitution, partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of real property taxes, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 Election and that
assessments, taxes, fees, levies and charges may be imposed by governmental
agencies for such services as fire protection, street, sidewalk and road
maintenance, refuse removal and for other public improvements, services or
benefits formerly provided without charge to property owners or occupants. It is
the intention of Tenant and Landlord that all such new and increased
assessments, taxes, fees, levies and charges be included within the definition
of "real property taxes" for the purposes of this Lease.
(iii) Any assessment, tax, fee, levy or charge
allocable to or measured by the area of the Premises or the rent payable
hereunder, including, without limitation, any gross income tax or excise tax
levied by the state, city or federal government, or any political subdivision
thereof, with respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or
any portion thereof.
(iv) Any assessment, tax, fee, levy or charge upon
this transaction or any document to which Tenant is a party, creating or
transferring an interest or an estate in the Premises.
(3) Exclusions. Notwithstanding any provision of this
subparagraph (h) express or implied to the contrary, "real property taxes" shall
not include Landlord's federal or state income, franchise, inheritance or estate
taxes.
(i) Direct Payments. Notwithstanding anything to the contrary contained
in this Paragraph 3, as to each specific category of expense which one or more
tenants of the Building or other buildings on the Project either pays directly
to third parties or specifically reimburses to Landlord (e.g. , separately
metered utilities, separately contracted janitorial service, property taxes
directly reimbursed to Landlord, etc.) such tenant('s) payments with respect
thereto shall not be included in Building Operating Expenses or Project
Operating Expenses, as the case may be, for purposes of this Paragraph 3.
Tenant's Building and Project Expense Percentages for each such category of
expense shall be adjusted accordingly by excluding from the denominator thereof
the Rentable Area of all such tenants paying such category of expense directly
to third parties or reimbursing same directly to Landlord. Moreover, if Tenant
pays or directly reimburses Landlord for any such category of expense, such
category of expense shall be excluded from the determination of Building
Operating Expenses for Tenant to the extent such expense was incurred with
respect to space in the Building or the Project, respectively, actually leased
to other tenants.
(j) Accountant's Determination. The annual determination of Building
Operating Expenses and Project Operating Expenses shall be made and certified by
a Certified Public Accountant designated by
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<PAGE> 11
Landlord. A copy of the determination shall be made available to
Tenant upon request. The accountant's determination shall be final and
binding upon Landlord and Tenant.
(k) Definition of "Rent." The Basic Annual Rent, the Additional Rent,
and other amounts required to be paid by Tenant hereunder, are sometimes
collectively referred to as, and shall constitute, "rent."
(l) On Termination. Even though the Lease term has expired and Tenant
has vacated the Premises, if Tenant has not paid all Additional Rent payable by
Tenant under this Lease attributable to a period before the termination of this
Lease, Tenant shall immediately pay any amount due from Tenant upon written
notice from Landlord. In the event of a termination of this Lease resulting in
Tenant's overpayment of Additional Rent, Landlord shall promptly reimburse
Tenant the amount of any overpayment.
SECURITY DEPOSIT
PARAGRAPH 4
(a) Purpose. In addition to the Rent Deposit specified in Item 5 of the
Basic Lease Provisions, Tenant has deposited with Landlord, receipt of which is
hereby acknowledged, the amount specified in Item 6 of the Basic Lease
Provisions, as security for the full performance of the obligations of Tenant to
Landlord under this Lease. If Tenant shall be in default with respect to the
payment of any item of rent or any other covenant contained herein, Landlord may
use or retain all or any part of said security deposit for the payment of any
rent or any other sum in default, or for the payment of any amount which
Landlord may spend or may become obligated to spend by reason of Tenant's
default. If any portion of said security deposit be applied or used, Tenant
shall, within five (5) days after written notice thereof, deposit an additional
amount with Landlord sufficient to restore said security deposit to its original
amount as specified in Item 6 of the Basic Lease Provisions and Tenant's failure
to do so shall constitute a material breach of this Lease. If Tenant is not in
default at the termination of this Lease, Landlord shall return said security
deposit to Tenant within thirty (30) days after termination of this Lease, less
any amounts required to restore the Premises to good condition and repair,
normal wear and tear excepted, but including damage resulting from the removal
by Tenant of its trade fixtures or equipment.
(b) Landlord's Obligations. Landlord's obligation with respect to any
security deposit is that of a debtor and not as a trustee, consequently such
sums may be commingled with rental receipts or dissipated and no interest shall
accrue thereon. In the event of the sale of the real property of which the
Premises constitute a part, Landlord or its agent shall pay over to Landlord's
successor in interest the sums held as security or advance rent and notify
Tenant in writing setting forth the details of such transfer, including the
successor's name and address. Upon such written notification, Tenant shall have
no further claim against Landlord in that regard. In the event of foreclosure by
any mortgagee against Landlord's interest in the Premises or the Lease, Landlord
shall continue to be liable for any security deposit and any such mortgagee
shall have no liability or responsibility therefor.
REPAIRS
PARAGRAPH 5
(a) Landlord's Obligations. Subject to Paragraph 5(b), Landlord shall
make all necessary repairs to the exterior walls, exterior doors, windows,
corridors and other common areas of the Building and the Project and Landlord
shall keep the Building and the Project in a safe, clean and neat condition, and
use reasonable efforts to keep all equipment used in common with other tenants,
such as elevators, plumbing, heating, air conditioning and similar equipment, in
good condition and repair. Except as provided in Paragraph 12 hereof, there
shall be no abatement of rent and no liability of Landlord by reason of
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<PAGE> 12
any injury to or interference with Tenant's business arising from the making
of any repairs, alterations or improvements in or to any portion of the Building
or the Project or in or to fixtures, appurtenances and equipment therein or
thereon. Tenant waives the right to make repairs at Landlord's expense under
Section 1942 of the California Civil Code, or under any law, statute or
ordinance now or hereafter in effect.
(b) Tenant's Obligations. Tenant agrees that it will make all repairs
to the Premises not required above to be made by Landlord and shall do all
decorating, remodeling, alteration and painting required by Tenant during the
term of the Lease. Tenant will pay for any repairs to the Premises, the Building
or the Project made necessary by any negligence or carelessness of Tenant or its
assignees, subtenants, employees or their respective agents or other persons
permitted in the Building or on the Project by Tenant, or any of them, and will
maintain the Premises, and will leave the Premises upon termination of this
Lease, in a safe, clean, neat and sanitary condition. Notwithstanding anything
in this Lease to the contrary, Tenant shall be responsible for replacing any
glass that may be broken or removed at the direction of or by any negligence or
carelessness of Tenant or its assignees, subtenants, employees or their
respective agent, or other persons permitted in the Building or the Project by
Tenant. Landlord shall not be liable to repair any leaks in the roof of the
Building or other damage to the Building resulting from penetrations of the
Building's roof made by or at the request of Tenant, unless such penetration is
made by Landlord's contractor before the Commencement Date.
IMPROVEMENTS AND ALTERATIONS
PARAGRAPH 6
(a) Tenant Improvement Allowance Memorandum. Landlord's sole
construction obligation under this Lease is as set forth in the Tenant
Improvement Allowance Memorandum attached hereto as "Exhibit B" and incorporated
herein by this reference.
(b) Landlord's Rights. Landlord shall have the right at any time to
change the arrangement and/or location of entrances or passageways, doors and
doorways, and corridors, elevators, stairs, toilets, or other public parts of
the Building and, upon giving Tenant reasonable notice thereof, to change the
name, number or designation by which the Building or the Project is commonly
known.
(c) Tenant's Right to Make Alterations. After the Commencement Date
Tenant shall not, without Landlord's prior written consent, make or permit any
alterations, improvements, additions, or Utility Installations (as hereafter
defined) in, on or about the Premises, except for non-structural alterations,
exceeding Five Thousand Dollars ($5,000) in cost in each instance. As used in
this Paragraph 6, the term "Utility Installation" shall mean bus ducting, power
panels, wiring, fluorescent fixtures, space heaters, conduits, air conditioning
equipment and plumbing. Landlord may require that Tenant remove any or all of
said alterations, improvements, additions, or Utility Installations at the
expiration of the Lease term, and restore the Premises to their prior condition,
ordinary wear and tear excepted. Landlord may also require Tenant to provide
Landlord, at Tenant's sole cost and expense, a lien and completion bond, in an
amount equal to one hundred fifty percent (150%) of the estimated cost of such
improvements, to insure Landlord against any liability for mechanics' and
materialmen's liens and to insure completion of the work. Should Tenant make any
alterations, improvements, additions or Utility Installations without the prior
approval of Landlord, Landlord may require that Tenant remove any or all of the
same.
(d) Conditions to Landlord's Approval. Any alterations, improvements,
additions or Utility Installations in or about the Premises that Tenant shall
desire to make and which require the consent of Landlord shall be presented to
Landlord in written form, with detailed plans for the proposed work. If Landlord
shall give its consent thereto, the consent shall be deemed conditioned upon
Tenant's
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<PAGE> 13
(1) acquiring a permit to do so from appropriate governmental agencies, (2)
furnishing a copy thereof to Landlord prior to the commencement of the work and
(3) complying with all conditions of said permit in a prompt and expeditious
manner.
(e) Lien Free Construction. Tenant shall pay when due all claims for
labor and materials furnished or alleged to have been furnished to or for Tenant
at or for use in the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Tenant shall give Landlord ten (10) days' prior written notice of the
commencement of any work in the Premises. Landlord shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Tenant shall, in good faith, contest the validity of any such lien, claim or
demand, then Tenant shall, at its sole expense, defend itself and Landlord
against the same and shall pay and satisfy any such adverse judgment that may be
rendered thereon before the enforcement thereof against the Landlord or the
Premises, upon the condition that if Landlord shall require, Tenant shall
furnish Landlord with a surety bond satisfactory to Landlord in an amount equal
to such contested lien, claim or demand in an amount equal to such contested
lien, claim or demand indemnifying Landlord against liability for the same and
holding the Premises free from the effect of such lien or claim. In addition,
Landlord may require Tenant to pay Landlord's attorneys' fees and costs incurred
by Landlord in participating in such action.
(f) Ownership Upon Expiration of Lease. Unless Landlord requires their
removal, all alterations, improvements, additions and Utility Installations
(whether or not such Utility Installations constitute trade fixtures of Tenant)
which may be made on the Premises shall become the property of Landlord and
remain upon and be surrendered with the Premises at the expiration of the Lease
term (with the exception of the computer room air conditioning compressor).
USE OF PREMISES
PARAGRAPH 7
Tenant shall use the Premises only as set forth in Item 7 of the Basic
Lease Provisions and shall not use or permit the Premises to be used for any
other purpose without the prior written consent of Landlord. Tenant shall not
use or occupy the Premises in violation of law or of the certificate of
occupancy issued for the Building, and shall, upon five (5) days' written notice
from Landlord, discontinue any use of the Premises which is declared by any
governmental authority having jurisdiction to be a violation of law or of said
certificate of occupancy. Tenant shall comply with any direction of any
governmental authority having jurisdiction which shall, by reason of the nature
of Tenant's use or occupancy of the Premises, impose any duty upon Tenant or
Landlord with respect to the Premises or with respect to the use or occupancy
thereof. Tenant shall not do or permit to be done anything which will invalidate
or increase the cost of any fire, extended coverage or any other insurance
policy covering the Building, the Project and/or property located therein and
shall comply with all rules, orders, regulations and requirements of the Pacific
Fire Rating Bureau or any other organization performing a similar function.
Notwithstanding Paragraph 3(d) or 3(e), Tenant shall promptly upon demand
reimburse Landlord for the full amount of any additional premium charged for
such policy by reason of Tenant's failure to comply with the provisions of this
paragraph, it being understood that such demand for reimbursement shall not be
Landlord's exclusive remedy. Tenant shall not in any way obstruct or interfere
with the rights of other tenants or occupants of the Building or the Project or
injure or annoy them, or use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain, or
permit any nuisance in, on or about the Premises. Tenant shall not commit or
suffer to be committed any waste in or upon the Premises.
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UTILITIES AND SERVICES
PARAGRAPH 8
(a) Utilities and Services to Be Provided by Landlord. Provided that
Tenant is not in default hereunder, Landlord agrees to furnish or cause to be
furnished to the Premises, the utilities and services described, subject to the
conditions and in accordance with the standards set forth below:
(1) Landlord shall provide automatic elevator facilities on
generally accepted business days from 8:00 a.m. to 6:00 p.m., and on Saturdays
from 8:00 a.m. to 12:00 noon, and have at least one elevator available for use
at all other times.
(2) On generally accepted business days from 8:00 a.m. to 6:00
p.m., and on Saturdays from 8:00 a.m. to 12:00 noon, Landlord shall ventilate
the Premises and furnish heat or air conditioning when in the judgment of
Landlord it is required for the comfortable occupancy of the Premises during
such days and hours, subject to any governmental requirements or standards
relating to, among other things, energy conservation, imposed or established by
governmental or cooperative organizations. Upon request, Landlord shall make
available at Tenant's expense after hours heat or air conditioning. The minimum
use of after hours heat or air conditioning and the cost thereof shall be
determined by Landlord and confirmed in writing to Tenant, as the same may
change from time to time. In addition to any and all other rights and remedies
which Landlord may invoke for a violation or breach of this Lease, Landlord may
discontinue said heating and air conditioning service without any abatement of
rent to Tenant whatsoever after giving Tenant forty-eight (48) hours written
notice. Landlord retains the right to install supplementary air conditioning
units in or for the Premises if Tenant uses heat generating machines or
equipment which affect the temperature otherwise maintained by the Building's
HVAC system; provided, however, that Landlord agrees to act reasonably in
exercising such right. The cost of such equipment shall be borne by Tenant.
(3) Landlord shall furnish to the Premises at all times,
subject to interruptions beyond Landlord's control, electric current as required
by the building standard office lighting and receptacles. At all times Tenant's
use of electric current shall never exceed the capacity of the feeders to the
Building or the risers or wiring installation. Except for the computer system to
be installed by Tenant in the Premises upon the commencement of the term of the
Lease, Tenant shall not install or use or permit the installation or use of any
computer or electronic data processing equipment in the Premises without the
prior written consent of Landlord which would materially increase the size of
Tenant's initial computer installation.
(4) Landlord shall furnish water for drinking, cleaning and
lavatory purposes only.
(5) Landlord shall provide janitorial services to the
Premises, comparable to that provided in other first class office buildings in
the vicinity of the Project, provided the Premises are used exclusively as
offices, and kept reasonably in order by Tenant. If the Premises are not used
exclusively as offices, or if Tenant elects and Landlord consents, the Premises
shall be kept clean and in order by Tenant, at Tenant's expense, and to the
satisfaction of Landlord, and by persons approved by Landlord and no one other
than persons approved by Landlord shall be permitted to enter the Premises for
such purposes. Tenant shall pay to Landlord the cost of removal of any of
Tenant's refuse and rubbish, to the extent that the same exceeds the refuse and
rubbish usually attendant upon the use of premises as offices.
(6) Landlord shall replace, as necessary, the fluorescent
tubes in the standard lighting fixtures installed by Landlord.
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(b) After Hours Charge. Landlord may impose a reasonable charge for any
utilities and services, including without limitation, air conditioning, electric
current and water, required to be provided by Landlord by reason of any
substantial recurrent use of the Premises at any time other than the hours of
8:00 a.m. to 6:00 p.m. Monday through Friday and 8:00 a.m. and 12:00 p.m.
Saturday or any use beyond what Landlord agrees to furnish as described above,
or special electrical, cooling and ventilating needs created in certain areas by
hybrid telephone equipment, computers and other similar equipment or uses. At
Landlord's option, separate meters for such utilities and services may be
installed for the Premises, and Tenant upon demand therefor, shall immediately
pay Landlord for the installation, maintenance or repair of such meters.
(c) Tenant's Obligations. Tenant agrees to cooperate fully at all times
with Landlord and to abide by all regulations and requirements which Landlord
may prescribe for the use of the above utilities and services. Any failure to
pay any excess costs as described above shall constitute a breach of the
obligation to pay rent under this Lease and shall entitle the Landlord to the
rights herein granted for such breach.
(d) Nonliability of Landlord. Landlord shall not be liable for failure
of any services unless such failure is caused by intentional acts of Landlord.
Landlord shall not be liable under any circumstances for loss of, or injury to,
property, however occurring, through or in connection with, or incidental to the
furnishing of any of the services described above. Landlord's failure to provide
the foregoing shall not relieve Tenant from its duty to pay the full rent
required hereunder, or constitute or be construed as a constructive or other
eviction of Tenant.
(e) Changes by Landlord. Notwithstanding anything hereinabove to the
contrary, Landlord reserves the right from time to time to make reasonable and
nondiscriminatory modifications to the above standards for utilities and
services.
RULES AND REGULATIONS
PARAGRAPH 9
Tenant agrees to abide by all rules and regulations of the Building and
Project imposed by Landlord as set forth in Exhibit "C" attached hereto, as the
same may be changed from time to time upon reasonable notice to Tenant. These
rules and regulations are imposed for the cleanliness, good appearance, proper
maintenance, good order and reasonable use of the Premises, the Building and the
Project, and as may be necessary for the enjoyment of the Building and the
Project by all tenants and their clients, customers and employees. Breach of the
rules and regulations shall not be grounds for termination of the Lease unless
Tenant continues to breach the same after ten (10) days' written notice by
Landlord or unless, in the case of a breach which by its nature cannot be cured
within said 10-day period, Tenant fails to commence to cure such breach within
said 10-day period and thereafter to diligently prosecute same to completion;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under Section 1161, et seq., of the California Code of
Civil Procedure. Landlord shall not be liable for the failure of any tenant, its
agents or employees, to conform to the rules and regulations.
TAXES ON TENANT'S PROPERTY
PARAGRAPH 10
(a) Tenant's Obligation to Pay. Tenant shall be liable for and shall
pay ten (10) days before delinquency, taxes, levies and assessments levied
against any personal property or trade fixtures placed by Tenant in or about the
Premises. If any such taxes, levies and assessments on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's property or
if the assessed value of the Building or the Project is increased by the
inclusion therein of a value placed upon such personal property or trade
fixtures of Tenant
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and if Landlord pays the taxes, levies and assessments based upon such increased
assessment, which Landlord shall have the right to do regardless of the validity
thereof, but only under proper protest if requested by Tenant. Tenant shall upon
demand repay to Landlord the taxes, levies and assessments so levied against
Landlord, or the proportion of such taxes, levies and assessments resulting from
such increase in the assessment; provided that, in any such event Tenant shall
have the right, in the name of Landlord and with Landlord's full cooperation but
without any cost to Landlord, to bring suit in any court of competent
jurisdiction to recover the amount of any such taxes, levies and assessments so
paid under protest, any amount so recovered to belong to Tenant.
(b) Additional Amounts Payable by Tenant. If the tenant improvements in
the Premises, whether installed and/or paid for by Landlord or Tenant and
whether or not affixed to the real property so as to become a part thereof, are
assessed for real property tax purposes at a valuation higher than the valuation
at which tenant improvements conforming to Landlord's "building standard" in
other space in the Building are assessed, then the real property taxes and
assessment levied against Landlord or the property by reason of such excess
assessed valuation shall be deemed to be taxes levied against personal property
of Tenant and shall be governed by the provisions of subparagraph (a), above. If
the records of the County Assessor are available and sufficiently detailed to
serve as a basis for determining whether said tenant improvements are assessed
at a higher valuation than Landlord's "building standard," such records shall be
binding on both Landlord and Tenant; otherwise the actual cost of construction
shall be the basis for such determination.
SUBSTITUTED PREMISES
PARAGRAPH 11
(a) In General. The parties acknowledge that the location of the
Premises on the plaza level of the Building provides certain intangible benefits
to Tenant in terms of access, visibility and convenience. Landlord, accordingly,
will use its best efforts to take these intangible benefits into account in
relocating Tenant to substituted premises pursuant to this Paragraph 11(a).
Subject to obtaining Tenant's consent which consent shall not be unreasonably
withheld or delayed, Landlord reserves the right, on thirty (30) days' written
notice to Tenant, to substitute other premises within the Building (or elsewhere
in the Project) for the Premises described above, provided that the substituted
premises: (a) are reasonably comparable in location to the Premises, (b) contain
at least the same square footage as the Premises, (c) contain comparable tenant
improvements, and (d) are made available to Tenant at the then current rental
rate for such space, in no event to exceed the rental specified herein. Landlord
shall pay all reasonable moving expenses of Tenant incidental to such
substitution of premises.
(b) Expansion. One year after the Rent Commencement Date, provided
Tenant is not in default under any of the terms or conditions of this Lease.
