SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Mark One:
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-27324
SYNAPTIC PHARMACEUTICAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2859704
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
215 College Road
Paramus, NJ 07652
(Address of principal executive offices) (Zip Code)
(201) 261-1331
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
As of July 25, 1996, there were 7,608,838 shares of the registrant's Common
Stock outstanding.
SYNAPTIC PHARMACEUTICAL CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
PART I. FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements 1
Balance Sheets at June 30, 1996 and December 31, 1995 1
Statements of Operations for the three months ended
June 30, 1996 and 1995, and for the six months ended
June 30, 1996 and 1995 2
Statements of Cash Flows for the six months ended
June 30, 1996 and 1995 3
Note to Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
(i)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SYNAPTIC PHARMACEUTICAL CORPORATION
BALANCE SHEETS
ASSETS
June 30, December 31,
1996 1995
---------- -----------
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 4,239,800 $27,680,969
Marketable securities--current maturities 11,279,362 7,932,322
Revenue receivable under collaborative agreement -- 129,208
Restricted security 770,000 770,000
Other current assets 718,229 350,796
----------- -----------
Total current assets 17,007,391 36,863,295
Property and equipment, net 2,335,825 2,232,418
Marketable securities 20,559,108 404,375
Patent and patent application costs,
net of accumulated amortization 1,591,889 1,412,155
Other assets 500 500
----------- -----------
$41,494,713 $40,912,743
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligations $ 146,338 $ 152,282
Accounts payable 448,324 196,750
Accrued liabilities 186,272 660,481
Accrued compensation 168,000 306,851
Unearned revenue under collaborative agreement 1,148,782 820,720
----------- -----------
Total current liabilities 2,097,716 2,137,084
Capital lease obligations, less current portion 45,178 106,472
Stockholders' equity:
Preferred Stock, $.01 par value; authorized--
1,000,000 shares; issued--none -- --
Common Stock, $.01 par value; authorized--
25,000,000 shares; issued--7,606,431 shares in
1996 and 7,326,368 shares in 1995; outstanding--
7,606,431 shares in 1996 and 7,325,493 shares in 1995 76,064 73,264
Additional paid-in capital 63,298,107 59,952,735
Net unrealized gains (losses) on securities (33,518) 196,384
Deferred compensation (493,018) (208,952)
Note receivable from stockholder -- (6,134)
Accumulated deficit (23,495,816) (21,336,465)
----------- -----------
39,351,819 38,670,832
Less: Treasury stock, at cost -- (1,645)
----------- -----------
Total stockholders' equity 39,351,819 38,669,187
----------- -----------
$41,494,713 $40,912,743
=========== ============
See note to financial statements.
1
SYNAPTIC PHARMACEUTICAL CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Revenues:
Contract revenue $ 1,711,086 $ 1,657,500 $ 3,422,170 $ 3,315,000
Grant revenue 70,000 70,000 140,000 182,000
----------- ----------- ----------- -----------
Total revenues 1,781,086 1,727,500 3,562,170 3,497,000
Expenses:
Research and development 2,821,664 2,481,925 5,484,292 4,983,694
General and administrative 678,581 510,924 1,363,852 1,068,833
----------- ----------- ----------- -----------
Total expenses 3,500,245 2,992,849 6,848,144 6,052,527
----------- ----------- ----------- -----------
Loss from operations (1,719,159) (1,265,349) (3,285,974) (2,555,527)
Other income, net:
Interest income 456,747 152,887 926,165 339,551
Interest expense (5,425) (8,673) (11,702) (18,149)
Gain (loss) on
sale of securities 212,160 (4,207) 212,160 (4,541)
---------- ----------- ----------- -----------
Other income, net 663,482 140,007 1,126,623 316,861
---------- ----------- ----------- -----------
Net loss $(1,055,677) $(1,125,342) $(2,159,351) $(2,238,666)
=========== =========== =========== ===========
Net loss per share $(0.14) $(2.63) $(0.29) $(5.29)
====== ====== ====== ======
Shares used in computation
of net loss per share 7,575,452 427,567 7,534,736 423,335
========= ======= ========= =========
See note to financial statements.