Landlord agrees that Tenant shall have the right to relocate to other space in
the Project or other space located in the City of San Diego which is owned by
Landlord or The Naiman Company (the "New Space") on the following terms and
conditions:
(1) The New Space shall be at least fifty percent (50.0%) sq.
ft. larger than the Premises;
(2) Tenant provides Landlord with a sixty (60) day written
notice of Tenant's desire to relocate to the New Space;
(3) Any and all costs of both Landlord and Tenant, including
without limitation legal fees incurred by Landlord in drafting a new lease for
the New Space (which legal fees shall not exceed $1,000), all of Tenant's moving
and relocation expenses and any brokerage commissions that may become payable to
third parties by reason of Tenant's relocation shall be paid solely by Tenant;
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<PAGE> 17
(4) Tenant continues to make payment of all items of rent, both Basic
Annual Rent and Additional Rent, and any other payment required to be made under
the Lease until Tenant is released from liability under this Lease;
(5) The monthly Basic Annual Rent for the New Space shall not exceed
Two Dollars ($2.00) per sq. ft. of Rentable Area in the New Space, increased at
the rate of eight percent (8.0%) per annum for each year (or portion thereof)
between the Commencement Date of this Lease and the commencement date of the
lease for the New Space;
(6) Tenant executes a new lease on terms and conditions reasonably
acceptable to Landlord; and
(7) Effective as of the commencement date of the lease for the New
Space, Tenant shall be released from liability under this Lease except for
liabilities or obligations arising from or relating to events or circumstances
occurring prior to such date.
FIRE OR CASUALTY
PARAGRAPH 12
In the event the Premises, or access to them, are wholly or partially
destroyed by fire or other casualty covered by the form of property insurance
maintained by Landlord, Landlord shall rebuild, repair or restore the Premises
and access thereto to substantially the same condition as when the same were
furnished to Tenant, excluding any improvements installed by Tenant, and the
Lease shall continue in full force and effect. In the event, however, that the
Building is so damaged or destroyed to the extent of more than one-third (1/3)
of its replacement cost, or to any substantial extent by a casualty not so
covered, Landlord may elect to terminate this Lease in lieu of so restoring the
Premises. Landlord shall in no event be obligated to make any repairs or
replacement of any items other than those items installed by or at the expense
of Landlord. If the Premises are damaged or destroyed to the extent that more
than one-third (1/3) of the Rentable Area of the Premises are rendered
untenantable, rent shall abate during the period of reconstruction, except to
the extent that proceeds of the policy of Business Interruption Insurance
required to be maintained by Tenant are available to pay the rent due hereunder.
Tenant hereby waives all of its rights under California Civil Code Sections 1932
and 1933 to terminate this Lease upon the damage or destruction of the Premises
or access thereto.
EMINENT DOMAIN
PARAGRAPH 13
In case the whole of the Premises, or such part thereof as
shall substantially interfere with Tenant's use and occupancy thereof, shall be
taken by any lawful power or authority by exercise of the right of eminent
domain, or sold to prevent such taking, either Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
said authority, except as provided herein. Tenant shall not because of such
taking assert any claim against Landlord or the taking authority for any
compensation because of such taking, and Landlord shall be entitled to receive
the entire amount of any award without deduction for any estate or interest of
Tenant. In the event the amount of property or the type of estate taken shall
not substantially interfere with Tenant's use of the Premises, Landlord shall be
entitled to the entire amount of the award without deduction for any estate or
interest of Tenant. In such event, Landlord shall promptly proceed to restore
the Premises to substantially their condition prior to such partial taking, and
a proportionate allowance shall be made to Tenant for the rent corresponding to
the time during which, and to the part of the Premises of which, Tenant shall be
so deprived on account of such taking and restoration. Nothing contained in this
Paragraph 13 shall be deemed to give Landlord any interest in, or prevent Tenant
from seeking any award against the taking authority for, the taking of personal
property and fixtures belonging to Tenant or for relocation or business
interruption expenses recoverable from the taking authority.
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<PAGE> 18
ASSIGNMENT AND SUBLETTING
PARAGRAPH 14
(a) No Assignment or Subletting Without Consent. Tenant shall not
voluntarily or involuntarily assign, sublet, mortgage or otherwise encumber all
or any portion of its interest in this Lease or in the Premises without
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld, and any such attempted assignment, subletting, mortgage
or other encumbrance without such consent shall be null and void and of no
effect.
(b) Non-Waiver. No permitted assignment, subletting, mortgage or other
encumbrance of Tenant's interest in this Lease shall relieve Tenant of its
obligation to pay the rent and to perform all of the other obligations to be
performed by Tenant hereunder. The acceptance of rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision of this
Lease or be a consent to any subletting, assignment, mortgage or other
encumbrance. Consent to one sublease, assignment, mortgage or other encumbrance
shall not be deemed to constitute consent to any subsequent attempted
subletting, assignment, mortgage or other encumbrance.
(c) Procedures. If Tenant desires at any time to assign this Lease or
to sublet the Premises or any portion thereof, it shall first notify Landlord of
its desire to do so and shall submit in writing to Landlord (1) the name of the
proposed subtenant or assignee; (2) the nature of the proposed subtenant's or
assignee's business to be carried on in the Premises; (3) the terms and
provisions of the proposed sublease or assignment; and (4) such financial
information as Landlord may reasonably request concerning the proposed subtenant
or assignee.
(d) Landlord's Options. At any time within thirty (30) days after
Landlord's receipt of the information specified in subparagraph (c) above,
Landlord may by written notice to Tenant elect (1) to sublease the Premises or
the portion thereof so proposed to be subleased by Tenant, or to take an
assignment of Tenant's leasehold estate hereunder, or such part thereof as shall
be specified in said notice, on the same terms stated in this Lease and in turn
sublease or assign to the proposed subtenant or assignee on the same terms as
those offered by Tenant to the proposed subtenant or assignee, as the case may
be; or (2) to terminate this Lease as to the portion (including all) of the
Premises so proposed to be subleased or assigned, with a proportionate abatement
in the rent payable hereunder; provided, however, that if the proposed sublease
will cover less than one half (1/2) of the area of the Premises covered by this
Lease and will have a term (including all options to renew or extend the same)
of less than two years and will terminate more than two years prior to the
expiration date of this Lease, Landlord shall not be entitled to exercise option
(2) above, but may exercise option (1). If Landlord does not exercise any option
set forth in this subparagraph (d) within said thirty (30) day period, Tenant
may thereafter within ninety (90) days after the expiration of said thirty (30)
day period enter into a valid assignment or sublease of the Premises or portion
thereof, upon the terms and conditions set forth in the information furnished by
Tenant to Landlord pursuant to subparagraph (c) above, subject, however, in each
instance, to Landlord's consent, which shall not unreasonably be withheld as set
forth in subparagraph (a) above.
(e) Involuntary Transfers. If this Lease is assigned to any person or
entity pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. Section 101
et seq. (the "Bankruptcy Code"), any and all monies or other consideration
payable or otherwise to be delivered in connection with such assignment shall be
paid or delivered to Landlord, shall be the exclusive property of Landlord and
shall not constitute property of Tenant or of the estate of Tenant within the
meaning of the Bankruptcy Code. Any and all monies or other consideration
constituting Landlord's property under the preceding sentence not paid or
delivered to Landlord shall be held in trust for the benefit of Landlord and be
promptly paid or delivered to Landlord. Any person or entity to which
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<PAGE> 19
this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall
be deemed without further act or deed to have assumed all of the obligations
arising under this Lease on and after the date of such assignment. Any such
assignee shall upon demand execute and deliver to Landlord an instrument
confirming such assumption.
(f) Related Matters.
(1) No Merger. The voluntary or other surrender of this Lease
by Tenant or a mutual cancellation hereof shall not work a merger, and shall at
the option of Landlord, terminate all or any existing subleases or subtenancies
or shall operate as an assignment to Landlord of such subleases or subtenancies.
(2) Transfer of Stock. If Tenant is a corporation which, under
the then current guidelines published by the Commissioner of Corporations of the
State of California, is not deemed a public corporation, or is an unincorporated
association or partnership, the transfer, assignment or hypothecation of any
stock or interest in such corporation, association or partnership in the
aggregate in excess of twenty-five percent (25%) shall be deemed an assignment
within the meaning and provisions of this Paragraph 14; provided, however, that
none of the following transactions shall require Landlord's prior consent: (i)
the sale of any stock of Tenant by means of a public offering registered under
the Securities Act of 1933, as amended: or (ii) the sale, conversion, exchange
or other disposition of any or all of Tenant's stock pursuant to any merger,
reorganization or combination, so long as the surviving entity that is the
Tenant hereunder has a net worth equal to or greater than the net worth of
Biosym Technologies, Inc. as of the date of transfer; or (iii) the sale of less
than all of the stock of Tenant so long as Arnold T. Hagler and Donald H. J.
Mckay, or either of them, collectively retain the ownership of at least 20% of
the issued and outstanding stock of Tenant. Tenant shall notify Landlord in
writing of any assignment of this Lease, whether or not any such assignment
requires Landlord's consent, within fifteen (15) days after the effective date
thereof.
(3) Reimbursement of Costs. Tenant agrees to reimburse
Landlord for Landlord's reasonable costs and attorneys' fees incurred in
conjunction with the processing and documentation of any such requested
assignment, subletting, transfer, change of ownership or hypothecation of this
Lease or Tenant's interest in and to the Premises, it being understood that the
amount of such attorneys' fees shall not exceed One Thousand Dollars ($1,000).
(4) Excess Rent. In the event that an assignment or sublease,
which is otherwise permitted under the terms of this Lease, results in the
payment of rent or other consideration by the occupant in excess of the Basic
Annual Rent imposed on Tenant hereunder, then fifty percent (50.0%) of such
excess rent or other consideration shall be paid to Landlord as rent hereunder.
Tenant shall furnish Landlord with whatever information Landlord may reasonably
require to determine whether such excess rent may be payable.
ACCESS
PARAGRAPH 15
Landlord reserves and shall at any time and all times have the right to
enter the Premises to inspect the same, to supply janitor service and any other
service to be provided by Landlord to Tenant hereunder, to submit the Premises
to prospective purchasers or tenants, to post notices of nonresponsibility, to
alter, improve or repair the Premises or any other portion of the Building, all
without being deemed guilty of an eviction of Tenant and without abatement of
rent, and may for the purpose erect scaffolding and other necessary structures
where reasonably required by the character of the work to be performed, provided
that the business of Tenant shall be interfered with as little as is reasonably
practicable. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the
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<PAGE> 20
Premises, and any other loss occasioned thereby. For each of the aforesaid
purposes, Landlord shall at all times have and retain a key with which to unlock
all of the doors in, upon and about the Premises, excluding Tenant's vaults and
safes, and Landlord shall have the right to use any and all means which Landlord
may deem proper to open said doors in an emergency in order to obtain entry to
the Premises, and any entry to the Premises Obtained by Landlord by any of said
means shall not under any circumstance, be construed or deemed to be a forcible
or unlawful entry into, or a detainer of, the Premises, or any eviction of
Tenant from the Premises or any portion thereof. No provision of the within
Lease shall be construed as obligating Landlord to perform any repairs,
alterations or decoration except as otherwise expressly agreed to be performed
by Landlord.
SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATES
PARAGRAPH 16
(a) Subordination. This Lease is junior, subject, and subordinate to
all ground leases, mortgages, deeds of trust, and other security instruments of
any kind now covering the Building, the Project, or any portion thereof.
Landlord reserves the right to place liens or encumbrances on the Building, the
Project, or any part thereof or interest therein superior in lien and effect to
this Lease. This Lease, at the option of Landlord, shall be subject and
subordinate to any and all such liens or encumbrances now or hereafter imposed
by Landlord without the necessity of the execution and delivery of any further
instruments on the part of Tenant to effectuate such subordination.
Notwithstanding the foregoing, Tenant covenants and agrees to execute and
deliver upon demand such further instruments evidencing such subordination of
this Lease as may be requested by Landlord. If Tenant fails to execute such
further instruments within ten (10) business days after demand, Landlord shall
execute such documents on behalf of Tenant as Tenant's attorney-in-fact. Tenant
does hereby make, constitute and irrevocably appoint Landlord as Tenant's
attorney-in-fact and in Tenant's name, place and stead, to execute such
instruments in accordance with this subparagraph. In addition, Tenant's failure
to execute such further instruments within ten (10) business days after demand
shall constitute a material breach of this Lease. In the event of the
foreclosure of any such lien or encumbrance, Tenant snaIl attorn to the then
owner who owns or acquires title to the Building or Project and will recognize
such owner as Landlord under this Lease. Tenant hereby waives any right to
terminate this Lease because of any such foreclosure, provided that the then
owner shall have previously agreed or shall agree to Tenant's occupancy and
right to quiet possession of the Premises.
(b) Tenant Certificates. Tenant shall at any time and from time to time
upon not less than ten (10) days prior notice by Landlord, execute, acknowledge
and deliver to Landlord a statement in writing certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and stating the
modifications), and the dates to which the Basic Annual Rent, additional rent
and other charges have been paid in advance, if any, and stating whether or not
to the best knowledge of Tenant, Landlord is in default in the performance of
any covenant, agreement or condition contained in this Lease and, if so,
specifying each such default of which Tenant may have knowledge. Any such
statement delivered pursuant to this Paragraph may be relied upon by any
prospective purchaser of the fee of the Building or the Project or any
mortgagee, ground lessor or other like encumbrancer thereof or any assignee of
any such encumbrancer upon the Building or the Project.
(c) Estoppel Certificates. In addition, and not in lieu of the
foregoing, within ten (10) days after the Commencement Date, Tenant shall
execute and deliver to Landlord a certificate substantially in the form of
Exhibit "D" attached hereto, indicating thereon any exceptions thereto which
Tenant claims to exist at that time. Failure
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<PAGE> 21
of Tenant to execute and deliver such certificate within said time period shall
constitute an acceptance of the Premises and the acknowledgement and agreement
by Tenant that the statements made on Exhibit "D" are true and correct without
exception.
SALE BY LANDLORD
PARAGRAPH 17
In the event of a sale or conveyance by Landlord of the Building, the
same shall operate to release Landlord from any and all liability under this
Lease. Tenant's right to quiet possession of the Premises shall not be disturbed
so long as Tenant shall pay the rent and observe and perform all of the
provisions of this Lease to be observed and performed by Tenant, unless this
Lease is terminated pursuant to specific provisions relating thereto or
contained herein. If any security deposit has been made by Tenant, Landlord may
transfer such security deposit to the purchaser, and thereupon Landlord shall be
discharged from any further liability in reference thereto.
NONLIABILITY AND INDEMNIFICATION OF LANDLORD; INSURANCE
PARAGRAPH 18
(a) Landlord's Nonliability. Subject to Paragraph 18(j), Landlord shall
not be liable for injury or damage which may be sustained by the person, goods,
wares, merchandise or property of Tenant, its employees, invitees or customers
or any other person in or about the Premises caused by or resulting from any
peril which may affect the Premises, including without limitation fire, steam,
electricity, gas, water or rain, which may leak or flow from or into any part of
the Premises, or from the breakage, leakage, obstruction or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures of the same, whether such damage or injury results from conditions
arising upon the Premises or upon other portions of the Building, or from other
sources. Landlord shall not be liable for any damages arising from any act or
neglect of any other tenant of the Project or any of their officers, employees,
agents, representatives, customers and business visitors or invitees.
(b) Indemnification. To the fullest extent permitted by law, Tenant
shall indemnify, hold Landlord harmless from and defend Landlord against any and
all claims, loss, costs, damage, expense or liability, including without
limitation reasonable attorneys' fees and costs of defense, for any injury or
damages to any person or property whatsoever, when such injury or damage has
been caused in part or in whole by the act, neglect, fault, or omission of
Tenant, its agents, servants, employees or invitees. This indemnity shall not
require payment as a condition precedent to recovery. In addition, if any person
not a party to this Lease shall institute any other type of action against
Tenant in which Landlord, involuntarily, and without cause, shall be made a
party defendant, Tenant shall indemnify, hold Landlord harmless from and defend
Landlord from all liabilities by reason thereof. Tenant shall reimburse Landlord
for attorneys' fees, incurred by Landlord in any action brought by a third party
against Landlord and for which action Tenant is required to indemnify Landlord
under this Paragraph 18(b).
(c) Tenant's Insurance. Tenant hereby agrees to maintain in
full force and effect at all times during the term of this Lease, at its own
expense, for the protection of Tenant and Landlord, as their interests may
appear, policies of liability insurance issued by a responsible carrier or
carriers acceptable to Landlord which afford the following coverages:
(1) Worker's Compensation, - Statutory
including Employer's
Liability Coverage
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(2) Comprehensive General Liability Insurance, including Blanket
Contractual Liability, Broad Form Property Damage, Personal
Injury, Completed Operations, Products Liability. Fire Damage,
Host Liquor Liability (or Liquor Liability, if applicable) and
Owned and Non-Owned Automobile Coverage
- Not less than $1,000,000 Combined Single Limit for both bodily
injury and property damage
(3) All Risk Insurance, including without limitation coverage
against sprinkler leakage, in an amount sufficient to cover
the full cost of replacement of all improvements and
betterments to the Premises paid for by Tenant and all of
Tenant's trade fixtures and other personal property.
(4) Business Interruption Insurance in an amount equal to the
Basic Annual Rent and the Additional Rent for a period of at
least twelve (12) months commencing with the date of loss. The
proceeds of such insurance shall be paid to Landlord if the
Premises are destroyed or rendered inaccessible by a risk
insured against by the policy of insurance required to be
maintained by Tenant under subparagraph (c) (3).
(5) Plate Glass Insurance for any plate glass in the Premises.
(d) Deductibles. Tenant may, with the written consent of Landlord,
elect to have reasonable deductibles in connection with the policies of
insurance required to be maintained by Tenant under subparagraphs (c)(3) and
(c)(4), above. If Tenant elects to maintain such deductibles, Tenant shall be
liable for paying the full amount of any deductibles in the event of a loss or
casualty.
(e) Certificates of Insurance. Tenant shall deliver to Landlord at
least fifteen (15) days prior to the time such insurance is first required to be
carried by the Tenant, and thereafter at least thirty (30) days prior to
expiration of such policy, Certificates of Insurance evidencing the above
coverage with limits not less than those specified above. Such Certificates,
with the exception of Worker's Compensation shall add, but not name Landlord,
and each of its partners, subsidiaries, affiliates, directors, agents and
employees as additional insureds and shall expressly provide that the interest
of same therein shall not be affected by any breach by Tenant of any policy
provision for which such Certificates evidence coverage. Further, all
Certificates shall expressly provide that no less than thirty (30) days prior
written notice shall be given Landlord in the event of material alteration to or
cancellation of the coverages evidenced by such Certificates. The insurance
required by this Paragraph 18 shall be the primary insurance as respects
Landlord (and any other additional insureds designated by Landlord) and not
contributory with any other available insurance. Such Certificate(s) evidencing
the liability insurance coverage required under subparagraph (c)(2) above shall
contain an endorsement providing, in substance, that "such insurance as is
afforded hereby for the benefit of (Landlord) shall be primary and any insurance
carried by (Landlord) shall be excess and not contributory."
(f) Landlord's Insurance. Landlord shall at all times during
the term of this Lease maintain in effect a policy or policies of "All Risk"
insurance, together with sprinkler leakage coverage, covering the Building and
the Project, including Landlord's interest in all tenant improvements in the
Premises. The cost of such insurance shall be included in the Building and/or
Project Operating Expenses to be reimbursed by Tenant to Landlord pursuant to
Paragraph 3.
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(g) Increases in Coverage. Upon demand, Tenant shall provide Landlord,
at Tenant's expense, with such increased amount of existing insurance, and such
other insurance in such limits, as Landlord may reasonably require and such
other hazard insurance as the nature and condition of the Premises may require
in the sole judgment of Landlord, to afford Landlord adequate protection for
said risks.
(h) No Co-Insurance. If, on account of the failure of Tenant to comply
with the provisions of this Paragraph 18, Landlord is adjudged a coinsurer by
its insurance carrier, then any loss or damage Landlord shall sustain by reason
thereof shall be borne by Tenant and shall be immediately paid by Tenant upon
receipt of a bill thereof and evidence of such loss.
(i) Insurance Limits. Landlord makes no representation that the limits
of liability specified to be carried by Tenant under the terms of this Lease are
adequate to protect Tenant against Tenant's undertaking under this Paragraph 18.
In the event Tenant believes that any such insurance coverage called for under
this Lease is insufficient, Tenant shall provide, at its own expense, such
additional insurance as Tenant deems adequate. In no event shall the limits of
any insurance coverage maintained by Tenant pursuant to this Paragraph 18 be
considered as limiting Tenant's liability under this Lease.
(j) Landlord's Negligence. Nothing contained in this Lease shall
operate to relieve Landlord of the consequences of its own negligence or the
negligence of its agents or employees.
WAIVER OF SUBROGATION
PARAGRAPH 19
Landlord and Tenant each hereby waive any and all rights of recovery
against the other, or against any other tenant or occupant of the Building or
the Project or against the officers, employees, agents, representatives,
customers and business visitors of such other party or of such other tenant or
occupant of the Building or the Project, for loss of or damage to such waiving
party or its property or the property of others under its control, arising from
any cause insured against under any policy of insurance required to be carried
by such waiving party pursuant to the provisions of this Lease (or any other
policy of insurance carried by such waiving party in lieu thereof) at the time
of such loss or damage. The foregoing waiver shall be effective whether or not a
waiving party shall actually obtain and maintain the insurance which such
waiving party is required to obtain and maintain pursuant to this Lease (or any
substitute therefor). Landlord and Tenant shall, upon obtaining the policies of
insurance which they are required to maintain under this Lease, give notice to
their respective insurance carrier(s) that the foregoing mutual waiver of
subrogation is contained in the Lease.
ATTORNEYS' FEES
PARAGRAPH 20
In the event of any legal action or proceeding brought by
either party against the other arising out of this Lease, the prevailing party
shall be entitled to recover reasonable attorneys' fees and costs incurred in
such action and such amount shall be included in any judgment rendered in such
action or proceeding.
WAIVER
PARAGRAPH 21
No waiver by Landlord of any provision of this Lease or of any
breach by Tenant hereunder shall be deemed to be a waiver of any other provision
hereof, or of any subsequent breach by Tenant of the same or any other
provision. Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to render unnecessary the
obtaining of Landlord's consent to or approval of any subsequent act of Tenant.
No act or thing done by Landlord or Landlord's agents during the term of this
Lease shall be deemed an
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<PAGE> 24
acceptance of a surrender of the Premises, unless done in writing signed by
Landlord. The delivery of the keys to any employee or agent of Landlord shall
not operate as a termination of the Lease or a surrender of the Premises. The
acceptance of any rent by Landlord following a breach of this Lease by Tenant
shall not constitute a waiver by Landlord of such breach or any other breach
unless such waiver is expressly stated in a writing signed by Landlord.
NOTICES
PARAGRAPH 22
All notices which Landlord or Tenant may be required, or may desire, to
serve on the other may be served, by personal service or as an alternative to
personal service, by mailing the same by registered or certified mail, postage
prepaid, addressed as set forth in Item 8 of the Basic Lease Provisions, or
addressed to such other address or addresses as either Landlord or Tenant may
from time to time designate to the other in writing. All notices should be
deemed effective upon receipt. If personally delivered, notices shall be deemed
received at the time of delivery. If any notice is sent by mail, the same should
be deemed fully delivered and received seventy-two (72) hours after mailing as
provided above.
INSOLVENCY OR BANKRUPTCY
PARAGRAPH 23
In no event shall this Lease be assigned or assignable by operation of
law and in no event shall this Lease be an asset of Tenant in any receivership,
bankruptcy, insolvency, or reorganization proceeding.
DEFAULT
PARAGRAPH 24
(a) Events of Default. The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant:
(1) Nonpayment of Rent. Any failure by Tenant to pay the rent
or to make any other payment required to be made by Tenant hereunder at the time
specified for payment, in which event Landlord shall give Tenant five (5) days'
written notice of default, which notice shall be in lieu of, and not in addition
to, any notice required under Section 1161, et seq., of the California Code of
Civil Procedure;
(2) Abandonment. The abandonment or vacation of the Premises
by Tenant;
(3) Nonmonetary Default. Any failure by Tenant to observe and
perform any other provision of this Lease to be observed or performed by Tenant,
where such failure continues for thirty (30) days (except where a different
period of time is specified in the Lease) after written notice by Landlord to
Tenant; provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under Section 1161, et seq., of the California
Code of Civil Procedure. If the nature of such default is such that the same
cannot reasonably be cured within such 30-day period, Tenant shall not be deemed
to be in default if Tenant shall within such period commence such cure and
thereafter diligently prosecute the same to completion;
(4) Misrepresentation. Tenant makes or has made or furnishes
or has furnished any warranty, representation or statement to Landlord in
connection with this Lease, or any other agreement to which Tenant and Landlord
are parties, which is or was false or misleading in any material respect when
made or furnished;
(5) Transfer of Assets. Any substantial portion of the assets
of Tenant is transferred, or any material obligation is incurred by Tenant,
unless such transfer or obligation is incurred in the ordinary course of
Tenant's business or in good faith for fair equivalent consideration, or with
Landlord's consent;
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<PAGE> 25
(6) Events of Insolvency. The occurrence of any of the
following events of insolvency:
(i) Tenant becomes insolvent as defined in the Federal
Bankruptcy Code, admits in writing its insolvency or its present or prospective
inability to pay its debts as they become due, is unable to or does not pay all
of any material portion (in number or dollar amount) of its debts as they become
due, permits or suffers a judgment to exist against it which materially affects
Tenant's ability to conduct its business in the ordinary course (unless
enforcement thereof is stayed pending appeal or the judgement is satisfied
within thirty (30) days after being rendered), makes or proposes an assignment
for the benefit of creditors, or any class thereof, for purposes of effecting a
moratorium upon or extension or composition of its debts, proposes any such
moratorium, extension or composition, or commences or proposes to commence any
bankruptcy, reorganization or insolvency proceeding, or another proceeding under
any federal, state or other law for the relief of debtors;
(ii) Tenant fails to obtain the dismissal, within thirty (30)
days after the commencement thereof, of any bankruptcy, reorganization or
insolvency proceeding, or other proceeding under any law for the relief of
debtors, instituted against it by one or more third parties or fails actively to
oppose any such proceeding, or, in any such proceeding, defaults or files an
answer admitting the material allegations upon which the proceeding was based or
alleges its willingness to have an order for relief entered or its desire to
seek liquidation, reorganization or adjustment of any of its debts;
(iii) Any receiver, trustee or custodian is appointed to take
possession of all or any substantial portion of the assets of Tenant, or any
committee of Tenant's creditors, or any class thereof, is formed for the purpose
of monitoring or investigating the financial affairs of Tenant or enforcing such
creditors' rights.
(b) Landlord's Remedies. In the event of any such default by Tenant,
then in addition to any other remedies available to Landlord at law or in
equity, Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving written notice of such intention to
terminate. In all events Landlord shall use reasonable good faith efforts to
mitigate damages caused by Tenant's default under this Lease. In the event that
Landlord shall elect to so terminate this Lease, then Landlord may recover from
Tenant:
(1) The worth at the time of award of any unpaid rent which
had been earned at the time of such termination; plus
(2) 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 Tenant proves reasonably could have
been avoided; plus
(3) 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 Tenant proves reasonably could be avoided; plus
(4) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform his obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom; and
(5) At Landlord's election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by applicable
California law.
(c) Certain Definitions. As used in subparagraphs (b)(1) and (b)(2)
above, the "worth at the time of award" is computed by allowing interest at the
rate specified in Paragraph 35, below. As used in
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<PAGE> 26
subparagraph (3) above, the "worth at the time of award" is 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%).
(d) Re-entry by Landlord. In the event of any such default by Tenant,
Landlord shall also have the right, with or without terminating this Lease, to
re-enter the Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant.
(e) Landlord's Option to Terminate Lease. In the event of the vacation
or abandonment of the Premises by Tenant or in the event that Landlord shall
elect to re-enter as provided above or shall take possession of the Premises
pursuant to legal proceeding or pursuant to any notice provided by law, then if
Landlord does not elect to terminate this Lease as provided in this Paragraph
24, Landlord may from time to time, without terminating this Lease, either
recover all rental as it becomes due or relet the Premises or any part thereof
for such term or terms and at such rental or rentals and upon such other terms
and conditions as Landlord in its sole discretion may deem advisable with the
right to make alterations and repairs to the Premises.
(f) Application of Rentals Received by Landlord. In the event that
Landlord shall elect to so relet, then rentals received by Landlord from such
reletting shall be applied: first, to the payment of any indebtedness other than
rent due hereunder from Tenant to Landlord; second, to the payment of any cost
of such reletting; third, to the payment of the cost of alterations reasonably
necessary to relet the Premises and the cost of repairs to the Premises; fourth,
to the payment of rent due and unpaid hereunder; and the residue, if any, shall
be held by Landlord and applied in payment of future rent as the same may become
due and payable hereunder. Should any reletting by Landlord result in the actual
payment of rent in any month in an amount less than the rent payable during that
month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord
immediately upon demand therefor by Landlord. Such deficiency shall be
calculated and paid monthly. Tenant shall also pay to Landlord as soon as
ascertained, any costs and expenses incurred by Landlord in such reletting or in
making such alterations and repairs not covered by the rentals received from
such reletting.
(g) Termination. No re-entry or taking possession of the Premises by
Landlord pursuant to this Paragraph 24 shall be construed as an election to
terminate this Lease unless a written notice of such intention be given to
Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such default.
(h) Default by Landlord. Landlord shall not be in default under this
Lease unless Landlord fails to perform obligations required of Landlord within a
reasonable time, but in no event later than their (30) days after written notice
by Tenant to Landlord and to the holder of any first mortgage or deed of trust
covering the Premises whose name and address shall have theretofore been
furnished to Tenant in writing, specifying in reasonable detail how Landlord has
failed to perform such obligations; provided, however, that if the nature of
Landlord's obligations is such that more than thirty (30) days are required for
performance then Landlord shall not be in default if Landlord commences
performance within said 30-day period and thereafter diligently prosecutes the
same to completion.
(i) Scope of Liability. If Landlord is a limited partnership it is
understood and agreed that any claims by Tenant shall be limited to the assets
of such limited partnership. Tenant also expressly waives
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<PAGE> 27
any and all rights to proceed against the individual partners (general or
limited) or the officers, directors or shareholders of any corporate partner in
such limited partnership, except to the extent of such partners' interest in
such limited partnership.
HOLDING OVER
PARAGRAPH 25
If Tenant holds over after the expiration or earlier termination of the
term hereof without the express written consent of Landlord, Tenant shall become
a tenant at sufferance only and shall pay two hundred percent (200%) of the
Basic Annual Rent in effect upon the date of such expiration or earlier
termination (subject to adjustment as provided in Paragraphs 2 and 3 hereof and
prorated on a daily basis), and otherwise upon the terms, covenants and
conditions herein specified, so far as applicable. Acceptance by Landlord of
rent after such expiration or earlier termination shall not constitute a consent
to a holdover hereunder or result in a renewal. The foregoing provisions of this
Paragraph are in addition to and do not affect Landlord's right of reentry or
any other rights of Landlord hereunder or as otherwise provided by law.
CONDITION OF PREMISES
PARAGRAPH 26
(a) Tenant acknowledges that neither Landlord nor any agent of Landlord
has made any representation or warranty with respect to the Premises, the
Building or the Project or with respect to the suitability of any part of the
Project for the conduct of Tenant's business.
(b) The taking of possession of the Premises by Tenant shall
conclusively establish that the Premises and the Building were at such time in
good and sanitary order, condition and repair, except for any discrepancies of
which Landlord receives written notice from Tenant within fifteen (15) days of
the Commencement Date.
QUIET POSSESSION
PARAGRAPH 27
Upon Tenant's paying the rent reserved hereunder and observing and
performing all of the covenants, conditions and provisions on Tenant's part to
be observed and performed hereunder, Tenant shall have quiet possession of the
Premises for the entire term hereof, subject to all of the provisions of this
Lease.
DAMAGE TO TENANT'S PROPERTY
PARAGRAPH 28
Landlord or its agents shall not be liable for any damage to Tenant's
property entrusted to employees of Landlord or its agents, nor for loss of or
damage to any property by theft or otherwise, nor for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of the Building or from
the pipes, appliances or plumbing works therein or from the roof, street or
sub-surface or from any other place or resulting from dampness or any other
cause whatsoever in the Building or the Project. Landlord and its agents shall
not be liable for interference with the light or other incorporeal
hereditaments, nor shall Landlord be liable for any latent defect in the
Premises or in the Building. Tenant shall give prompt notice to Landlord in case
of fire or accidents in the Premises or in the Building, or of defects therein
or in the fixtures or equipment.
CONFLICT OF LAWS
PARAGRAPH 29
This Lease shall be governed by and construed pursuant to the laws of
the State of California.
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<PAGE> 28
USE OF COMMON AREAS; PARKING
PARAGRAPH 30
Tenant shall have the non-exclusive right, in common with others, to
the use of the common areas and common entrances, lobbies, elevators, ramps,
drives, stairs, and similar access and serviceways and the other common
facilities in and adjacent to the Building, and the Project, subject to such
nondiscriminatory rules and regulations as may be adopted by the Landlord.
Tenant shall have such parking rights as are set forth in the Parking Agreement
attached hereto as Exhibit "E. "
SUCCESSORS AND ASSIGNS
PARAGRAPH 31
Except as otherwise provided in this Lease, all of the covenants,
conditions and provisions of this Lease shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
BROKERS
PARAGRAPH 32
Tenant warrants that it has had no dealings with any real estate broker
or agent in connection with the negotiation of this Lease, excepting only the
broker named in Item 10 of the Basic Lease Provisions and that it knows of no
other real estate broker or agent who is or might be entitled to a commission in
connection with this Lease. Landlord covenants and agrees to pay all real estate
commissions due in connection with this Lease to such broker. Tenant hereby
agrees to indemnify Landlord with respect to any claims by any broker(s) other
than the one(s) in Item 10 of the Basic Lease Provisions of this Lease.
NAME
PARAGRAPH 33
Tenant shall not, without the written consent of Landlord, use
the name of the Building or the Project for any purpose other than as the
address of the business to be conducted by Tenant in the Premises, and in no
event shall Tenant acquire any rights in or to such names.
EXAMINATION OF LEASE
PARAGRAPH 34
Submission of this Lease for examination or signature by
Tenant does not constitute a reservation of or option for Lease, and it is not
effective as a Lease or otherwise until execution by and delivery to both
Landlord and Tenant.
INTEREST ON TENANT'S OBLIGATIONS; LATE CHARGE
PARAGRAPH 35
(a) Interest. Any amounts due from Tenant to Landlord which is
not paid when due shall bear interest at the rate of ten percent (10%) per annum
or, at Landlord's option, at the maximum rate per annum permitted under
California law (not to exceed eighteen percent (18.0%) per annum) from the date
such payment is due until paid, but the payment of such interest shall not
excuse or cure the default.
(b) Late Charge. In the event Tenant is more than ten (10)
days late in paying any installments of rent due under this Lease, Tenant shall
pay Landlord a late charge equal to five percent (5%) of the delinquent
installment of rent. The parties agree that the amount of such late charge
represents a reasonable estimate of the cost and expense that would be incurred
by Landlord in processing each delinquent payment of rent by Tenant and that
such late charge shall be paid to Landlord as liquidated damages for each
delinquent payment
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<PAGE> 29
pursuant to California Civil Coda Section 1671. The parties further agree that
the payment of late charges and the payment of interest provided for in
subparagraph (a) are distinct and separate from one another in that the payment
of interest is to compensate Landlord for the use of Landlord's money by Tenant,
while the payment of late charges is to compensate Landlord for the additional
administrative expense incurred by Landlord in handling and processing
delinquent payments.
FORCE MAJEURE
PARAGRAPH 36
Any covenants, conditions, provisions or agreements on the part of
Landlord to perform any act or thing for the benefit of Tenant shall not be
deemed breached if Landlord is unable to furnish or perform the same by virtue
of a strike, lockout, laws, rules, orders, ordinances, directions, regulations
or requirements of any federal, state, county or municipal authority, labor
trouble or any other cause whatsoever beyond Landlord's control, nor shall
Tenant's rent be abated by reason of such inability on the part of Landlord.
TIME
PARAGRAPH 37
Time is of the essence of this Lease and each and all of its
provisions.
DEFINED TERMS AND MARGINAL HEADINGS
PARAGRAPH 38
The words "Landlord" and "Tenant" as used herein shall include the
plural as well as the singular. If more than one person is named as Tenant the
obligations of such persons are joint and several. The marginal headings and
titles to the articles of this Lease are not a part of this Lease and shall have
no effect upon the construction or interpretation of any part hereof.
PRIOR AGREEMENTS; SEPARABILITY
PARAGRAPH 39
This Lease contains all of the agreements of the parties hereto with
respect to any matter covered or mentioned in this Lease, and no prior
agreement, understanding or representation pertaining to any such matter shall
be effective for any purpose. No provision of this Lease may be amended or added
to except by an agreement in writing signed by the parties hereto or their
respective successors in interest. If any term or provision of this Lease the
deletion of which would not adversely affect the receipt of any material benefit
by either party hereunder shall be held invalid or unenforceable to any extent,
the remainder of this Lease shall not be affected thereby and each term and
provision of this Lease shall be valid and enforceable to the fullest extent
permitted by law.
CORPORATE AUTHORITY
PARAGRAPH 40
If Tenant executes this Lease as a corporation, each of the
persons executing this Lease on behalf of Tenant does hereby covenant and
warrant that Tenant is a duly authorized and existing corporation, that Tenant
has and is qualified to do business in California, that the corporation has full
right and authority to enter into this Lease, and that each person signing on
behalf of the corporation was authorized to do so.
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<PAGE> 30
NO LIGHT, AIR OR VIEW EASEMENT
PARAGRAPH 41
Any diminution or shutting off of light, air or view by any structure
which may be erected on lands adjacent to the Building shall in no way affect
this Lease or impose any liability on Landlord.
EFFECT OF ADDENDA
PARAGRAPH 42
The provisions of any subsequent provisions to this Lease (hereafter,
"Addenda"), if any, shall supersede and override any other provision in this
Lease to the extent the same are inconsistent. The Addenda shall consist of any
paragraphs identified in Item 11 of the Basic Lease Provisions as being part of
this Lease.
42.1 Guarantee of Lease. Tenant's obligations under this Lease shall be
guaranteed until the first anniversary of the Rent Commencement Date by First
Source Capital Fund, an Oregon general partnership, pursuant to the terms of a
Guarantee of Lease acceptable to Landlord.
42.2 Signing. Tenant shall have no right to affix or post any signs of
any type on the exterior walls of the Building. Any signs used by Tenant on the
exterior walls of the Premises which are within the interior of the Building
shall comply with the Rules and Regulations (Exhibit "C"). As of the date of
this Lease, Landlord has not consented to the posting of any signs by Tenant on
any exterior wall of the Premises.
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<PAGE> 31
FLOOR PLAN OF THE PREMISES
(to be provided)
EXHIBIT "A-1"
[GRAPHIC]
<PAGE> 32
[MASTERPLAN - PHASE 1]
[SITE PLAN OF THE PROJECT]
[GRAPHIC]
<PAGE> 33
DEFINITION OF RENTABLE AREA
The term "Rentable Area" as used in the Lease shall mean:
(a) Single Tenant Floor. As to each floor of the Building on which the
entire space rentable to tenants is or will be leased to one tenant (hereinafter
referred to as "Single Tenant Floor") Rentable Area shall be the entire area
bounded by the inside surface of the four exterior glass walls (or the inside
surface of the permanent exterior wall where there is no glass) on such floor,
including all areas used for elevator lobbies, corridors, special stairways, or
elevators, restrooms, mechanical rooms, electrical rooms and telephone closets
without deduction for columns and other structural portions of the Building or
vertical penetrations that are included for the special use of Tenant but
excluding the area contained within the exterior walls of the Building stairs,
fire towers, vertical ducts, elevator shafts, flues, vents, stacks and pipe
shafts.
(b) Multi-Tenant Floor. As to each floor of the Building on which space
is or will be leased to more than one tenant (hereinafter referred to as
"Multi-Tenant Floor"), Rentable Area attributable to each such lease shall be
the total of (i) the entire area included within the Premises covered by such
lease, being the area bounded by the inside surface of any exterior glass walls
(or the inside surface of the permanent exterior wall where there is no glass)
of the Building bounding such Premises, the exterior of all walls separating
such premises from any public corridors or other public areas on such floor, and
the centerline of all walls separating such Premises from other areas leased or
to be leased to other tenants on such floor, and (ii) a pro rata portion of the
area covered by the elevator lobbies, corridors, restrooms, mechanical rooms,
electrical rooms and telephone closets situated on such floor.