2
SYNAPTIC PHARMACEUTICAL CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
For the six months
ended June 30,
1996 1995
----------- -----------
Operating activities:
Net (loss) $(2,159,351) $(2,238,666)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 490,212 370,467
Amortization of deferred compensation 97,648 36,709
Compensation resulting from forgiveness of notes
receivable from employee -- 364
(Gain) loss on sale of securities (212,160) 4,541
Changes in operating assets and liabilities:
(Increase) decrease in other current assets (367,433) 202,219
(Decrease) in accounts payable, accrued liabilities
and accrued compensation (361,486) (281,183)
Decrease in collaborative agreement
revenue receivable 129,208 74,235
Increase in deferred revenue 328,062 1,102,500
----------- -----------
Net cash (used in) operating activities (2,055,300) (728,814)
Investing activities:
Sale or maturity of investments 6,710,000 5,272,054
Purchase of investments (30,238,480) (3,669,006)
Purchases of property and equipment (440,195) (206,510)
Increase in patent and patent application costs (324,193) (284,968)
Principal payments made by employee/stockholder -- 365
----------- -----------
Net cash (used in) provided by investing activities (24,292,868) 1,111,935
Financing activities:
Issuance of common stock, net of repurchases 2,968,103 249,934
Payments on capital lease (67,238) (60,758)
Payments on notes receivable from stockholders 6,134 5,652
----------- -----------
Net cash provided by financing activities 2,906,999 194,828
----------- -----------
Net (decrease) increase in cash and cash
equivalents (23,441,169) 577,949
Cash and cash equivalents at beginning of period 27,680,969 2,563,902
----------- -----------
Cash and cash equivalents at end of period $ 4,239,800 $ 3,141,851
=========== ===========
See note to financial statements.
3
SYNAPTIC PHARMACEUTICAL CORPORATION
NOTE TO FINANCIAL STATEMENTS
June 30, 1996
Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and may not include all
information and footnotes required for a presentation in accordance with
generally accepted accounting principles. In the opinion of the management of
Synaptic Pharmaceutical Corporation (the "Company"), these financial statements
include all normal and recurring adjustments necessary for a fair presentation
of the financial position and the results of operations and cash flows of the
Company for the interim periods presented. For more complete financial
information, these financial statements should be read in conjunction with the
audited financial statements for the fiscal year ended December 31, 1995, and
notes thereto included in the Company's 1995 Annual Report on Form 10-K. The
results of operations for the fiscal quarter ended June 30, 1996, are not
necessarily indicative of the results of operations to be expected for the full
year.
4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
Synaptic Pharmaceutical Corporation ("Synaptic" or the "Company") is a
biotechnology company engaged in the development of a broad platform of enabling
technology which it calls "human receptor-targeted drug design technology." It
is utilizing this technology both to discover and clone the genes that code for
human receptor subtypes associated with specific disorders and to design
compounds that can potentially be developed as drugs for treating these
disorders. The Company is engaged in collaborations with four pharmaceutical
companies: Eli Lilly and Company ("Lilly"), Merck and Co., Inc. ("Merck"),
Ciba-Geigy Limited ("Ciba-Geigy"), and The Dupont Merck Pharmaceutical Company
("Dupont Merck"). Since inception, the Company has financed its operations
primarily through the sale of stock and through funds provided by its
collaborative partners Lilly, Merck and Ciba-Geigy under collaborative
agreements.
Under its collaborative agreements, the Company may receive one or two
types of revenue from its collaborative partners: contract revenue and license
revenue. Contract revenue includes research funding to support a specified
number of the Company's scientists and payments upon the achievement of
specified research and development milestones. Research funding revenue is
recognized ratably over the period of the agreement to which it relates and is
based upon predetermined funding requirements. Research milestone payment
revenue is recognized when the related research milestone is achieved. License
revenue represents non-refundable payments for licenses to the Company's
technology and drug discovery systems. Non-refundable payments for licenses are
recognized immediately upon execution of the related agreement since the terms
of these licenses are generally in perpetuity and the Company does not have
significant future performance obligations. In addition, if a drug is developed
as a result of any of the collaborative agreements between the Company and its
collaborative partners, the Company will receive royalty payments based upon the
sale of such drugs.