(c) Rentable Areas. For purposes of establishing the initial Building
Expense Percentage, Project Expense Percentage and Basic Annual Rent as shown in
Items 4(c)(i) and 4(c)(ii) of the Basic Lease Provisions, the Rentable Area of
the Premises is deemed to be as set forth in Item 1(a) of the Basic Lease
Provisions, and the Rentable Areas of the Building and the Project are deemed to
be 158,785 and 515,000 square feet, respectively. Prior to the Commencement
Date, and from time to time thereafter at Landlord's option, Landlord's
architect shall determine and certify in writing to Tenant and Landlord the
actual Rentable Area of the Premises, the Building and the Project,
respectively, which such determinations and certifications shall be conclusive,
and thereupon Tenant's Building Expense Percentage, Project Expense Percentage
and Basic Annual Rent shall be adjusted accordingly.
EXHIBIT "A-3"
<PAGE> 34
TENANT IMPROVEMENT ALLOWANCE MEMORANDUM
In addition to the mutual covenants contained in the Lease, Landlord
and Tenant further mutually agree as follows:
1. Tenant Improvement Allowance
Landlord shall pay $20.00 per square foot of Usable Area in the
Premises (as hereafter defined) (the "Allowance") for the work to be performed
by Landlord under this Tenant Improvement Allowance Memorandum (the
"Memorandum"). Such work shall include the construction of the tenant
improvements described below and the preparation of all space plans, working
drawings, plans for such construction and building permits and fees associated
with this work.
2. Plans and Specifications for the Premises.
(a) Tenant agrees to cooperate with Landlord's architects and
engineers in the completion of detailed space plans and specifications for the
Premises which shall include, but not be limited to, locations of doors,
partitioning, reflected ceiling, electrical fixtures, outlets and switches,
telephone outlets, plumbing fixtures, extraordinary floor loads, and other
special requirements. Tenant shall coordinate, develop and approve such space
plans and working drawings in writing and obtain all required governmental
permits ("Permits") on or before the Space Plan Approval Date set forth in the
Schedule of Approvals below. Tenant may have its own architect prepare space
plans and specifications and obtain Permits prior to the Space Plan Approval
Date. If Tenant does so, Landlord shall be entitled in all respects to rely upon
all plans, drawings and information so supplied by Tenant. The tenant
improvement work to be done pursuant to such plans and specifications shall be
hereinafter referred to as "Tenant's Work."
(b) Tenant's plans and specifications shall not be in conflict with
the building codes for the City of San Diego or with insurance regulations for a
fire resistive Type I building. All plans and specifications shall be in a form
satisfactory to appropriate governmental authorities responsible for issuing
permits and licenses required for construction.
3. Definition of Usable Area.
The term Usable Area shall mean the Rentable Area of the Premises,
less the area of elevator lobbies, public restrooms, mechanical rooms,
electrical rooms, telephone closets and other common areas of the Building and
vertical penetrations not constructed or provided for the special use of Tenant.
4. Work at Tenant's Cost and Expense.
(a) After Tenant has performed its obligations under Paragraphs
7(a), 7(b) and 7(c) below, Landlord shall cause Tenant's Work to be installed by
Landlord's contractor, but at Tenant's sole cost and expense, subject, however,
to Landlord's paying the Allowance. Prior to commencing any Tenant's Work,
Landlord shall submit to Tenant a written cost estimate of the Tenant's Work.
Tenant shall approve the cost estimate of the Tenant's Work by notifying the
Landlord in writing within the time limit specified in Paragraph 7(b) of the
Schedule of Approvals below. At the same time, Tenant shall also pay Landlord in
full the amount of such.
EXHIBIT "B"
Page 1 of 3
<PAGE> 35
cost less the Allowance. After payment is made, Landlord's contractor shall then
proceed with Tenant's Work. Tenant shall be responsible for the expense, design,
function and maintenance of special, non-Building Standard improvements, whether
or not installed by Landlord.
(b) In addition, Tenant shall pay Landlord fifteen percent (15%) of
the costs of Tenant's Work in excess of the allowance for Landlord's overhead
and coordination of the Tenant's Work.
5. Building Standard Materials.
The following items are Building Standard and must be used in order to
maintain the Building's integrity. These items are exterior window blinds, suite
entry and interior doors and hardware, acoustical ceilings, suite plaques and
directory strips, HVAC and electrical systems, metal studs and carpeting.
However, Tenant may request different materials or require work different from
or in addition to the Building Standard. In such event any materials, drawings,
plans or specifications requested shall be subject to the approval of Landlord
in writing. Such approval shall not be unreasonably withheld.
6. Completion and Rental Commencement Date.
It is understood that the Tenant shall be liable for the delay and
increased cost, if any, in completing the affected Tenant's Work. It is further
understood that the Rent Commencement Date (as defined in the Lease) will not be
affected by any such delay on the part of Tenant. Neither the Commencement Date
nor the Rental Commencement Date of the Lease as set forth in Paragraph 1 of the
Lease and in the Basic Lease Provisions shall be delayed by any of the
following:
(a) Tenant's failure to approve or furnish its space plans and
specifications, working drawings, and Permits by the time
specified in the Schedule of Approvals, below, or,
(b) Delays of any nature, whether or not within Tenant's control,
resulting from Tenant's decision to use any materials, finishes
or installations other than Building Standard, or
(c) A delay in performance of Tenant's Work as a result of Tenant's
failure to approve written costs of the Work in accordance with
Paragraphs 4 and 5 hereof.
(d) Any change requested by Tenant in the scope of work approved and
contracted for by Landlord.
7. Schedule of Approvals.
Tenant shall approve the matters listed in the "Event" column below by
the corresponding time specified in the "Time" column as follows:
Event Time
(a) SPACE PLAN APPROVAL DATE; August 10, 1984
i.e. approval of final
plans and specifications
for Tenant's Work
EXHIBIT "B"
Page 2 of 3
<PAGE> 36
(b) Deadline for Tenant's Seven days from
approval of Landlord's receipt of Landlord's
cost estimate of Tenant's written cost estimate
Work
(c) Deadline for payment One half of Tenant's share
of Tenant's share due upon commencement of
of cost of Tenant's construction, the balance
Work upon completion of
construction.
EXHIBIT "B"
Page 3 of 3
<PAGE> 37
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls of the Building shall not be obstructed or used
for any purpose other than ingress and egress. The halls, passages, entrances,
elevators, stairways, balconies and roof are not for the use of the general
public, and Landlord shall in all cases retain the right to control and prevent
access thereto of all persons whose presence, in the judgment of Landlord, shall
be prejudicial to the safety, character, reputation and interests of the
building and the Tenants, provided that nothing herein contained shall be
construed to prevent such access to persons with whom Tenant normally deals only
for the purpose of conducting its business on the Premises (such as clients,
customers, office suppliers and equipment vendors, and the like) unless such
persons are engaged in illegal activities. Neither Tenant nor any employee of
Tenant shall go upon the roof of the Building without the prior written consent
of Landlord.
2. No awnings or other projections shall be attached to the outside
walls of the Building. No curtains, blinds, shades or screens shall be attached
to or hung in, or used in connection with, any window or door of the Premises
other than Landlord's standard drapes. All electric ceiling fixtures hung in
offices or spaces along the perimeter of the Building must be fluorescent, of a
quality, type, design and bulb color approved by Landlord. Neither the interior
nor the exterior of any windows shall be coated or otherwise sunscreened without
the prior written consent of Landlord.
3. No sign, advertisement, notice or handbill shall be exhibited,
distributed, painted or affixed by Tenant on, about or from any part of the
Premises, or the Building, or the Project without the prior written consent of
Landlord. If Landlord shall have given such consent at the time, whether before
or after the execution of this Lease, such consent shall in no way operate as a
waiver or release of any of the provisions hereof or of this Lease, and shall be
deemed to relate only to the particular sign, advertisement or notice so
consented to by Landlord and shall not be construed as dispensing with the
necessity of obtaining the specific written consent of Landlord with respect to
each and every such sign, advertisement or notice other than the particular
sign, advertisement or notice, as the case may be, so consented to by Landlord.
In the event of the violation of the foregoing by Tenant, Landlord may remove or
stop same without any liability, and may charge the expense incurred in such
removal or stopping to Tenant. Interior signs on doors and directory tablet
shall be inscribed, painted or affixed for Tenant by Landlord at Tenant's
expense, and shall be of a size, color and style acceptable to Landlord. The
directory tablet will be provided exclusively for the display for the name and
location of Tenant only and Landlord reserves the right to exclude any other
names therefrom. Nothing may be placed on the exterior of corridor walls or
corridor doors other than Landlord's standard lettering.
4. The sashes, sash doors, skylights, windows, and doors that reflect
or admit light and air into halls, passageways or other public places in the
Building shall not be covered or obstructed by Tenant, nor shall any bottles,
parcels or other articles be placed on the windowsills. Tenant shall see that
the windows, transoms and doors of the Premises are closed and securely locked
before leaving the Building and must observe strict care not to leave windows
open when it rains. Tenant
EXHIBIT "C"
Page 1 of 4
<PAGE> 38
shall exercise extraordinary care and caution that all water faucets or water
apparatus are entirely shut off before Tenant or Tenant's employees leave the
Building, and that all electricity, gas or air shall likewise be carefully shut
off, so as to prevent waste or damage. Tenant shall cooperate with Landlord in
obtaining maximum effectiveness of the cooling system by closing drapes when the
sun's rays fall directly on the windows of the Premises. Tenant shall not tamper
with or change the setting of any thermostats or temperature control valves.
5. The toilet rooms, water and wash closets and other plumbing fixtures
shall not be used for any purpose other than those for which they were
constructed, and no sweepings, rubbish, rags, or other substances shall be
thrown therein. All damages resulting from any misuse of the fixtures shall be
borne by Tenant if it or its subtenants, assignees or any of their servants,
employees, agents, visitors or licensees shall have caused the same.
6. Tenant shall not mark, paint, drill into, or in any way deface any
part of the Premises, the Building or the Project. No boring, cutting or
stringing of wires or laying of linoleum or other similar floor coverings shall
be permitted, except with the prior written consent of Landlord and as Landlord
may direct.
7. No bicycles, vehicles, birds or animals of any kind shall be brought
into or kept in or about the Premises, and no cooking shall be done or be
permitted by Tenant on the Premises, except that the preparation of coffee, tea,
hot chocolate and similar items for Tenant and its employees shall be permitted
provided power shall not exceed that amount which can be provided by a 30 amp
circuit. Tenant shall not cause or permit any unusual or objectionable odors to
be produced or permeate the Premises. Smoking or carrying lighted cigars,
cigarettes or pipes in the elevators of the Building is prohibited.
8. The Premises shall not be used for manufacturing or for the storage
of merchandise, except as such storage may be incidental to the permitted use of
the Premises. Tenant shall not occupy or permit any portion of the Premises to
be occupied as an office for a public stenographer or typist, or for the
manufacture or sale of liquor, narcotics, or tobacco (except by a cigarette
vending machine for use by Tenant's employees) in any form, or as a medical
office, or as a barber or manicure shop, or as an employment bureau without the
express written consent of Landlord. Tenant shall not engage or pay any
employees on the Premises except those actually working for Tenant on the
Premises nor advertise for laborers giving an address at the Premises. The
Premises shall not be used for lodging or sleeping or for any immoral or illegal
purposes.
9. Tenant shall not make, or permit to be made any unseemly or
disturbing noises or disturb or interfere with occupants of the building or
neighboring buildings or premises or those having business with them, whether by
the use of any musical instrument, radio, phonograph, unusual noise, or in any
other way. Tenant shall not throw anything out of doors, windows or skylight or
down the passageways.
10. Neither Tenant, its subtenants or assignees nor any of their
servants, employees, agents, visitors or licensees, shall at any time bring or
keep upon the Premises any inflammable, combustible or explosive fluid, chemical
or substance.
EXHIBIT "C"
Page 2 of 4
<PAGE> 39
11. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by Tenant, nor shall any changes be made in existing
locks or the mechanisms thereof. Tenant must upon the termination of his
tenancy, restore to the Landlord all keys of stores, offices, and toilet rooms,
either furnished to or otherwise procured by Tenant, and in the event of the
loss of keys so furnished, Tenant shall pay to the Landlord the cost of
replacing the same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such changes.
12. All removals, or the carrying in or out of any safes, freight,
furniture, or bulky matter of any description must take place during the hours
which Landlord shall determine from time to time, without the express written
consent of Landlord. The moving of safes or other fixtures or bulky matter of
any kind must be done upon previous notice to the superintendent of the Building
and under his supervision, and the persons employed by Tenant for such work must
be acceptable to the Landlord. Landlord reserves the right to inspect all safes,
freight or other bulky articles to be brought into the Building and to exclude
from the Building all safes, freight or other bulky articles which violate any
of these Rules and Regulations or the Lease. Landlord reserves the right to
prescribe the weight and position of all safes, which must be placed upon
supports approved by Landlord in order to distribute their weight.
13. Tenant shall not purchase spring water, ice, towels, janitorial
supplies or maintenance or other like services, from any person or persons not
approved by Landlord.
14. Landlord shall have the right to prohibit advertising by Tenant
which, in Landlord's opinion tends to impair the reputation of the Building or
the Project or its desirability as an office location. Upon written notice from
Landlord, Tenant shall refrain from or discontinue such advertising.
15. Landlord reserves the right to exclude from the Building between
the hours of 6:00 p.m. and 8:00 a.m. and at all hours on Saturday, Sunday and
legal holidays all persons who are not known to the Building watchman and who do
not present a pass to the Building approved by Landlord. The Landlord will
furnish passes to persons for whom Tenant requests the same in writing. Tenant
shall be responsible for all persons for whom he requests passes and shall be
liable to Landlord for all acts of such persons. Landlord shall in no case be
liable for damages for any error with regard to the admission to or exclusion
from the Building of any person. In case of an invasion, mob riot, public
excitement or other circumstances rendering such action advisable in Landlord's
opinion, Landlord reserves the right without any abatement of rent to require
all persons to vacate the Building and to prevent access to the Building during
the continuance of the same for the safety of the Tenant and the protection of
the Building and the property in the Building.
16. Any persons employed by Tenant to do janitorial work shall, while
in the Building and outside of the Premises, be subject to and under the control
and direction of the superintendent of the Building (but not as an agent or
servant of said superintendent or of Landlord), and Tenant shall be responsible
for all acts of such persons.
17. All doors opening onto public corridors shall be kept closed,
except when in use for ingress and egress.
EXHIBIT "C"
Page 3 of 4
<PAGE> 40
18. The requirements of Tenant will be attended to only upon
application to the Office of the Building.
19. Canvassing, soliciting and peddling in the Building are prohibited
and Tenant shall report and otherwise cooperate to prevent the same.
20. All office equipment of any electrical or mechanical nature shall
be placed by Tenant in the Premises in settings approved by Landlord, to absorb
or prevent any vibration, noise and annoyance.
21. No air conditioning unit or other similar apparatus shall be
installed or used by Tenant without the prior written consent of Landlord.
22. There shall not be used in any space, or in the public halls of the
Building, either by Tenant or others, any hand trucks except those equipped with
rubber tires and rubber side guards.
23. No vending machine or machines of any description shall be
installed, maintained or operated upon the Premises without the written consent
of Landlord.
24. The scheduling of Tenant move-ins shall be subject to the
reasonable discretion of Landlord.
25. If Tenant desires telephone or telegraph connections, Landlord will
direct electricians as to where and how the wires are to be introduced. No
boring or cutting for wires or otherwise shall be made without directions from
Landlord.
26. The term "personal goods or services vendors" as used herein means
persons who periodically enter the Building for the purpose of selling goods or
services to Tenant, other than goods or services which are used by Tenant solely
for the purpose of conducting its business on the Premises. "Personal goods or
services" include, but are not limited to, drinking water and other beverages,
food, barbering services, and shoeshining services. Landlord reserves the right
to prohibit personal goods and services vendors from access to the Building
except upon such reasonable terms and conditions, including but not limited to
the payment of a reasonable fee and provision for insurance coverage, as are
related to the safety, care and cleanliness of the Building, the preservation of
good order thereon, and the relief of any financial or other burden on the
Landlord occasioned by the presence of such vendors or the sale by them of
personal goods or services to Tenant or its employees. If necessary for the
accomplishment of these purposes, Landlord may exclude a particular vendor
entirely or limit the number of vendors who may be present at any one time in
the Building.
EXHIBIT "C"
Page 4 of 4
<PAGE> 41
ESTOPPEL CERTIFICATE
Statement of Tenant Release
Data: _____________________________, 19__
Re: Address: ________________________
For Premises in: _________________________
_________________________
Gentlemen:
It is our understanding that you have made certain commitments to the
Landlord of the subject premises and, as a condition thereof, have required this
certification by the undersigned.
The undersigned, as Tenant under that certain Office Lease dated
__________________ , 19 ___ , made and entered into between Sorrento Tech
Limited, as Landlord, and the undersigned, as Tenant, hereby ratified said Lease
and certified that the undersigned has accepted possession and entered into
occupancy of the Premises described in said Lease and the minimum rental in the
monthly amount of $ ____________ was payable from that or an earlier date; that
said Lease is in full force and effect and has not been assigned, modified,
supplemented or amended in any way; that the same represents the entire
agreement between the parties as to the leasing; that the terms of said Lease to
be performed by the Landlord have been fully satisfied, including without
limitation, that the improvements and space required to be furnished according
to said Lease have been completed in all respects, that Landlord has fulfilled
all of its duties of an inducement nature, that all required contributions by
Landlord to Tenant on account of Tenant's improvements have been paid and
received; and that on this date there are no existing defenses or offsets which
the undersigned has against the enforcement of said Lease by Landlord; that
rental has not been paid in advance except as provided by the Lease terms, and
that security in the sum of $ _____________ has been deposited with Landlord;
and that all minimum rental due as of this date has been paid.
Very truly yours,
________________________
________________________
TENANT
EXHIBIT "D"
<PAGE> 42
PARKING AGREEMENT
Subject to compliance with the following Rules and Regulations, so long
as the Lease to which this Parking Agreement is attached remains in effect,
Tenant or persons designated by Tenant shall be entitled to park, on a
non-exclusive basis, in the Project parking facilities, and on surface parking
areas located on the Project.
All persons utilizing the Project parking facilities shall comply with
this Parking Agreement. The following Rules and Regulations are in effect until
Landlord notifies Tenant of any change. Landlord reserves the right to modify
and/or adopt such other reasonable and non-discriminatory rules and regulations
for the Project parking as it deems necessary. Landlord may refuse to permit any
person who violates this Parking Agreement to park in the Project parking
facilities. Any violation of this Parking Agreement shall subject the violator's
car to removal from the Project parking facilities at the violator's expense.
Rules and Regulations
1. Cars must be parked entirely within the stall lines painted on the
floor.
2. All directional signs and arrows must be observed.
3. The speed limit shall be 5 miles per hour.
4. Parking is prohibited:
(a) In areas not striped for parking,
(b) In fire lanes,
(c) Where "no parking" signs are posted,
(d) In cross-hatched areas, or
(e) In such other areas as may be designated by Landlord.
5. Every parker is required to park and lock his or her own car. All
responsibility for damage to cars or persons is assumed by the
parker.
6. No more than one vehicle may be parked in any one parking space.
Washing, waxing, cleaning or servicing of any vehicle by a parker
and/or his agents is prohibited.
7. Tenant shall acquaint all its officers and employees with these
Rules and Regulations.