The Company also receives revenues from government grants under the Small
Business Innovative Research ("SBIR") program of the National Institutes of
Health.
To date, the Company's expenditures have been for research and development
related expenses, general and administrative related expenses, fixed asset
purchases and various patent related expenditures incurred in protecting the
Company's technologies. The Company has been unprofitable since its inception
and had an accumulated deficit of $23,495,816 at June 30, 1996. The Company
expects to continue to incur operating losses for a significant number of years
and may not become profitable, if at all, until it begins to receive royalty
revenue. To date, the Company has not received any royalty revenue and does not
expect to receive such revenue for a significant number of years, if at all.
5
Results of Operations
Comparison of the Three Months Ended June 30, 1996 and 1995
Revenues. The Company recognized revenue of $1,781,086 and $1,727,500 for
the three months ended June 30, 1996 and 1995, respectively. The increase of
$53,586 was attributable to an increase in contract revenue which resulted
primarily from annual increases in the rates charged to the Company's
collaborative partners per full time equivalent scientist.
Research and Development Expenses. The Company incurred research and
development expenses of $2,821,664 and $2,481,925 for the three months ended
June 30, 1996 and 1995, respectively. The increase of $339,739, or 13.7%, in
research and development expenses was attributable primarily to: an increase of
approximately $174,000 in compensation expense resulting from an increase in
average headcount year-to-year as well as annual salary and bonus increases and
an associated increase in fringe benefit expense; an increase of approximately
$62,000 related to depreciation of fixed assets as well as amortization of
patents; a one-time license fee of approximately $44,000; and an increase of
approximately $68,000 in research supply costs.
General and Administrative Expenses. The Company incurred general and
administrative expenses of $678,581 and $510,924 for the three months ended June
30, 1996 and 1995, respectively. The increase of $167,657, or 32.8%, in general
and administrative expenses was attributable primarily to: an increase of
approximately $42,000 in compensation expense resulting from annual salary and
bonus increases and an associated increase in fringe benefit expense; an
increase of approximately $85,000 in expenses, such as registration fees,
transfer agent fees, legal costs, printing costs and additional insurance,
relating to being a public company; and an increase of approximately $14,000 in
certain supply and computer related expenses.
Other Income, Net. The Company received other income, net of interest
expense, of $663,482 and $140,007 for the three months ended June 30, 1996 and
1995, respectively. The increase of $523,475 in other income, net of interest
expense, was attributable primarily to: an increase of approximately $304,000 in
interest income, resulting from higher average cash, cash equivalent and
marketable security balances during the three months ended June 30, 1996, as
compared to the three months ended June 30, 1995; and an increase of
approximately $216,000 in realized gain resulting from the maturity of one of
the Company's marketable securities.
Net Loss. The Company incurred a net loss of $1,055,677, and $1,125,342
for the three months ended June 30, 1996 and 1995, respectively. The decrease
of $69,665 in net loss was attributable to the increase in revenue and other
income offset by the higher expenses of research and development and general and
administrative.
Comparison of the Six Months Ended June 30, 1996 and 1995
Revenues. The Company recognized revenue of $3,562,170 and $3,497,000 for
the six months ended June 30, 1996 and 1995, respectively. The increase of
6
$65,170 was attributable primarily to an increase of $107,170 in contract
revenue which was partially offset by a reduction of $42,000 in grant revenue.
The increase in contract revenue was due primarily to annual increases in the
rates charged to the Company's collaborative partners per full time equivalent
scientist.
Research and Development Expenses. The Company incurred research and
development expenses of $5,484,292 and $4,983,694 for the six months ended June
30, 1996 and 1995, respectively. The increase of $500,598, or 10.0%, in
research and development expenses was attributable primarily to: an increase of
approximately $295,000 in compensation expense resulting from an increase in
average headcount year-to-year as well as annual salary and bonus increases and
an associated increase in fringe benefit expense; an increase of approximately
$126,000 related to depreciation of fixed assets as well as amortization of
patents; a one-time license fee of approximately $44,000; and an increase of
approximately $96,000 in research supply costs, all of which were partially
offset by a decrease of approximately $56,000 in post-doctoral costs and
pre-clinical expenses.