EXHIBIT "E"
<PAGE> 1
EXHIBIT 10.35
DATED 27th July 1993
VESTEY ESTATES LIMITED
- and -
MOLECULAR SIMULATIONS LIMITED
with
MOLECULAR SIMULATIONS INC
as
Surety
-------------------------------------
UNDERLEASE
- of -
Suite 240/250 The Quorum,
Barnwell Drive, Cambridge
--------------------------------------
R.A. Roberts
26 Hosier Lane
London
EC1A 9HR
JPS/JR/V5/352/1473G
<PAGE> 2
THIS UNDERLEASE made the 27th day of July One thousand nine hundred and ninety
three BETWEEN VESTEY ESTATES LIMITED whose registered office is at 24/30 West
Smithfield, London, EC1 (hereinafter called "the Landlord") of the first part
MOLECULAR SIMULATIONS LIMITED whose registered office is situate at St. John's
Innovation Centre Cowley Road Cambridge CB4 4WS (hereinafter called "the
Tenant") of the second part and MOLECULAR SIMULATIONS INC of 16 New England
Executive Park Burlington Massachusetts USA
(hereinafter called "the Surety") of the third part
WITNESSETH as follows:-
Interpretation
1.1 In this Deed unless there is something in the subject or context
inconsistent therewith the following expressions shall have the
meanings hereby assigned to them namely:
1.1.1 "the Landlord" shall include its successors in title and the
reversioners for the time being immediately expectant on the
determination of the term hereby granted
1.1.2 "the Tenant" shall include its successors in title
1.1.3 "these presents" shall mean this Deed and the Schedules hereto
any licence granted pursuant hereto any Deed of Variation of
the provisions hereof and any instrument made supplemental
hereto and any agreement pursuant to which this Lease is
granted
1.1.4 "the term" shall mean the term hereby granted and shall
include where appropriate any extension thereof whether by
agreement of the parties or by or pursuant to any statute for
the time being in force
1.1.5 "the insured risks" shall mean fire lightning explosion
aircraft and other aerial devices or articles dropped
therefrom earthquake riot civil commotion and malicious damage
storm or temptest bursting or overflowing of water
- 1 -
<PAGE> 3
tanks apparatus pipes flood impact by road vehicles subsidence
land slips and heave and such other insurable risks (including
if the Landlord or any Superior Landlords so require property
owners and third party liability insurance) as the Landlord or
any Superior Landlords may from time to time deem it
reasonably desirable or expedient to insure against subject to
such exclusions and limitations as may be imposed by or agreed
with the Insurers
1.1.6 "the Planning Acts" shall mean the Town and Country Planning
Acts 1971 to 1990 and all other legislation for the time being
relating to Town and Country Planning or to development
control and any regulations rules orders instruments plans
permissions or directions made under any of the foregoing
1.1.7 "working day" shall mean a day on which clearing banks in the
City of London are (or would be but for a strike lock-out or
other stoppage affecting particular bank or banks generally)
open during banking hours but for the avoidance of doubt not
Saturdays
1.1.8 "the Landlord's Surveyor" shall mean any professional firm or
professionally qualified person from time to time appointed by
or acting for the Landlord (including any professionally
qualified employee of the Landlord) to perform the functions
of a surveyor for any purpose under these presents
1.1.9 "the demised premises" shall mean the premises described in
Part II of the First Schedule and any alterations or additions
to the said premises together with all fixtures and fittings
in the nature of landlord's fixtures and fittings and
electrical and other service installations
-2-
<PAGE> 4
which are now or at any time hereafter may be affixed to or
upon the said premises
1.1.10 "the Building" shall mean the building described in Part I of
the First Schedule
1.1.11 "the Estate" shall mean the Estate at Barnwell Drive.
Cambridge shown for identification purposes on plan 1 annexed
and thereon edged in green
1.1.12 "the Headlease" shall mean the lease under which the Landlord
holds its leasehold interest in the demised premises
1.1.13 "considering the viability of development" shall mean the
Landlord carrying out any of the following activities:
1.1.13.1 the survey inspection and measurement of all
parts of the Building
1.1.13.2 the examination and testing of all parts of the
structure (including foundations all walls floors
raised floors suspended ceilings ceilings and
soffits columns and the roof) of the Building
1.1.13.3 the investigation of the soil and ground upon
which the Building stands together with the
investigation of the foundations of the Building
1.1.13.4 the investigation of the flow of light and air to
all windows of the demised premises and the flow
of light and air to nearby buildings as may be
affected by the Building
1.1.14 "the Sublet Unit" shall mean a single part of the demised
premises which does not exceed fifty percent (50%) of the
area of the whole of the demised premises
1.2 In this Deed unless there is something in the subject or context
inconsistent therewith:
1.2.1 where two or more persons are respectively included in the
-3-
<PAGE> 5
expressions "the Landlord" or "the Tenant" or "the Surety"
the covenants expressed to be made by the Landlord on the
Tenant or the Surety respectively shall be deemed to be made
by such persons jointly and severally
1.2.2 covenants and obligations made or assumed by any party shall
be binding on and enforceable against his personal
representatives
1.2.3 words importing the singular shall include the plural and vice
versa; words importing the masculine gender shall include the
feminine gender and vice versa; and words importing persons
shall include corporations and vice versa
1.2.4 any reference to the doing or permitting of any act or thing
by the Landlord shall be deemed to include the doing or
permitting of that act or thing by the agents workmen servants
or other employees or agents of or any contractor engaged by
the Landlord or any Superior Landlords
1.2.5 any covenant by the Tenant not to do any act or thing shall be
deemed to include a separate and independent covenant not to
suffer or permit the doing of that act or thing
1.2.6 all rights reservations permissions and indemnities in favour
of the Landlord shall also be for the benefit of any Superior
Landlords to the intent that any Superior Landlords shall be
entitled to exercise or have the benefit of the same addition
to the Landlord
1.2.7 where the consent permission approval or the like of the
Landlord is required under any covenant or condition herein
contained the same covenant or condition shall be subject to
the consent of any Superior Landlord or Mortgagees (if so
required) to the intent that the consent of any Superior
Landlord and/or Mortgagees shall be a condition precedent to
-4-
<PAGE> 6
the grant by the Landlord of any consent permission approval
or the like and that the Landlord may require the Tenant to
discharge the reasonable costs charges and expenses of any
Superior Landlords or Mortgagees in respect thereof
l.2.8 any reference to any Act or any section of any Act shall be
deemed to include any amendment modification re-enactment or
consolidation thereof and any statutory instrument or
regulation made thereunder for the time being in force and
additionally in the case of the Value Added Tax Act 1983 shall
include any directive and regulations adopted by the Council
of European Communities which relate to Value Added Tax
1.2.9 unless otherwise indicated reference to a specified Clause or
Schedule shall be construed as reference to that specified
Clause or Schedule to this Deed
1.2.10 Clause and Schedule headings are for ease of reference only
and do not affect the construction of this Deed
Demise
2.1 In consideration of the rents hereby reserved and of the covenants by
the Tenant (and the Surety) hereinafter contained the Landlord HEREBY
DEMISES unto the Tenant ALL THOSE the demised premises TOGETHER WITH
the rights and benefits specified in Part I of the Second Schedule BUT
SUBJECT TO the exceptions and reservations and other matters specified
in Part II of the Second Schedule TO HOLD the same (except and reserved
and subject as aforesaid) UNTO the Tenant from the 27th day of July
1993 for a term of 15 years subject to the right of earlier termination
set out in clause 5.8 YIELDING AND PAYING therefor yearly and so in
proportion for any part of a year during the term the rents as set
forth in the Third Schedule hereto by equal quarterly payments in
advance on each of the usual quarter days in each year
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<PAGE> 7
(namely on the 25th day of March 24th day of June 29th day of September
and 25th day of December) save where any such quarter day falls on a
day which shall not be a working day in which case payment for that
quarter shall not be due on the relevant quarter day but shall be due
and payable on the working day immediately prior thereto without any
deduction or set off whatsoever the first of such payments to be made
on the 25th day of December 1993 and by way of additional rent from
time to time such sum or sums as shall be equal to:
2.1.1 the reasonable and proper amounts which the Landlord may
expend in effecting or maintaining any insurance of the
demised premises (including any increased premium payable by
reason of any act or omission by the Tenant any sub-tenant or
their respective servants agents licensees or invitees
(together with professional fees demolition and site clearance
fees and any Value Added Tax payable) against the insured
risks and in the event that such insurance is attributable to
other premises in addition to the demised premises to pay such
reasonable proportion of such amounts as are attributable to
the demised premises as shall be properly determined by the
Landlord or the Landlord's Surveyor whose decision shall be
binding on the Tenant and
2.1.2 the amounts which the Landlord may expend in effecting or
maintaining insurance against three years' loss of rent
hereunder in respect of the demised premises (including any
likely increase in rent following a review of rent in
accordance with the Third Schedule)
such additional rent to be paid by the Tenant on demand therefor by the
Landlord
Tenant's Covenants
The Tenant HEREBY COVENANTS with the Landlord as follows:
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Rent
3.1 To pay (by bankers standing order to a bank account of the Landlord in
the United Kingdom if the Landlord so requires) the said rents at the
times and in the manner at and in which the same are hereinbefore
reserved and made payable without any deduction or set off whatsoever
Outgoings
3.2.1 To pay and discharge all rates taxes duties charges assessments
impositions and outgoings whatsoever (whether parliamentary parochial
local or of any other description and whether or not of a capital or
non-recurring nature) which are now or may at any time during the term
be taxed assessed charged or imposed upon or payable in respect of the
Tenant's use and occupation of the demised premises or any part thereof
or on the owner or occupiers thereof save for taxes on rent (other than
VAT on rent) and rates taxes duties charges assessments impositions and
outgoings payable in respect of dealings with any reversion immediately
or immediately expectant on the term or in respect of the Headlease or
in relation to any dealings with the Headlease and in the event that
such rates taxes duties charges assessments impositions and outgoings
are attributable to other premises of the Landlord in addition to the
demised premises to pay to the Landlord on demand by way of additional
rent such reasonable proportion of such rates taxes duties charges
assessments impositions and outgoings as are attributable to the
demised premises as shall be properly determined by the Landlord's
Surveyor whose decision shall be binding on the Tenant
3.2.2 If before the expiration of the term the Tenant or any undertenant or
occupier of the demised premises or any part thereof shall cease to
occupy the same or to use the same for the purpose for which the same
was constructed or has been adapted and if after the termination of the
term the Landlord shall pursuant to Section 17 or 17A of the
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General Rate Act 1967 pay any rates or surcharge additional to rates to
pay to the Landlord on demand a sum equal to the amount of such
payments attributable to such cessation of occupation or use
Services
3.3 To pay and discharge and indemnify the Landlord against all charges for
electricity water and gas supplied to or consumed in the demised
premises during the term and the meter rents in connection therewith
and to observe and perform all recommendations regulations and
requirements of the electricity water supply and gas authorities
imposed during the term in respect of the demised premises and to pay
all telephone and telex charges (including equipment rental and
installation costs) incurred during the term in respect of the demised
premises and items therein
Nuisance
3.4 From time to time during the term to pay all reasonable and proper
costs charges and expenses necessarily incurred by the Landlord in
abating any nuisance at the demised premises and executing all such
works as may be necessary for abating a nuisance at the demised
premises whether or not in obedience to a notice served by a local or
other competent authority
Schedule of Dilapidations Costs Etc.
3.5 To pay to the Landlord within seven days of demand all costs charges
and expenses (including legal costs and fees payable to any Superior
Landlords or to a Surveyor) which may be reasonably and properly
incurred by the Landlord:
3.5.1 in reasonable contemplation of any proceedings under
Sections 146 and/or 147 of the Law of Property Act 1925
notwithstanding forfeiture is avoided otherwise than by
relief granted by the Court
3.5.2 in reasonable contemplation of or incidental to the
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preparation and service of a Schedule [illegible] to be
during the term or following the [illegible]
3.5.3 incidental to the recovery of rent [illegible] payable
hereunder or to the remedying of any [illegible] covenant
on the part of the Tenant herein contained
3.5.4 in connection with the levy of a distress for the rents
payable hereunder or any part thereof or for or as a result of
the bailiff being paid the said rents or any part thereof
whether or not any distress in the event be levied
Internal Repair
3.6 To repair renew and replace throughout the term and to keep the demised
premises and every part thereof in good and substantial repair and
condition in every respect damage by any of the insured risks excepted
unless the policy or policies of insurance shall be vitiated or payment
of the policy monies shall be refused in whole or in part in
consequence of any act neglect default or omission of the Tenant or any
sub-tenant or their respective servants agents or invitees
Clean Windows
3.7 To clean the inside of all the windows in the demised premises at least
once in every month during the term
Decoration
3.8 In the year expiring on the 27th day of July 1998 and in every fifth
year thereafter and also in the last three months of the term
(howsoever terminating) but not twice in any one year to prepare and
paint in a proper and workmanlike manner all the inside wood iron and
other work usually painted of the demised premises with two coats at
least of good quality and suitable paint and to wash down and clean all
tiles glazed panels and bricks cement finishes and stone and similar
washable surfaces and to prepare and treat suitably having regard to
its nature (whether by painting varnishing or otherwise) all
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internal surfaces of the demised premises which ought not to be painted
PROVIDED THAT in the last three months of the term the tints colours
and patterns of all such works of internal decoration shall be such as
shall be approved by the Landlord approval not to be unreasonably
withheld or delayed
Service Charge
3.9 To pay the service charge as is more particularly described and set
out in the Fourth Schedule in the percentage at the times and in the
manner therein specified
Statutory Requirements
3.10.1 At all times during the term to observe and comply in all respects with
the provisions and requirements of any and every enactment (which
expression in this covenant includes as well any and every Act of
Parliament already or hereafter to be passed as any and every order
regulation and bye-law already or hereafter to be made under or in
pursuance of any such Act) so far as they relate to or affect the
demised premises or any part thereof or the user of the Tenant and any
undertenant or other occupier thereof and whether required to be
observed or complied with by the landlord or tenant or owner or
occupier thereof and to indemnify the Landlord at all times against all
reasonable and proper claims costs charges and expenses in respect
thereof and not at any time during the term to do or omit or suffer to
be done or omitted on or about the demised premises any act or thing by
reason of which the Landlord may under any enactment incur or have
imposed upon it or become liable to pay any penalty damages
compensation costs charges or expenses
3.10.2 Provided a copy of any variation of the current insurance policy has
been supplied to the Tenant to comply with all recommendations from
time to time of the Insurers of the demised premises and of the
appropriate authority in relation to fire precautions affecting the
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demised premises
Yielding-Up
3.11 At the expiration or sooner determination of the term quietly to yield
up unto the Landlord the demised premises in such state and condition
as shall in all respects be consistent with a full and due performance
by the Tenant of the covenants on the Tenant's part herein contained
(except the Tenant's fixtures and fittings the Tenant forthwith making
good all damage done to the demised premises by such removal)
Repair on Notice
3.12 To permit the Landlord at any time or times during the term on prior
reasonable written notice (except in case of emergency) to enter into
and upon the demised premises causing as little disruption to the
Tenant's use and business as possible to examine the state of repair
and condition of the same and within two calendar months or sooner if
requested after notice in writing to the Tenant shall have been given
or left at the demised premises of all defects and wants of reparation
found on such examination to repair and make good the same according to
such notice and the covenants in that behalf hereinbefore contained and
in case the Tenant shall make default in so doing it shall be lawful
for the Landlord (without prejudice to the right of re-entry
hereinafter referred to) to enter upon the demised premises and repair
and restore the same and all expenses incurred thereby shall on demand
be paid by the Tenant to the Landlord and if not so paid shall be a
debt due from the Tenant to the Landlord and shall be recoverable by
the Landlord in the same manner (inter alia) as if it were rent in
arrear
Entry
3.13 To permit the Landlord or any Superior Landlords at any time or times
during the term on prior reasonable written notice (except in the case
of emergency) to enter into and upon the demised premises for any
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necessary or reasonable purposes including (without prejudice to the
generality of the foregoing):
3.13.1 executing repairs alterations engineering construction or other works
to or upon any other parts of the Building or upon such adjoining or
neighbouring premises
3.13.2 constructing installing inspecting testing laying down making
connections to maintaining altering repairing cleansing renewing
supplementing or emptying any conduits pipes drains channels
watercourses sewers wires and cables in connection with or for the
accommodation of the Building or any such adjoining or neighbouring
premises (including where necessary breaking up any land and/or
erecting and /or maintaining scaffolding on or outside the demised
premises and
3.13.3 executing repairs alterations or other works to or upon any part of the
Building
3.13.4 considering the viability of development
the person or persons so exercising such right of entry forthwith
making good all damage thereby directly occasioned to the demised
premises and causing as little disruption as possible to the Tenant's
business use and occupation of the demised premises
Adjoining Premises
3.14.1 To permit the Landlord at any time during the term to erect rebuild or
alter any buildings or erections facing adjoining or near to the
demised premises or the Building and to rebuild or alter any other
parts of the Building to any extent and in any manner the Landlord may
reasonably think fit notwithstanding that the buildings or erections so
erected rebuilt or altered may obstruct or interfere with the access of
light or air for the time being to or enjoyed by the demised
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premises or any part thereof PROVIDED that the demised premises shall
not thereby be rendered incapable for the use specified in clause
3.19.3 hereof
3.14.2 Not to make any objection to or claim in respect of any works of
construction building alteration addition or repair carried out upon
any other parts of the Building or any land or property adjoining or
near any part of the demised premises by the Landlord or any Superior
Landlords or any persons authorised by either of them or by the tenants
and occupiers of any other parts of the Building or such land or
property unless such works will render the demised premises unsuitable
for the use specified in clause 3.19.3 hereof
Alterations
3.15.1 Not to erect any new buildings on or make any additions or alterations
to the demised premises or to cut maim remove or damage any of the
walls timbers floors or ceilings of the demised premises or make any
communication into or with any adjacent building or property PROVIDED
THAT:
3.15.1.1 the Tenant may with the prior written consent of the Landlord
make internal non-structural additions or alterations to the
demised premises in accordance with plans and specifications
approved by the Landlord (such consent and approval not to be
unreasonably withheld or delayed)
3.15.1.2 the Tenant may hang blinds at the windows on the demised
premises with the prior written consent of the Landlord as to
the type fixing size and colour of the blinds
3.15.1.3 in the event of the Landlord giving consent to the carrying
out of any additions or alterations whatsoever to the demised
premises the Tenant will at the end or sooner determination of
the term if so required by the Landlord reinstate the demised
premises to their former state and
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condition before the carrying out of such alterations or
additions and to the reasonable satisfaction in all respects
of the Landlord
Machinery.
3.16.1 Not without the prior written consent of the Landlord such consent not
to be unreasonably withheld to set up or permit or suffer to be set up
any fire or stove or any plant machinery in or upon the demised
premises other than machinery normally found in premises used for the
purposes here in authorised
3.16.2 Not to install any additional electric points in the demised premises
and not to alter the heating and ventilating apparatus installed in the
demised premise without the consent in writing of the Landlords such
consent not to be unreasonably withheld and then only under the
superintendence and to the satisfaction of the Landlord's Surveyor and
in accordance with all statutory requirements and reasonable
recommendations of the Landlord's Surveyor
3.16.3 To procure that all electrical instruments or devices on the demised
premises are earthed insulated and fitted with effective suppressors
Signs Etc.
3.17 Not to exhibit on any part of the exterior of the demised premises or
upon or in any part of the interior of the demised premises so as to be
visible from the exterior any sign notice signboard poster
advertisement or other structure or equipment
Goods Outside the Demised Premises
3.18.1 Not to store place or deposit any goods materials equipment or rubbish
of any kind outside the demised premises or in or over any roadway,
footpath courtyard or car parking space on the Estate or in any
entrances to the Building
3.18.2 Not to form or allow 1:0 be formed any refuse dump rubbish or scrap
heap on the demised premises or any part thereof and generally to keep
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the same clean and tidy
3.18.3 Without prejudice to the generality of sub-clauses 3.18.1 and 3.18.2
above the Tenant shall be permitted to deposit refuse waste and rubbish
in the Refuse Store Building shown coloured orange on the plan annexed
PROVIDED THAT the said refuse waste or rubbish shall be of such a type
as is usually produced in the usual course of the business undertaken
by the Tenant
User
3.19.1 Not to allow any auction or any meeting for political religious or
other similar purpose to be held in the demised premises not to use the
demised premises or any part thereof as an amusement arcade or fun
palace or for any illegal or immoral purpose or for any offensive
disreputable or noisy trade business pursuit or occupation not to do
anything in or upon the demised premises or any part thereof which may
be or become a nuisance damage disturbance danger to the Landlord or
the owners or lessees or occupiers of any other parts of the Building
or any adjoining or neighbouring property nor leave the demised
premises untenanted or uncared for
3.19.2 Not to cook on the demised premises or allow any person to sleep or
reside on the demised premises
3.19.3 Not to use the demised premises or any part thereof nor permit or
suffer the same to be used otherwise than as offices for a purpose
within Class B1(a) or (b) of the Schedule to the Town & Country
Planning (Use Classes) Order 1987 notwithstanding any revocation
variation or amendment of the said Order
Easements Etc.