General and Administrative Expenses. The Company incurred general and
administrative expenses of $1,363,852 and $1,068,833 for the six months ended
June 30, 1996 and 1995, respectively. The increase of $295,019, or 27.6%, in
general and administrative expenses was attributable primarily to: an increase
of approximately $54,000 in compensation expense resulting from annual salary
and bonus increases and an associated increase in fringe benefit expense; an
increase of approximately $145,000 in expenses, such as registration fees,
transfer agent fees, legal costs, printing costs and additional insurance,
relating to being a public company; and an increase of approximately $35,000 in
certain supply and computer related expenses.
Other Income, Net. The Company received other income, net of interest
expense, of $1,126,623 and $316,861 for the six months ended June 30, 1996 and
1995, respectively. The increase of $809,762 in other income, net of interest
expense, was attributable primarily to an: increase of approximately $587,000 in
interest income resulting from higher average cash, cash equivalent and
marketable security balances during the six months ended June 30, 1996, as
compared to the six months ended June 30, 1995; and an increase of approximately
$217,000 in realized gain resulting from the maturity of one of the Company's
marketable securities.
Net Loss. The Company incurred a net loss of $2,159,351, and $2,238,666
for the six months ended June 30, 1996 and 1995, respectively. The decrease of
$79,315 in net loss was attributable to the increase in revenue and other income
offset by the higher expenses of research and development and general and
administrative.
The Company does not believe that inflation has had a material impact on
the results of its operations for either the three month period or the six month
period which ended June 30, 1996.
7
Liquidity and Capital Resources
At June 30, 1996 and December 31, 1995, cash, cash equivalents and
marketable securities were in the aggregate $36,078,270 and $36,017,666,
respectively. In January of 1996 the Company sold 213,000 shares of its common
stock pursuant to the exercise of the over-allotment option granted to the
underwriters of the Company's initial public offering which closed in December
1995, raising additional capital, net of related expenses, of approximately
$2,460,000. In May of 1996 the Company sold 48,114 shares of its common stock
pursuant to the exercise of certain warrants that were sold by the Company in
1993, raising additional capital of approximately $457,000. To date, the
Company has met its cash requirements through the sale of its stock, through
licensing fees, research funding and milestone payments received under the
collaborative agreements with Lilly, Merck and Ciba-Geigy, through SBIR grants
and through interest earned on its investments. To date, the Company's
principal use of funds has been to fund research and development, to purchase
fixed assets used primarily in its research activities, to create its patent
estate and to pay general and administrative support costs.
At June 30, 1996, the Company was involved in collaborative arrangements
with Lilly, Merck, Ciba-Geigy and Dupont Merck. In May 1996, the Company's
research collaboration with Ciba-Geigy was expanded in scope and extended for
one additional year, with Ciba-Geigy having the right to an additional one-year
extension upon notice to the Company by August 4, 1997. Lilly, Merck and
Ciba-Geigy are providing research funding to the Company during 1996. The
Company's collaborative arrangement with DuPont Merck, which began in February
1996, does not provide for any research funding by Dupont Merck. Research
funding under the Lilly Agreement is scheduled to expire on December 31, 1998
but Lilly has the right to terminate such funding earlier by giving six months'
prior written notice. The initial term of the Merck collaborative arrangement
will expire on November 30, 1996 but Merck has the right to terminate the
collaboration, and the research funding, earlier by giving 90 days' prior
written notice. The Ciba-Geigy collaboration has an expiration date of August
4, 1998.
At June 30, 1996, the Company had invested an aggregate of $4,893,784 in
property and equipment. Included within the $4,893,784 is $658,077 of equipment
under capital leases. The net present value of obligations under capital leases
at June 30, 1996, was $191,516. This amount is secured by a treasury note in
the amount of $270,000 which is recorded in the balance sheet as restricted
securities. This treasury note must be renewed annually in an amount equal to
the then aggregate unpaid balances under the lease agreements. The last of
these lease agreements will expire on December 5, 1997.