3.20.1 Not to obstruct any of the windows or lights belonging to the demised
premises or any adjoining or neighbouring property nor to make any new
window light passage drainage or other encroachment or easement into
against upon or over the demised premises or any part thereof and in
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case any encroachment or easement whatsoever shall be attempted to be
made or acquired by any person or persons whomsoever to give notice
thereof in writing to the Landlord immediately the same shall come to
the notice of the Tenant and at the cost of the Tenant to do all such
things as may be proper or reasonably required by the Landlord for
preventing any new encroachment or easement being made or acquired
3.20.2 Not to give any third party any acknowledgement that the Tenant enjoys
the access of light or air to any of the windows or openings in the
demised premises by the consent of such third party or to pay any sum
of money to or enter into any agreement with such third party for the
purpose of inducing or binding him to abstain from the obstructing the
access of light or air to any such windows or openings And in the event
of any such third party doing or threatening to do anything which
obstructs or would obstruct such access or light or air to notify the
same forthwith in writing to the Landlord
3.20.3 To permit the Landlord to enter upon the demised premises after giving
not less than 7 days prior written notice except in case of emergency
for the purpose of doing all such things as are referred to in clause
3.20.1 and to permit the Landlord to bring all such necessary actions
as it may reasonably think fit in the name of the Tenant in respect of
the obstruction of the access of light or air to any of the windows or
openings in the demised premises in respect of any such encroachment or
easement as aforesaid
Drains Etc.
3.21 Not to discharge pass or deposit into the conduits pipes drains
channels watercourses or sewers serving the demised premises any
noxious or deleterious effluent or other substance which shall cause an
obstruction or deposit in or injure the said conduits pipes drains
channels watercourses or sewers and in the event of any such
obstruction deposit or injury to forthwith make good such damage
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caused to the reasonable satisfaction of the Landlord
Weights
3.22.1 Not to suspend any excessive weight from the main structure walls
floors or roof of the demised premises or of the Building
3.22.2 Not to overload or permit or suffer to be overloaded the raised floors
structural floors ceilings suspended ceilings roofs or structure or
electricity circuits of the Building or use the same in any manner
which will cause undue strain or interference therewith nor to use the
demised premises or the Building or any part thereof in such manner as
to subject the same to any strain beyond that which they are designed
to bear with due margin for safety
Dangerous Substances
3.23 Not to store or use or permit to be stored or used any dangerous
noxious explosive inflammable or radioactive substances on or in the
demised premises
Planning
3.24.1 Not at any time during the term to do or omit anything on or in
connection with the demised premises the doing or omission of which
shall be a contravention of the Planning Acts or of any licences
consents permissions approvals and conditions (if any) granted or
imposed thereunder and to indemnify the Landlord against all actions
proceedings damages penalties costs charges claims and demands in
respect of such acts and omissions or any of them
3.24.2 Not without the prior written consent of the Landlord to submit an
application for planning permission relating to the demised premises to
the appropriate national or local or other public authority
(hereinafter referred to as "the planning authority") and forthwith to
give notice with two copies thereof to the Landlord of all
determinations made pursuant to such application and in the event of
the planning authority indicating its willingness to grant the desired
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licence consent permission or approval only with modifications or
subject to conditions not to accept such modifications or conditions
without the consent in writing of the Landlord and to give the Landlord
forthwith full particulars of such modifications or conditions
3.24.3 To observe and perform all conditions attached to any such licence
consent permission or approval and to keep the Landlord and any
Superior Landlords effectually indemnified against all actions
proceedings damages penalties costs charges claims and demands
whatsoever in respect of the costs of the said application and works
and things done in pursuance of the said planning permission and in
respect of all breaches (if any) of the said conditions and every part
thereof respectively
3.24.4 To give notice forthwith to the Landlord of any notice or order or
proposal for a notice or order served on the Tenant under the Planning
Acts and if so required by the Landlord to produce the same and at the
reasonable request of the Landlord but at the joint cost of the
Landlord and the Tenant where such notice or order or proposal for a
notice or order has implications for the Landlord and the Tenant
jointly to make or join in making such objections or representations in
respect of any proposal as the Landlord may require provided it is
expressly agreed that if a notice or order or proposal for a notice or
order has implications only for the Tenant or the Tenant's interest in
the demised premises then the cost of maintaining or joining in such
obligations or representations as the Landlord may require as referred
to above shall be at the Tenant's sole cost
3.24.5 If and when called upon so to do to produce to the Landlord all such
plans documents and other evidence as the Landlord may require in order
to satisfy itself that the provisions of Clauses 3.24.2 and 3.24.3 have
been complied with in all respects
3.24.6 If the Tenant shall receive any compensation with respect to the
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Tenant's interest hereunder because of revocation or [illegible]
planning permission or of any restriction placed upon the user or
demised premises under or by virtue of the Planning Acts then if and
when the Tenant's interest hereunder shall be determined whether by
surrender or under the power of re-entry herein contained or otherwise
the Tenant shall forthwith make such provision as is just and equitable
for the Landlord to receive a due proportion of such compensation
3.24.7 Unless the Landlord shall otherwise direct to carry out before the
expiration or sooner determination of the term any works stipulated or
required to be carried out to the demised premises by a date subsequent
to such expiration or sooner determination as a condition of any
planning permission which may have been granted to the Tenant during
the term
Landlord's Taxation Liability.
3.25 To indemnify the Landlord against any tax or imposition which becomes
payable by the Landlord during the term in respect of the demised
premises the any adjoining premises or any part and/or Building or
thereof by reason of any negligent act omission neglect or default on
the part of the Tenant (whether or not the same is in breach of any of
the covenants on the part of the Tenant or the conditions herein
contained) including without prejudice to the generality of the
foregoing any application for or obtaining of any planning permission
in respect of the demised premises and/or the Building or any
alteration addition repair or reinstatement relating to or upon any of
them and any development or disposal (by way of assignment subletting
or otherwise howsoever) of the demised premises or any part thereof AND
to indemnify the Landlord against any additional tax or imposition
which either during the said term or at any time after the
determination thereof becomes payable by the Landlord in respect of
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the demised premises and/or the Building or any adjoining premises
(whether as a result of the loss of eligibility for reduced rates of
tax or as a result of the grossing up or otherwise howsoever) which but
for such negligent act omission neglect or default of the Tenant or its
underlessees as aforesaid would not have been payable by the Landlord
Alienation
3.26.1 Not at any time to assign underlet transfer charge share or part with
possession or occupation (other than by way of an underlease of the
Sublet Unit as hereinafter permitted) of part only of the demised
premises or execute any declaration of trust with regard to the whole
or part of the demised premises
3.26.2 Not to transfer part with or share possession or occupation of the
whole of the demised premises save by way of an assignment or
underletting of the whole of the demised premises as hereinafter
permitted
3.26.3 Not to charge the whole of the demised premises without the previous
consent in writing of the Landlord such consent not to be unreasonably
withheld or delayed
3.26.4 Not to assign the whole of the demised premises without the previous
consent in writing of the Landlord such consent not to be unreasonably
withheld or delayed in the case of an assignment to a respectable and
responsible assignee whose references shall have been first approved by
the Landlord PROVIDED THAT the Landlord may as a condition of such
consent require a guarantor or guarantors (by way of guarantee and
indemnity and in such form as the Landlord shall in its reasonable
discretion require) of the covenants to be undertaken by such assignee
and their successors in title and assigns throughout the term of this
Lease and further require that such guarantor or guarantors enter into
a covenant to take a lease on identical terms to these presents for
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the residue of the term in the event that this Deed is disclaimed and
to pay the Landlord's reasonable costs thereof and PROVIDED FURTHER
THAT the Landlord shall be entitled to require such assignee to enter
into a direct covenant with the Landlord and any Superior Landlords to
observe and perform the covenants and conditions contained and on the
part of the Tenant to be observed and performed
3.26.5 Not to underlet part of the demised premises other than by one
underlease of the whole of the Sublet Unit
3.26.6 Not to underlet the whole of the demised premises or the Sublet Unit
without the previous consent in writing of the Landlord such consent
not to be unreasonably withheld or delayed and not to underlet the
whole of the demised premises or the Sublet Unit at a fine or premium
or at a rent less than the rack rental value (as defined in paragraph 1
of the Third Schedule) at the time of such underletting or in the case
of the underletting of the Sublet Unit a fair proportion thereof
3.26.7 Not to be a party or privy to any agreement or arrangement for the
commutation in whole or in part of any rent reserved by and made
payable on any underletting of the demised premises or of the Sublet
Unit
3.26.8 Not without the prior written consent (not to be unreasonably withheld
or delayed) of the Landlord to vary alter or modify any of the terms or
provisions of any underletting of the demised premises or of the Sublet
Unit
3.26.9 Upon the Landlord consenting to an underletting of the whole of the
demised premises or of the Sublet Unit to procure that the underlease
or the licence to underlet shall contain:
3.26.9.1 an unqualified covenant on the part of the underlessee with
the Landlord and any Superior Landlords in the terms mutatis
mutandis of Clauses 3.26.3 to 3.26.8 (inclusive)
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3.26.9.2 such covenants by the underlessee which the Tenant hereby
undertakes to enforce as to prohibit the underlessee from
doing or suffering any act or thing upon or in relation to the
demised premises which will contravene any of the Tenant's
obligations in these presents
3.26.9.3 provisions for review of rent reserved by the underlease which
the Tenant hereby undertakes to operate and enforce
corresponding both as to terms and dates with the provisions
set out in the Third Schedule for the revision of the rent
hereby reserved and
3.26.9.4 provisions enabling the Tenant to determine the term created
by any underlease on or before the date for determination of
this Lease set out in clause 5.8 hereof
3.26.9.5 a condition for re-entry on breach of covenant on the part of
the underlessee
3.26.9.6 an unqualified covenant on the part of the underlessee of the
Sublet Unit not to create any further underlease of the Sublet
Unit (however inferior)
3.26.9.7 an endorsement of a Court Order excluding the Underlease from
the provisions of Sections 24-28 of Part II of the Landlord
and Tenant Act 1954 upon the joint application of the Tenant
and the Underlessee
3.26.10 The grant of any underlease of the whole of the demised premises or of
the Sublet Unit shall be conditional upon the Tenant and the proposed
underlessee obtaining and producing to the Landlord for its approval
prior to the grant of the said underlease an order of the Court
pursuant to Section 38(4) of the Landlord and Tenant Act 1954 (as
amended by the Law of Property Act 1969) authorising an agreement which
shall be contained in the form of underlease excluding in relation to
the tenancy to be thereby created the provisions of
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Sections 24 to 28 of the Landlord and Tenant Act 1954.
3.26.11 Not to allow or permit any shares in the Tenant to be held on trust or
other than by the person beneficially entitled thereto nor to allow or
register the transfer of any shares in the Tenant where such transfer
would have the effect of changing the person firm or company who at the
date hereof has control of the Tenant within the meaning of Section 302
Income & Corporation Taxes Act 1970 without the previous consent in
writing of the Landlord such consent not to be unreasonably withheld in
the case of a transfer to a respectable and responsible transferee
whose references shall have first been approved by the Landlord
PROVIDED THAT the Tenant may (without obtaining the Landlord's consent
but subject to the Tenant notifying the Landlord in 21 days) pledge
shares to a Bank or Financial Institution as security for a loan made
by such Bank or Financial Institution to either the Tenant or to a
parent company of the Tenant
3.26.12 Notwithstanding the provisions of clause 3.26 above the Tenant may
share or pact with occupation of the demised premises with any other
company which is a member of the same group of companies as the Tenant
as defined in the Landlord & Tenant Act 1954
3.26.13 Not to create more than one underletting (which expression shall
include sub-underleases however inferior) of the Sublet Unit to the
intent that the demised premises shall not be occupied at any time by
more than two persons or companies (including the Tenant)
Notice of Alienation
3.27 Within twenty-eight days next after the making thereof without any
demand by the Landlord to produce to the Landlord or the Solicitors for
the time being of the Landlord for registration two certified copies of
all assignments transfers of any shares in the Tenant mortgages charges
and other dispositions and devolutions of title which shall at any time
during the terms relate to the demised
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premises or any part thereof and to pay both to the Landlord by way of
management fee and to the Landlord's Solicitors by way of registration fee for
the registration of every such document a reasonable sum which shall not be less
than the sum of TWENTY-FIVE POUNDS (pound25.00) and any further reasonable sum
which is payable by the Landlord to any Superior Landlords in respect of the
registration thereof
3.28 To give immediate notice to the Landlord of any notice or order or
proposal for a notice or order or claim for whatsoever nature affecting
the demised premises or any part thereof served upon the Tenant or
otherwise served or left at the demised premises and if so required by
the Landlord to produce the same and at the reasonable request of the
Landlord but at the joint cost of the Landlord and the Tenant whether
the notice order or claim has implications for the Landlord and the
Tenant jointly to make or join in making such objections or
representations in respect of such notice order or claim as the
Landlord may require provided it is expressly agreed that the notice or
order or claim only has implications for the Tenant or the Tenant's
interest in the demised premises then the cost of making or joining in
any such objections or representations as the Landlord may require as
referred to above shall be at the Tenant's sole cost
Indemnity
3.29.1 To keep the Landlord fully and effectually indemnified from and against
all proper expenses costs claims demands damages and any other
liability whatsoever in respect of any action proceeding claim demand
loss expense damages costs or other liability in respect of
3.29.1.1 the injury to or death of any person or damage to any property
howsoever arising directly or indirectly out of the state of
repair and condition of the demised premises or any alteration
or addition thereto or the electrical installation or any
other service installations therein or
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<PAGE> 26
the user thereof or works carried out or in the course of
being carried out to the demised premises
3.29.1.2 any interference or alleged interference with or obstruction
made by the Tenant any undertenant or occupier of the demised
premises of any right or alleged right of light air drainage
or other right or alleged right benefiting any adjoining or
neighbouring property
3.29.1.3 any stoppage caused by the Tenant any undertenant or occupier
of the demised premises of the drains used in common with the
owner or occupier of any adjoining or neighbouring property
3.29.1.4 all general rates which may be payable by the Landlord as a
result of the Tenant or any sub-Tenant vacating the demised
premises at any date prior to the determination of the term
and this paragraph 3.29.1.4 shall remain in force
notwithstanding the determination of the term
3.29.2 To be responsible for and to indemnify the Landlord against all damage
and injury occasioned to the demised premises the Building or any
neighbouring premises or any property thereon or to any person caused
by the act neglect default or negligence of the Tenant or any
undertenant servant agent licensee or invitee of the Tenant or any
undertenant
Insurances
3.30.1 Not to do or permit or suffer to be done any act or thing which may
make void or voidable any policy for the insurance of the Building or
which may cause an increased premium to be payable for such insurance
or for the insurance of any adjoining or neighbouring premises of the
Landlord or any Superior Landlords and (without prejudice to the
Landlord's rights of action in respect of a breach of this Clause) to
repay to the Landlord all sums paid by way of increased premiums and
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all expenses incurred by it in consequence of a breach of the
provisions of this Clause and all such payments shall be added to the
rents hereby reserved and shall be recoverable as rent in arrear
3.30.2 In the event of the demised premises or any part thereof being
destroyed or damaged by any of the insured risks or otherwise to
forthwith upon the same coming to the Tenant's notice give notice
thereof to the Landlord
3.30.3 Not without the prior written consent of the Landlord to effect any
insurance in respect of the demised premises against the insured risks
3.30.4 In the event of the Building or any part thereof being destroyed or
damaged by any of the insured risks and the insurance monies under any
insurance against the same effected thereon being wholly or partly
irrecoverable by reason of any act or default on the part of the Tenant
or any sub-tenant or their respective servants agents licensees or
invitees then and in every such case the Tenant will forthwith pay to
the Landlord the whole or (as the case may require) a fair proportion
of the cost (including professional and other fees demolition and site
clearance fees and any Value Added Tax payable) of rebuilding or
reinstating the Building
Death of Guarantor
3.31 Within fourteen days of the death during the term of any person who has
or shall have guaranteed to the Landlord the payment of the rents and
observance and performance of the covenants on the part of the Tenant
herein contained to give notice thereof in writing to the Landlord and
if so reasonably required by the Landlord at the Tenant's expense in
all respects to procure some other person or persons acceptable to the
Landlord to execute a guarantee in such form as the Landlord shall
reasonably require PROVIDED ALWAYS that if the Tenant shall be a
company of which such deceased guarantor was a director the Landlord
may require some other director or directors of such company
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(including such person (if any) as may be appointed to fill the place
of such deceased director) to execute such guarantee as aforesaid
Defective Premises Act 1972
3.32 In connection with the Defective Premises Act 1972:
3.32.1 to notify the Landlord in writing immediately upon becoming
aware of any defect in the demised premises
3.32.2 to erect and maintain within the demised premises prominent
notices or warnings of relevant defects within the meaning of
Section 4 of the said Act in such form as the Landlord may
from time to time reasonably require
3.32.3 to indemnify the Landlord against all claims proceedings
demands costs and expenses incurred under Section 4 of the
said Act by reason of the Tenant's failure to erect and
display such notice
3.32.4 to permit the Landlord at any time on reasonable notice and
causing as little disruption to the Tenant's business as
possible to enter upon the demised premises for any or all of
the following purposes namely erecting and exhibiting notices
thereon and giving warning of relevant defects within the
meaning of Section 4 of the said Act in the demised premises
and installing lighting or any other reasonable means of
warning or protection against such defects
Interest
3.33 As an addition to the rents hereby reserved to pay to the Landlord
interest (as well before as after any judgment) at the rate of Four per
cent per annum above either National Westminster Bank Plc base lending
rate for the time being or such other designated rate of interest as
shall be substituted therefor by National Westminster Bank Plc and in
force at the date of commencement of the period in respect
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of which any payment of interest accrues due under these presents (with
a minimum of Twelve per cent per annum) on any rents and other sums due
hereunder in arrear and unpaid after the same shall become due from the
date such rents or other sums become due to the date of payment thereof
PROVIDED THAT this covenant shall be without prejudice to the
Landlord's right of re-entry under the provisions of Clause 5.1
Value Added Tax
3.34.1 To pay Value Added Tax on taxable supplies received by the Tenant under
or in connection with these presents and on all sums which the Tenant
is required to pay under the terms of these presents including without
prejudice to the generality of the foregoing if required by the
Landlord the rents herein reserved PROVIDED THAT the Landlord shall
render a suitable V.A.T invoice to the Tenant in respect thereof
3.34.2 All payments to be paid to the Landlord hereunder (if the said Value
Added Tax shall be chargeable) by reference to the rents and/or other
consideration payable under this Lease shall be made at the like times
as such rent and other considerations payable but otherwise all
payments due hereunder shall be made when the supply giving rise to the
charge to Value Added Tax is treated as taking place for the purposes
of Value Added Tax and (for the avoidance of doubt) it is confirmed
that where in any part of this Lease or in any Schedule to Lease the
Tenant agrees to pay an amount of money (or other consideration) such
amount (or other consideration) shall be regarded as exclusive of any
Value Added Tax which may from time to time be chargeable with respect
thereto or by reference thereto or as a result of supply made by the
Landlord to the Tenant under the terms of or in connection with this
Lease
3.34.3 Without prejudice to any Statutory rights which the Landlord has in
this respect it is confirmed that the Landlord reserved the right in
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its absolute discretion from time to times to exercise or not as the
case may be any election to waive exemption in respect of any supply
made by the Landlord and nothing in this Lease or otherwise shall
create any implication as to how the Landlord may exercise that
discretion from time to time
3.34.4 Where under this Lease the Tenant agrees to pay or contribute to (or
indemnify the Landlord or any other person in respect of) any costs
fees expenses outgoings or other liability of whatsoever nature whether
or the Landlord or any third party reference to such costs fees
expenses outgoings and other liabilities shall (for the avoidance of
doubt) be taken to be increased by such a sum as to includes any Value
Added Tax (or any similar tax or taxes whether in substitution thereof
or addition thereto) charged in relation thereto except to the extent
and only to the extent that the Landlord obtains a credit for the same
as allowable input tax
3.34.5 For the purposes of this Clause 3.34 and all other provisions of this
Lease Value Added Tax shall have the same meaning as in the Value Added
Tax Act 1983 and shall include any similar tax whether in substitution
for or in addition to it
Costs
3.35 To pay the reasonable and proper legal charges and Architects Engineers
and Surveyors fees of the Landlord and any Superior Landlords including
stamp duty on licences and counterparts resulting from all applications
by the Tenant for any consent of the Landlord or any Superior Landlords
including legal charges and Architects Engineers and Surveyors fees
actually incurred in cases where consent is refused or the application
is withdrawn by the Tenant
Regulations
3.36 To perform and observe and procures compliance in all respects with the
regulations set out in the Fifth Schedule and such other regulations
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as the Landlord may from times to time hereafter make in its reasonable
discretion
Observe Covenants in Superior Lease
3.37 To perform and observe the lessee's covenants (other than the covenant
to pay rent) and the conditions referred to in the Headlease in so far
as they relate to the demised premises notwithstanding any
inconsistency between these presents and the said covenants and
conditions contained in the Headlease
Observe Documents
3.38 To perform and observe and procure compliance in all respects with the
provisions of the documents referred to in the Sixth Schedule and to
indemnify the Landlord at all times against all claims costs charge and
expenses in respect thereof
Information
3.39 At all times during the term upon the reasonable request by the
Landlord forthwith and at the cost of the Tenant to provide the
Landlord with
3.39.1 full names and addresses of all persons in occupation of the
demised premises or any part of it
3.39.2.1 the precise part of the demised premises which such persons
occupy
3.39.2.2 a true copy of the document or if none a written memorandum of
the agreement and parties to it whereby each such person is or
claims to be entitled to occupy any part of the demised
premises
Car Parking
3.40 Without prejudice to the regulations set out in the Fifth Schedule the
Tenant will perform and observe and procure compliance in all respects
with the regulations set out below relating to vehicles on the Estate
and the car parking spaces:-
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<PAGE> 32
3.40.1 The Tenant will only park private passenger motor vehicles with a gross
weight not exceeding 1.5 metric tonnes in the designated parking spaces
on the Estate
3.40.2 The Tenant shall not be permitted to park elsewhere on the Estate and
shall not at any time cause an obstruction to the roads footpaths
pavements or courtyard
3.40.3 The maximum speed limit for vehicles travelling on the Estate will be
ten miles per hour
3.40.4 The Tenant's visitors may park one private passenger motor vehicle
only with a gross weight not exceeding 1.5 metric tonnes in the
designated visitor car parking space
3.40.5 The Tenant will not service clean repair or maintain any vehicle
whilst parked on the Estate and no vehicles will be displayed for sale,
or hire
Landlord's Covenants
The Landlord HEREBY COVENANTS with the Tenant as follows:
Quiet Enjoyment
4.1 That subject to the Tenant duly paying the rents hereby reserved and
made payable and observing and performing the covenants and conditions
herein contained and on the Tenant's part to be observed and performed
so that such payment observance and performance shall be and continue
to be a condition precedent to the remaining obligation of the Landlord
in this Clause 4.1 to the intent and with the effect that the Landlord
shall not be under any such obligation at any time that the Tenant is
in breach of its obligations in respect of any such payment observance
and performance the Tenant shall and may peaceably and quietly possess
and enjoy the demised premises during the term without any disturbance
by the Landlord or any persons rightfully claiming under or in trust
for the Landlord
Insurance
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<PAGE> 33
4.2.1 That the Landlord will effect and maintain an insurance of the demised
premises against the insured risks and three years' loss of rent in
respect of the demised premises and will expend all monies received by
virtue of any such insurance (other than in respect of loss of rent
towards rebuilding reinstating the demised premises as soon as
reasonably possible after the destruction thereof or damage thereto the
Landlord making up any deficiency of insurance monies out of its own
money unless any monies payable under such insurance shall be refused
in whole or in part by reason of any act or default of the Tenant or
any sub-tenant or their respective servants agents licensees or
invitees PROVIDED THAT in the event that the Superior Landlord insures
the demised premises the Landlord's obligations hereunder shall be
limited to using all reasonable endeavours to procure that the Superior
Landlord complies with its covenants in the Headlease to insure
4.2.2 If at the expiry of twelve months after the date of such destruction or
damage the Landlord has not commenced reinstatement of the Building
then either party shall be entitled to determine this Underlease at
any time thereafter either by the Tenant giving not less than one
month's notice in writing to the Landlord or the Landlord giving not
less than six months notice in writing to the Tenant and upon expiry of
such notice this Underlease shall thereupon cease and determine but
without prejudice to any right of action of either party against the
other which shall have accrued prior to such termination and in that
event any monies payable under the policy of insurance hereinbefore
referred to shall belong to the Landlord absolutely
4.2.3 The Landlord shall at the Tenant's request produce to the Tenant as
soon as reasonably possible written confirmation from the Insurer that
the demised premises is insured together with reasonable evidence of
payment of the annual premium
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<PAGE> 34
Maintenance
4.3 Subject to the prior payment by the Tenant of all moneys and rent due
hereunder the discharge of all the liabilities of the Tenant and the
observance of all the Tenant's covenants herein contained:-
4.3.1 to maintain repair renew replace and keep in good and serviceable order
and condition the electrical and television aerial cabling water
drainage ventilation and telecommunication services and the service
duct risers and all fixtures and fittings bins receptacles tools
appliances and material within the common areas of the Estate only and
used or supplied for the benefit of all tenants which the Landlord
acting reasonably may in the interests of good estate management
consider necessary for the maintenance upkeep or cleanliness of the
Estate
4.3.2 As and when necessary to employ porters cleaners and other staff of a
like nature
4.3.3 To maintain repair renew overhaul modernise and insure the plant and
machinery within the Building and/or the Estate including but without
prejudice to the generality the heating boilers lifts ventilation and
central heating system hot and cold water system fire alarm system
lightning conductor or any electrical appliance
4.3.4 To maintain repair renew rebuild alter clean light and decorate the
common parts of the Building including but without prejudice to the
generality the entrance halls communal doors entrance lobbies corridors
passageways staircases fire escape staircases sanitary apparatus fire
fighting appliances external window glass toilets and cleaning store
rooms
4.3.5 To maintain repair renew rebuild alter clean and decorate the exterior
and the structure (including the roofs and foundations) of the Building
4.3.6 To rebuild renew repair maintain decorate light and cleanse all party
walls fences and structures all footpaths car parks landscaped areas
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(internal and exterior) roads the cycle shed the refuse store building
the service building fountain courtyard in the Building and/or the
Estate and all conduits pipes drains channels water courses sewers
wires and cables and other things used or capable of being used in
common by the occupiers of the Building and/or Estate or any part
thereof and the occupiers of any adjoining or neighbouring premises
4.4 To use reasonable endeavours to ensure that all other tenants and
occupiers of the Building and the Estate perform and observe and
comply in all material respects with the regulations set out in the
Fifth Schedule and such other regulations as the Landlord may from time
to time hereafter make in its reasonable discretion
Headlease
5. To use all reasonable endeavours to observe and perform the covenants
and conditions on the lessees part to be observed and performed
contained within the Headlease save to the extent that such covenants
and conditions are to be observed by the Tenant under this Lease or by
other lessees of the Estate
Provisos
PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED as follows:
Forfeiture
5.1 This Deed is made upon the express condition that if and whenever the
said rents sums or other payments or any parts thereof shall be unpaid
for twenty one days after any of the days hereinbefore appointed for
payment thereof (whether the same shall have been lawfully demanded or
not) or if the Tenant shall compound or make arrangements with the
Tenant's creditors or shall suffer any of the effects of the Tenant to
be taken in execution or if the Tenant (being a corporation) shall
enter into liquidation whether compulsory or voluntary (except for a
reconstruction or amalgamation of a solvent company forthwith carried
into effect) or if a receiver shall be appointed in respect of any
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<PAGE> 36
part of the Tenant's undertaking or if a limited company shall apply to
become unlimited under the Companies Act 1985 or if an application
shall be made or a petition shall be presented to the Court for the
grant of any administration order under the Insolvency Act 1986 or for
any order of similar effect under any law relating to companies or if
an administrator or administrative receiver or provisional liquidator
shall be appointed or if the Tenant (not being a corporation) shall
become bankrupt or make any assignment for the benefit of his creditors
or make any arrangement with his creditors for the liquidation of his
debts by composition or otherwise of if any material covenants on the
Tenant's part herein contained shall not be performed or observed then
and in any of the said cases and thenceforth it shall be lawful for the
Landlord into or upon the demised premises or any part thereof in the
name of the whole to re-enter the same to repossess and enjoy as if
this Deed had not been made without prejudice to any right of action or
remedy of the Landlord in respect of any antecedent breach of any of
the covenants by the Tenant herein contained
Suspension of Rent
5.2 If the demised premises or any part thereof shall at any time be
destroyed or damaged by any of the insured risks so as to be unfit for
occupation and use and the relevant policy or policies of insurance in
respect thereof shall not have been vitiated or payment of the policy
monies refused in whole or in part in consequence of any act or default
on the part of or suffered by the Tenant or any sub-tenant or their
respective servants agents licensees or invitees then the rent hereby
firstly reserved the service charge and any other sums due pursuant to
this Lease or a fair and just proportion thereof according to the
nature and extent of the damage sustained shall be suspended and cease
to be payable until the demised premises shall again be
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rendered fit for occupation and use or for a period of three years
(whichever is the shorter) and in case of dispute as to the proportion
or period of such abatement the same shall be referred to arbitration
in accordance with the Arbitration Acts 1950 and 1979
Notices
5.3 In addition to any other mode of service any notices requiring to be
served hereunder shall be validly served if served in accordance with
Section 196 of the Law of Property Act 1925 as amended by the Recorded
Delivery Service Act 1962 or in addition in the case of a company if
served in accordance with those provisions at its registered office for
the time being PROVIDED THAT all notices to be served upon the Landlord
hereunder shall be served at its registered office for the time being
if the Landlord be a company or at its last known place of abode if the
Landlord be an individual
Compensation
5.4 If the tenancy hereby granted is within Part II of the Landlord and
Tenant Act 1954 then subject to the provisions of sub-section (2) of
Section 38 of that Act neither the Tenant nor any assignee or
underlessee of the term or of the demised premises shall be entitled on
quitting the demised premises to any compensation under Section 37 of
the said Act
Use of Other Land
5.5 Nothing herein contained or implied shall impose or be deemed to impose
any restriction on the use of any land or buildings of the Landlord or
any Superior Landlords not comprised in these presents (other than a
restriction to the effect that such use must not render the demised
premises unsuitable or incapable for the use specified in clause 3.19.3
hereof) or give the Tenant the benefit or the right to enforce or to
have enforced or to prevent the release or modification of any covenant
condition or stipulation entered into by any lessee or
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tenant of the Landlord or any Superior Landlords in respect of property
not comprised in these presents or shall operate to prevent or restrict
in anyway the development of any property not comprised in these
presents
Waiver
5.6 No acceptance of or demand or receipt for rent by the Landlord after
knowledge or notice received by the Landlord or its agents of any
breach of the Tenant's covenants and conditions herein contained shall
be or operate as a waiver wholly or partially of any such breach but
any such breach shall for all purposes be a continuing breach of
covenant so long as such breach shall be subsisting and that no person
taking any estate or interest under these presents shall be entitled to
set up any such acceptance of or demand or receipt for rent by the
Landlord or its agents as a defence in any action or proceedings by the
Landlord
Warranty
5.7 Nothing herein contained or implied shall be taken to be a covenant
warranty or representation by the Landlord that the demised premises
can lawfully be used by the Tenant or for any particular purpose and
the term and the rents hereby reserved shall not determine by reason
only of any changes modifications or restrictions on user of the
demised premises or obligations or requirements (if any) made or
hereafter to be made or imposed under or by virtue of the Planning Acts
5.8 Early Determination
5.8.1 If the Tenant shall desire to terminate this Underlease early the
Tenant shall be permitted by the terms of these presents to do so on
either the 27th day of July 1996 and 27th day of July 1998 provided the
Tenant has complied in all material respects with all the Tenant's
covenants and conditions contained in this Underlease
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5.8.2 If the Tenant shall desire to terminate this Underlease on the 27th day
of July 1996 it shall give to the Landlord at least six months prior
written notice of its intention to determine and shall on the expiration
of the notice forthwith pay to the Landlord the sum of Twenty Five
Thousand Pounds (Pound 25,000) together with value added tax thereon.
5.8.3 If the Tenant shall desire to terminate this Underlease on the 27th day
of July 1998 it shall give to the Landlord at least six months prior
written notice of its intention to determine. No sums shall be payable.
5.8.4 On the expiration of the notice referred to in 5.8.2 and 5.8.3 above
provided the Tenant has complied in all material respects with the
Tenant's covenants and conditions in this Underlease and in the case of
the notice served in accordance with clause 5.8.2 paid to the Landlord
the sum specified therein this Underlease will terminate but without
prejudice to the antecedent rights of either party.
Surety.
6.1 The Surety HEREBY COVENANTS with the Landlord so that such covenant
shall and does appertain to each and every part of the demised premises
and so that such covenant shall be construed as if it were a separate
and independent covenant with each and every person who shall from time
to time be the owner of the reversion immediately expectant upon the
term that the Tenant will punctually pay the rents and other sums
payable under these presents and will perform and observe the Tenant's
covenants and conditions contained in these presents and the Surety will
indemnify and keep indemnified the Landlord against all losses expenses
costs claims or damages arising by reason of any non-payment of such
rents and other sums and any breaches of such covenants and conditions
PROVIDED THAT any neglect or forbearance of the Landlord in enforcing
any payment covenant or condition or any
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<PAGE> 40
disclaimer of this Deed by a liquidator or trustee in bankruptcy shall
not release or in any way affect the liability of the Surety under this
clause
6.2 IT IS HEREBY AGREED AND DECLARED that the covenant on the part of the
Surety contained in Clause 6.1 shall remain in full force and effect
during any extension of the term under the provisions of the Landlord
and Tenant Act 1954
6.3 In the event of the Tenant becoming bankrupt or entering into
liquidation whether compulsory or voluntary and the trustee in such
bankruptcy or the liquidator disclaiming this Deed the Surety will take
from the Landlord but only if required by the Landlord by written
notice to the Surety within three months after such disclaimer a grant
of another lease of the demised premises for the residue of the term
unexpired at the date of such disclaimer at the same rents reserved by
these presents (including any revised rent determined under the Third
Schedule hereto) and subject to the like covenants conditions and
provisos as are contained in these presents but so that the times at
which:
6.3.1 the Landlord shall be entitled to revise the rent and
6.3.2 the demised premises are to be decorated shall be the same
times respectively as are specified in these presents and the
Surety on the execution of such further Lease will execute and
deliver to the Landlord a Counterpart thereof and will pay the
Landlord's reasonable costs in respect thereof
6.4 IT IS HEREBY AGREED AND DECLARED that:
6.4.1 This Clause 6 shall remain in full force and effect
notwithstanding any disclaimer of this Deed by a trustee in
bankruptcy or liquidator and
6.4.2 the Surety shall be liable hereunder to the Landlord as if
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<PAGE> 41
the Surety was a principal debtor in respect of such
liabilities
6.4.3 (for the avoidance of any doubt) this Clause 6 shall be and is
part of these presents and is not a contract collateral
thereto nor is it to be construed as such AND THE SURETY
HEREBY EXPRESSLY ACKNOWLEDGES that it shall be bound by the
terms of this Clause 6 to the Landlord and to each and every
person who shall be from time to time the owner of the
reversion immediately expectant on the term (as if each and
every such person had been made a party to this Lease and a
separate and independent covenant had been given by the Surety
to each and every such person AND THE SURETY HEREBY FURTHER
EXPRESSLY ACKNOWLEDGES that each such person shall have the
benefit of and shall be entitled to enforce each and every
part of this Clause 6 notwithstanding the fact that either the
benefit of this Clause 6 has not been expressly assigned to
the person seeking to enforce it (or the relevant part of it)
or that if the said benefit has been expressly assigned that
no notice of any assignment has been given to or received by
the Surety
6.4.4 the Surety hereby irrevocably acknowledges that notice of any
assignment of the benefit of this Clause 6 shall be deemed
validly served if sent to or left at the demised premises
whether or not it is likely that the Surety would receive the
same or in fact does receive the same
IN WITNESS whereof the parties hereto being companies have hereunto caused their
respective Common Seals to be affixed to this deed
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THE FIRST SCHEDULE
PART I
(the Building)
ALL THAT Building known as The Quorum, Barnwell Drive, Cambridge of which the
demised premises form part shown for the purposes of identification on the plan
number 1 attached and thereon edged in blue
PART II.
(the demised premises)
ALL THAT area on the Second floor of the Building and known as Suite 240/250 The
Quorum, Barnwell Drive, Cambridge with a net internal floor area of 6545 square
feet shown for the purposes of identification on plan number 2 attached and
thereon edged in red and for the avoidance of doubt the demised premises shall
include: -
(i) all non-loadbearing walls wholly within the demised premises
(ii) one half (severed vertically) of all non-leadbearing walls separating
the demised premises from any other part of the Building
(iii) all plaster or other decorative finish applied to any wall bounding the
demised property and not falling within (i) or (ii) above or applied to
any column or loadbearing wall within the demised premises
(iv) the whole of all doors door frames door furniture and glass in the
doors windows window frames window sills window furniture bounding the
demised premises
(v) all ceilings bounding the demised premises including the suspended
ceiling and supports to the extent of the finishes to the soffit or
underside of the roof lining sheet where under a roof but not the
structure
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[MOLONEY & RHODES/THE QUORUM PLAN 1]
[VESTEY ESTATES LIMITED]
[STAMP ILLEGIBLE]
[SEAL]
<PAGE> 44
[FIRST FLOOR PLAN 2]
[VESTEY ESTATES LIMITED]
[STAMP ILLEGIBLE]
[SEAL]
<PAGE> 45
(vi) all floors to the extent of the screeds and the finishes of the
concrete sub-floor but not the structure including the raised floor and
supports and floor boxes providing electricity and telecommunications
services
(vii) all conducts pipes drains channels watercourses sewers wires cables
electrical heating water and sanitary apparatus glass plant machinery
and appurtenances of whatsoever nature belonging to and/or exclusively
serving the demised premises
THE SECOND SCHEDULE
PART l
(rights and benefits)
Subject to the prior payment by the Tenant of all money and rents due hereunder
discharge of all the liabilities of the Tenant and observance of all the
Tenant's covenants herein contained and so that such payment discharge and
observance shall be and continue to be a condition precedent to the entitlement
of the Tenant to use and enjoy all of the rights contained herein to the intent
that and with the effect that no such rights contained herein shall accrue at
any time that the Tenant is in breach of its obligations in respect of any such
payment and/or discharge and/or observance:
1.1 The full free and uninterrupted passage and running of water soil gas
and electricity mains water electric computer and telecommunication
services and all other services to and from the demised premises
through and along all conduits pipes drains channels watercourses
sewers wires and cables which are or may hereafter during the term be
in or over or under any other part of the Building or the Estate or
adjoining or neighboring property of the Landlord
2.1 The right to park 29 private passenger motor vehicles belonging to the
Tenant or the Tenant's staff or the Tenant's visitors in the
- 42 -
<PAGE> 46
designated car parking spaces shown numbered 22 to 30 inclusive 34 to
39 inclusive and 44 to 57 inclusive on the plan attached The Landlord
however reserves the right during the term to designate suitable
alternative parking spaces for the Tenant on the Estate in respect of
car parking spaces numbered 44 to 48 inclusive
3.1 The right to park one private passenger motor vehicle in the car
parking space designated by the Landlord for the parking of visitors
vehicles or vehicles belonging to disabled staff shown numbered 177 on
the plan attached or such other parking space as may be agreed by the
Landlord and the Tenant
4.1 The right to connect to electrical and television aerial cabling and to
connect to water drainage ventilation and telecommunications services
located in the service duct risers with the prior written consent of
the Landlord PROVIDED THAT in the event such consent is granted the
Tenant shall cause as little inconvenience as possible to the Building
in the exercise of this right and shall make good as soon as reasonably
possible any damage thereby occasioned
5.1 The Tenant shall have the right to allow his employees or visitors to
stand pedal cycles within any available space in the cycle shed on the
Estate
6.1 The right in common with the Landlord and others having the like
right:-
6.1.1 to pass and repass with or without vehicles at all times and
for all purposes connected with the use of the demised
premises (but not otherwise) over the roadways footpaths
pavements courtyards and entrances on the Estate provided that
vehicles shall not be permitted at any time (save in the case
of emergency) to obstruct or enter the Building courtyard
6.1.2 to pass and repass through the entrances to the Building
- 43 -
<PAGE> 47
marked QII and QIII on the plan and to use the lifts
staircases and landings for all purposes connected with the
use of the demised premises PROVIDED THAT the lifts in the
Building shall be used for the carriage of passengers and
their hand luggage only and the Landlord shall not be liable
for any loss or damage caused by any temporary failure of the
lifts
6.1.3 to use the toilet facilities including the disabled toilets on
the Second floor of the QII and QIII of the Building
6.1.4 to enter on 48 hours written notice the service riser duct to
carry out any necessary repairs or connections for which the
Tenant is responsible and making good any damage thereby
occasioned in exercise of this right
6.l.5 to use and enjoy any landscaped areas on the Estate
7. The Tenant shall have the right of support shelter and protection for
the demised premises from the remainder of the Building as enjoyed at
the date hereof
PART II
(exceptions and reservations and other matters)
1.1 The full free and uninterrupted passage and running of water soil gas
and electricity mains water and all other services from and to all
other parts of the Building and any neighboring adjoining or adjacent
land and premises now or at any time hereafter during the term
belonging to the Landlord or any Superior Landlords through and along
all conduits pipes drains channels watercourses sewers wires and cables
which are or may hereafter during the term be in or over or under the
demised premises
2.1 Full free and unrestricted right for the Landlord to enter the demised
- 44 -
<PAGE> 48
premises for the purpose of access to the service riser duct upon
giving reasonable notice (save in the case of an emergency where
immediate access is required)
3.1 The right to build on develop deal with and use any other part of the
Building or any adjoining or neighboring property retained by the
Landlord in such manner as the Landlord thinks fit even though the
amenity of the demised property or the access of light or air thereto
may be lessened thereby and without making any compensation to the
Tenant PROVIDED THAT the demised premises shall not thereby be rendered
incapable for the use permitted in this Lease
4.1 The right at reasonable times and on reasonable notice (except in
emergency) to enter the demised premises as provided in clauses 3.13
and 3.14 hereof
5.l The right for the Landlord to place notices "To Let" or "For Sale" on
any part of the Estate
6.1 All liberties privileges easements quasi-easements rights benefits and
advantages over the demised premises now or from time to time enjoyed
or intended to be enjoyed by any premises now or at any time belonging
to the Landlord or any Superior Landlord
7.1 Easements rights and privileges over the demised premises corresponding
to those expressly granted to the Tenant over the other parts of the
Building
8.1 The right at reasonable times and on reasonable notice (except in
emergency) to enter the demised premises for the purpose of inspecting
maintaining repairing replacing and cleansing all the plant and
machinery of whatever nature located in the roof void above the demised
premises together with a corresponding right to have access to the roof
void itself by removing the ceiling of the demised premises as
appropriate forthwith making good all damage thereby occasioned.