The Company leases laboratory and office facilities under an agreement
expiring on December 31,1999. The minimum annual payment under the lease is
$646,000. A standby letter of credit for approximately $413,000 has been issued
to the Company's landlord as a security deposit and is secured by a treasury
note in the amount of $500,000 which is recorded in the balance sheet as
restricted securities.
At June 30, 1996 the Company had available funds of $36,078,270. The
Company intends to utilize these funds primarily to pay its operating expenses
8
(to the extent revenues and other income are insufficient to cover such
expenses), to expand its research programs and to make leasehold improvements to
its facilities beyond the level which existed on June 30, 1996. It is
anticipated that the Company will continue to incur operating losses for a
significant number of years. The Company believes that its cash on hand,
together with the funds it will receive from its collaborative partners,
interest income and funds received under SBIR grants, will be sufficient to
fund an increased operating expense level at least through 1998.
Except for the historical information contained herein, this management
discussion and analysis of financial condition and results of operations
contains "forward looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Although the Company believes that the
expectations reflected in such forward looking statements are reasonable, it can
give no assurance that such expectations will prove to be correct. Certain
important factors that could cause actual
results to differ materially from the Company's expectations include
the early termination of one or more of the Company's collaborative agreements
and other risk factors set forth as "Cautionary Statements" in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995, or
detailed from time to time in filings that the Company makes with the Securities
and Exchange Commission.
9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On June 4, 1996, the Company held its annual meeting of stockholders for
the following purposes: (i) to elect eight directors to the Board of Directors
(Proposal No. 1); (ii) to consider and vote upon a proposal recommended by the
Board of Directors to approve the 1996 Nonemployee Director Stock Option Plan of
the Company (Proposal No. 2); (iii) to consider and vote upon a proposal
recommended by the Board of Directors to amend the Company's Amended and
Restated Certificate of Incorporation to classify the Board of Directors into
three classes (Proposal No. 3); and (iv) to ratify the appointment by the Board
of Directors of Ernst & Young LLP as the independent auditors of the Company for
the fiscal year ending December 31, 1996 (Proposal No. 4).
The stockholders elected the persons named below, the Company's nominees
for director, as directors of the Company, casting votes in favor of such
nominees or withholding votes as indicated:
VOTES IN FAVOR VOTES WITHHELD
Jonathan J. Fleming 5,014,056 710
Zola P. Horovitz 5,014,256 510
Eric R. Kandel 5,014,766 500
John E. Lyons 4,905,766 109,000
Kathleen P. Mullinix 4,989,066 25,700
Sandra Panem 5,014,056 710
Alison Taunton-Rigby 5,014,066 700
Robert Walkingshaw 5,014,056 710
The stockholders approved Proposal No. 2 as follows:
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
4,984,699 121,692 2,875 41,500
The stockholders approved Proposal No. 3 as follows:
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
4,167,359 614,530 1,357 231,520
The stockholders approved Proposal No. 4 as follows:
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
5,013,566 200 1,000 0
10
Item 5. Other Information
On May 31, 1996, the Company and Ciba-Geigy Limited ("Ciba-Geigy") entered
into a new agreement (the "1996 Agreement") and amended the terms of their
Research and License Agreement dated August 4, 1994 (the "1994 Agreement") for
the principal purpose of expanding the scope and extending the term of their
collaboration under the 1994 Agreement. Pursuant to the 1994 Agreement, the
companies are focusing exclusively on the identification and development of
neuropeptide Y drugs for the treatment of obesity and eating disorders, as well
as cardiovascular disorders. Pursuant to the 1996 Agreement, the companies are
continuing to collaborate in the identification and development of drugs for the
treatment of obesity and eating disorders. However, the targets for such drugs
are not neuropeptide Y receptors but are other, undisclosed targets (the "1996
Targets").