9.1 The right for the Cambridge City Council and the Anglian Water
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<PAGE> 49
Authority or other Authority, Body, Company or person exercising
statutory powers to enter the demised premises (if appropriate) on
giving reasonable notice in writing (except in the case of an
emergency) and to carry out works for the purpose of inspecting,
maintaining, cleansing, repairing or renewing the public foul and
surface water sewers and if necessary in accordance with the statutory
powers and obligations for the time being of the persons exercising
such right provided that in the event of the exercise such right by
Cambridge City Council there should be no obligation on the Cambridge
City Council to pay compensation to the Tenant or to any other person
save as such as Cambridge City Council is required by statute to pay
notwithstanding any contract to the contrary
THE THIRD SCHEDULE
(rents)
1.1 In this Schedule the following expressions shall have the meanings
hereby assigned to them namely:
1.1.1 "the first rent period" shall mean the period beginning on the
date of commencement of the term and ending on the 24th day of
December 1998
1.1.2 "the subsequent rent periods" shall mean the periods
commencing on the 25th day of December in the years 1998 and
2003 and ending on the 24th day of December in the year 2003
and 2008 respectively
1.1.3 "the appropriate date" shall mean the date of commencement of
each of the subsequent rent periods as appropriate
1.1.4 "the rack rental value" shall mean the yearly rent for which
the demised premises might reasonably be expected to be let on
the appropriate date with vacant possession in the open market
by a willing landlord to a willing tenant for a term
- 46 -
<PAGE> 50
equal to a term of 15 years computed from the appropriate date
upon the terms and conditions of these presents (but save as
to the rent hereby reserved and upon the supposition (if not a
fact) that the Landlord and the Tenant have complied with all
the covenants and conditions on their respective parts herein
contained and that the demised premises are suitable and ready
for immediate occupation and use and that the Tenant shall pay
the rent therefor immediately from the appropriate date
without receiving any rent free period capital payment rates
free period or other incentive or concession (in this Schedule
referred to as "a Rent Concession") and there being
disregarded
1.1.4.1 any effect on rent of the fact that the Tenant or the
Tenant's predecessors in title have been in
occupation of the demised premises or any part
thereof
1.1.4.2 any goodwill attaching to the demised premises by
reason of the carrying on thereat of the particular
trade or business of the Tenant
1.1.4.3 any effect on rent of any improvement carried out by
the Tenant to the demised premises or any part
thereof at the Tenant's own expense in accordance
with the terms of these presents otherwise than in
pursuance of an obligation to the Landlord
1.1.4.4 any effect on rent of the fact that either a Rent
Concession was given to the Tenant at the
commencement of the Term and/or that a Rent
Concession would be reasonably likely to be given to
a lessee taking a lease similar to this Lease at the
appropriate date
- 47 -
<PAGE> 51
1.1.4.5 any works carried out to the demised premises by the
Tenant or any sub-tenant or any person authorized by
either of them which have diminished the rental value
of the demised premises
1.1.4.6 any enactment referred to in paragraph 6.1 of this
Third Schedule
1.1.4.7 any obligation upon the Tenant whatsoever to
reinstate the demised premises or any part thereof to
a condition in which the demised premises or any part
thereof were in prior to any alterations being
carried out thereto
1.1.4.8 the fact that the Landlord shall have the option of
charging Value Added Tax on rents payable hereunder
whether or not such option shall have been exercised
and in particular if the Landlord shall have elected
to charge VAT on rents payable hereunder disregarding
any diminution in the rental value of the demised
premises arising from the fact that Value Added Tax
is payable upon the rents payable hereunder
1.1.5 "the Appointed Surveyor" shall mean a surveyor agreed upon in
writing by the Landlord and the Tenant and in default of such
agreement within one month after the expiry of the period
referred to in paragraph 3.1 of this Schedule a chartered
surveyor (who shall so far as practicable be a chartered
surveyor with previous experience of lettings of properties of
the nature of and in the same locality as the demised
premises) nominated by the President of the Royal Institution
of Chartered Surveyors upon the application of
- 48 -
<PAGE> 52
either the Landlord or the Tenant made at any time
2.1 The rent payable under this Deed for the demised premises shall be:
2.1.1 For the period from the date hereof until the 8th day of
January 1994 the sum of a peppercorn (if demanded)
2.1.2 For the period from 9th January 1994 until 24th December 1996
in the first rent period rent at the yearly rate of Fifty
Thousand Pounds (British Pound Sterling 50,000.00)
2.1.3 For the period from 25th December 1996 until the end of the
first rent period at the yearly rate of Sixty Five Thousand
Pounds (British Pound Sterling 65,000.00)
2.1.4 During each of the subsequent rent periods a yearly rent equal
to the yearly rent payable immediately preceding the date of
commencement of the subsequent rent period in question or (if
greater) a sum equal to the rack rental value of the demised
premises on the appropriate date
3.1 If the Landlord and the Tenant shall not have agreed the rack rental
value before the appropriate date (or by such later date as may be
agreed in writing by the Landlord and the Tenant) the rack rental value
shall be determined by the Appointed Surveyor
4.1 The determination of the rack rental value by the Appointed Surveyor
who shall act as an expert shall be final and binding on the Landlord
and the Tenant and the fees of the Appointed Surveyor shall be borne by
the Landlord and the Tenant in equal shares or as he may direct
5.1 If the revised rent payable in the subsequent rent periods has not been
ascertained by the appropriate date rent shall continue to be payable
at the yearly rate previously payable such payments being on account of
the rent for that subsequent rent period
5.2 If on the appropriate date the rack rental value shall not have been
agreed or determined as aforesaid then within 14 days after the date
when the same has been agreed between the parties or the date upon
- 49 -
<PAGE> 53
which the award of the Appointed Surveyor shall be received by one
party the Tenant shall pay to the Landlord:
5.2.1 any shortfall between the rent which would have been paid on
the appropriate date and on any subsequent quarter days had
the revised rent been ascertained on or before the appropriate
date and the payments made by the Tenant on account; and
5.2.2 interest at the base lending rate of National Westminster Bank
plc (or such other designated rate as shall be substituted
therefor by National Westminster Bank plc and in force at the
date of commencement of the period in respect of which any
payment of interest accrued is due under this paragraph) on
the shortfall from the appropriate date to the date of payment
thereof and if not so paid shall be recoverable as rent in
arrear
6.1 If on the appropriate date there shall be in force any enactment (which
expression includes any Act of Parliament now or hereafter in force as
well as any instrument regulation or order made thereunder or deriving
validity therefrom) which shall relate to the control of rents and
which shall restrict, interfere with or affect the Landlord's right to
revise the rent hereby reserved in accordance with the terms hereof or
to recover the whole or any part of such revised rent then the Landlord
shall be entitled once following each removal or modification of such
enactment to serve notice (hereinafter called an "Interim Notice") upon
the Tenant and from and after the date of service of such Interim
Notice until the next appropriate date or the Service of the next
Interim Notice or the determination of this Deed (whichever shall
first occur) the yearly rent payable under this Deed shall be increased
to whichever is higher of the rack rental value at the date of service
of the Interim Notice or the yearly rent payable
- 50 -
<PAGE> 54
immediately prior thereto and the provisions of this Schedule shall
apply accordingly mutatis mutandis with the substitution of the said
date of service for the relevant appropriate date
7.1 If and when the rack rental value has been agreed or determined as
aforesaid the Landlord and the Tenant shall forthwith annex memoranda
on this Deed and the Counterpart thereof recording such agreement or
determination
8.1 For the avoidance of doubt it is hereby expressly agreed that the
service of the notice more particularly described in clause 5.8.1 and
5.8.2 hereof shall not make time of the essence in relation to any
notices served pursuant to this schedule
THE FOURTH SCHEDULE
1. In this schedule the following expressions have the following
meanings:
(a) "financial year" means a period of twelve months ending on
24th December in each year
(b) "the specified percentage" means 10.69706 per cent
(c) "the service costs" means the total sum computed in accordance
with clauses 5, 6 and 7 of this schedule
(d) "the service charge" means the specified percentage of the
service costs except that in the first five years of the term
the service charge shall be as specified in clauses 4.1 and
4.2
(e) "the expert" means a professionally qualified surveyor or
accountant (who may be a person employed by the Landlord)
2. The Tenant covenants with the Landlord to pay the service charge during
the term by equal payments in advance at the times at which and in the
manner in which rent is payable pursuant to this Underlease
- 51 -
<PAGE> 55
3. The service costs in respect of any financial year shall be calculated
not later than the beginning of the financial year in question
4.1 For the first year of the Term (commencing on the date hereof) the
service charge payable by the Tenant shall be British Pound Sterling
11,455 ("the initial service charge")
4.2 From the 27th day of July 1994 to the end of the fifth year of the term
the service charge payable shall be the initial service charge
increased by the percentage rise (if any) in the Index of Retail Prices
published by the Department of Employment or any successor Ministry or
Department when the last published index figure is compared with the
index figure for the year earlier PROVIDED that in the event that if
the basis for compilation of the said Index shall be substantially
amended or the Index shall no longer be in existence then the parties
hereto may substitute such Index as they shall agree and in the event
of no agreement being reached such Index as shall be decided by a
Surveyor appointed by agreement between the parties or in the event
that no agreement can be reached within twenty eight days of the
dispute arising then on the application of either party to the
President for the time being of The Royal Institute of Chartered
Surveyors who shall have full power to determine the matter and award
costs
5. The service costs shall consist of a total sum equal to:-
(a) the expenditure reasonably estimated by the expert as likely
to be properly incurred by the Landlord in the financial year
in question in connection with the items specified in clause 6
of this schedule together with
(b) an appropriate amount as a reserve for or towards such of the
items specified in clause 6 as likely to give rise to
expenditure only once during the then unexpired term thereof
or at intervals of more than one year PROVIDED THAT such
- 52 -
<PAGE> 56
anticipated future expenditure to be incurred shall be in
respect of the replacement or renewal of major items of plant
and equipment only or the decoration of the exterior and
common parts of the Building and the Landlord shall not be
entitled to make such fair and reasonable provision for such
expenditure if it is anticipated that the expenditure will be
incurred by the Landlord during the last year of the term or
at any time after the expiration of the term PROVIDED FURTHER
THAT the Certificate of the expert as to the amount of the
service cost in any accounting period shall indicate whether
or not the Landlord has established and is maintaining any
fund pursuant to this paragraph and shall further provide full
details of any such fund or funds and PROVIDED FURTHER THAT
all sums received by the Landlord pursuant to this paragraph
shall be credited to an account separate from the Landlord's
own money and shall be held by the Landlord upon trust during
the period of the term plus one year (which shall be the
perpetuity period applicable to these provisions) for the
persons who from time to time shall be tenants of the Building
to apply the same together with the interest earned thereon
for the purposes set out in this paragraph and at the expiry
of such period any such sums unexpended shall be paid to the
persons who shall then be the tenants of the Building in equal
shares to the percentage which the service costs payable by
each Tenant respectively bears to the total of all the service
costs payable by the tenants of the Building PROVIDED FURTHER
THAT where any expenditure is to be incurred on any such item
in the financial year to which the said estimate relates the
expert shall in computing the said total sum
- 53 -
<PAGE> 57
give credit for the amount then standing to the credit of the
reserve in respect of the item in question
6. The items to be included in the service costs are the following:-
(a) the costs of and incidental to the carrying out by the
Landlord of any work in pursuance of any requirement of any
Act of Parliament or of any local or public authority relating
to the Building and or the common parts and/or the Estate
(b) the amount of any rates taxes assessments or outgoings of any
nature whatsoever payable in respect of the common parts of
the Building and/or the Estate and paid by the Landlord during
the term
(c) the reasonable and proper cost of employing porters cleaners
and other staff of a like nature (including the cost of
uniforms bonuses national insurance contributions pensions)
for the maintenance and general running and management of the
Building and the Estate and (where the Landlord provides
accommodation for such persons) an amount equal to a fair rent
for such accommodation and any rates payable thereon
(d) the reasonable and proper cost of preparing accounts and
certificates relating to the calculation of the service costs
or the service charge
(e) the cost of employing managing agents in respect of the
Building and the Estate
(f) The reasonable and proper costs and expenses incurred in
connection with the maintenance repair renewal overhaul
modernization insurance and running of the plant and machinery
within the Building and/or the Estate including but without
prejudice to the generality the heating boilers lifts
ventilation central heating system hot and cold water
- 54 -
<PAGE> 58
systems fire alarm system lightening conduct or any electrical
plant
(g) The costs and expenses reasonably and properly incurred in
connection with the maintenance repair renewal rebuilding
alteration cleaning lighting and decorating of the common
parts of the Building including but without prejudice to the
generality the entrance halls communal doors entrance lobbies
corridors passages staircases fire escape staircases sanitary
apparatus fire fighting appliances external window glass
toilets and cleaning store rooms
(h) The reasonable and proper costs and expenses incurred in
connection with the maintenance repair renewal rebuilding
alteration cleaning and decorating of the exterior and the
structure (including the roofs and foundations) of the
Building
(i) the reasonable and proper costs and expenses payable in
respect of making rebuilding renewing repairing maintaining
decorating lighting and cleansing all party walls fences and
structures all footpaths car parks landscaped areas (internal
and external) roads the cycle shed the refuse store building
the service building fountain courtyard in the Building and/or
the Estate and all conduits pipes drains channels watercourses
sewers wires and cables and other things used or capable of
being used in common by the occupiers of the Building and/or
the Estate or any part thereof and the occupiers of any
adjoining or neighboring premises
(j) The reasonable and proper cost of providing such other
services and exercising such other works and doing such other
matters and things as the Landlord shall reasonably
- 55 -
<PAGE> 59
consider appropriate for the benefit of the lessees of the
Building and/or the Estate
7. As soon as practicable after the end of each financial year the expert
shall determine and certify the amount by which the estimate referred
to in paragraph (a) of clause 5 of this schedule exceeds or falls short
of the actual expenditure incurred by the Landlord in respect of the
items specified in clause 6 in the financial year in question (giving
credit for any amount applied from the reserve in payment of items of
expenditure incurred during that year) and shall supply the Tenant with
a copy of the certificate together with an itemized breakdown of the
calculation thereof
8. Within twenty-one days of the receipt by the Tenant of the said
certificate the Tenant shall pay to the Landlord the specified
percentage of the deficiency or as the case may be the Landlord shall
repay to the Tenant the specified percentage of the excess
9. If in the reasonable opinion of the expert it is equitable to do so he
may increase or decrease the specified proportion
10. Any dispute arising out of the provisions of this clause shall be
referred to the decision of a single arbitrator to be appointed on the
application of either party by the President for the time being of the
Royal Institution of Chartered Surveyors whose decision shall be final
but this sub-clause shall not confer upon the Tenant the right to
challenge the amount of the total sum computed under clause 5(a) of
this clause
11. The Tenant shall be entitled to inspect all invoices receipts and
vouchers in respect of the service costs
THE FIFTH SCHEDULE
Regulations for the conduct of the Building:-
1.1 The Landlord or the Landlord's Agents or staff shall be at liberty to
- 56 -
<PAGE> 60
refuse to any person access to the Building if they shall think that
such refusal is for the benefit of the Tenants or occupants of the
Building
2.1 The Tenant is not entitled to use the lifts for the carriage of
articles likely to cause damage to the lifts or the Building and the
Landlord or the Landlord's Agents or staff shall be at liberty to
refuse permission to use the passenger lifts for the carriage of any
goods whatsoever if this shall interfere with the convenience of the
other Tenants or occupants of the Building or be likely to cause damage
to the passenger lifts or the Building
3.1 The Tenant is not permitted to place deposit store or abandon any goods
articles or rubbish whatsoever in the common parts of the Building
4.1 The Tenant shall not misuse the toilet facilities and lifts and in
particular shall not empty tea leaves or coffee grounds down the sinks
or deposit matter in the toilets likely to cause a blockage
5.1 The Tenant shall not be entitled to erect nameboards or display notices
in the common parts of the Building but each Tenant may have one entry
only in respect of the tenancy on the Landlord's nameboard in the
entrance lobby of the Building by arrangement with the Landlord's
Agents. The Landlord reserves the right to vary the position of any
Tenant's nameboard and to rearrange the disposition of the lettering
thereon but will not exercise such right in a manner which would
prejudice the visibility of the Tenant's nameboard nor without first
consulting the Tenant. Nameboards or display notices or lettering on
the entrance door or subsidiary entrance door of the demised premises
must conform to the standard design for the Building and no signage in
any form shall be erected without the prior written consent of the
Landlord or the Landlord's Agent
6.1 Any services rendered to a Tenant by staff employed by the Landlord
- 57 -
<PAGE> 61
other than services referred to in the Fourth Schedule hereto are to be
deemed special services for which and for the consequences of which
that Tenant shall be entirely responsible and the Tenant shall not be
entitled to any services from such staff which may in any way interfere
with the performance of their duties to the Landlord or the Landlord's
Agents
7.1 The Tenant shall not play or permit or suffer the playing of any
musical instrument or the use of any radio television record-player or
other similar device for the reproduction of any music or sound on or
in the demised premises so as to be audible outside the demised
premises
8.1 Any unloading or loading for or by the Tenant shall require the prior
written approval of the Landlord such approval may be restricted to
such activity taking place outside of normal working hours
THE SIXTH SCHEDULE
1. Entry number 2 of the Charges Register of Land Certificate Title Number
CB116559
2. Entry number 2 of the Charges Register of Land Certificate Title Number
CB193633
THE COMMON SEAL OF VESTEY ) [SEAL]
ESTATES LIMITED was hereunto )
affixed in the presence of:- )
/s/ Illegible Director
/s/ Illegible Secretary
- 58 -
<PAGE> 1
EXHIBIT 21
Subsidiaries of the Registrant
Biosym Technologies, Inc., a
Delaware Corporation
Molecular Simulations Limited, a
UK Corporation
Molecular Simulations Sarl, a
French Corporation
Molecular Simulations Software Gmbh,
a German Corporation
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
February 6, 1997
San Diego, California
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 14,509
<SECURITIES> 0
<RECEIVABLES> 16,674
<ALLOWANCES> (496)
<INVENTORY> 0
<CURRENT-ASSETS> 35,175
<PP&E> 4,768
<DEPRECIATION> (3,257)
<TOTAL-ASSETS> 41,265
<CURRENT-LIABILITIES> 30,895
<BONDS> 1,400
0
22
<COMMON> 5
<OTHER-SE> 7,361
<TOTAL-LIABILITY-AND-EQUITY> 41,265
<SALES> 47,261
<TOTAL-REVENUES> 47,261
<CGS> 7,759
<TOTAL-COSTS> 7,759
<OTHER-EXPENSES> 35,802
<LOSS-PROVISION> 19
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,068
<INCOME-TAX> 1,471
<INCOME-CONTINUING> 2,597
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,597
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