The term of the collaboration under the 1996 Agreement (the "Term") extends
until August 4, 1998, but may be extended by Ciba-Geigy for an additional
one-year period upon notice to the Company not later than August 4, 1997. The
Company and Ciba-Geigy have agreed to allocate the aggregate number of Company
scientists which Ciba-Geigy was originally required to fund under the 1994
Agreement between the collaborations under both the 1994 Agreement and the 1996
Agreement. Accordingly, the amount of funding originally required of Ciba-Geigy
under the 1994 Agreement has not increased as a result of the 1996 Agreement,
but has instead been allocated between the two collaborations.
As part of the 1996 Agreement, Ciba-Geigy is also required to make payments
to the Company upon the achievement by Ciba-Geigy of certain drug development
milestones and, subject to certain limitations, to pay the Company royalties on
the sale of drugs developed through the use of the Company's technology. In
addition, Ciba-Geigy received an exclusive worldwide license to use the
Company's drug discovery systems relating to the 1996 Targets for the
development and commercialization of drugs that are selective for such Targets
for the treatment
and/or diagnosis of obesity, eating disorders and other metabolic disorders.
The Company retained the right to use these systems for all other therapeutic
applications, although Ciba-Geigy has a right of first negotiation in the event
the Company determines to seek a collaborative partner or licensee for any such
other application.
11
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
- ----------- -----------
3.1(a) Amended and Restated Certificate of Incorporation of the
Company filed December 19,1995
3.1(b) Certificate of Designations of Series A Junior Participating
Preferred Stock filed December 19, 1995
3.1(c) Certificate of Amendment of the Amended and Restated
Certificate of Incorporation of the Company filed June 4, 1996
3.2 Amended and Restated By-Laws of the Company, as amended on
June 4, 1996
*10.31 Research and License Agreement dated as of May 31, 1996,
between the Company and Ciba-Geigy Limited
*10.32 Supplement No. 1 to Research and License Agreement dated as of
August 4, 1994, between the Company and Ciba-Geigy Limited
+10.33 1996 Nonemployee Director Stock Option Plan of the Company
11 Statement Regarding Computation of Per Share Earnings (Loss)
27 Financial Data Schedule
* Portions of this Exhibit have been omitted and filed separately with the
Secretary of the Securities and Exchange Commission pursuant to the
Company's Application Requesting Confidential Treatment under Rule 24b-2
under the Securities Exchange Act of 1934, as amended.
+ Management contract or compensatory plans or arrangement.
(b) Reports on Form 8-K
On June 20, 1996, the Company filed a Current Report on Form 8-K describing the
issuance by the Company of a press release announcing that the Company had
entered into a new Research and License Agreement with Ciba-Geigy Limited.
Except for the report described above, the Company did not file Current Reports
on Form 8-K during the fiscal quarter ended June 30, 1996.
12
SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SYNAPTIC PHARMACEUTICAL CORPORATION
(Registrant)
Date: August 8, 1996 By: /s/ Kathleen P. Mullinix
-----------------------------
Name: Kathleen P. Mullinix
Title: Chairman, President &
Chief Executive Officer
By:/s/ Robert L. Spence
-----------------------------
Name: Robert L. Spence
Title: Chief Financial Officer &
Treasurer
13
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SYNAPTIC PHARMACEUTICAL CORPORATION
(formerly Neurogenetic Corp.)
SYNAPTIC PHARMACEUTICAL CORPORATION, a Delaware corporation (the
"Corporation"), hereby certifies and provides as follows:
1. The name of the Corporation is SYNAPTIC PHARMACEUTICAL
CORPORATION.
2. The Corporation's original Certificate of Incorporation was
filed with the Secretary of State of the State of Delaware on January 16,
1987, under the name Neurogenetic Corp.
3. This Amended and Restated Certificate of Incorporation (the
"Restated Certificate") which was duly adopted in accordance with Sections 242
and 245, with prompt written notice thereof having been given to the
stockholders of the Corporation pursuant to Section 228(d), of the General
Corporation Law of the State of Delaware, amends and restates the provisions
of the present Amended and Restated Certificate of Incorporation of the
Corporation.
4. Immediately upon filing this Restated Certificate, the text
of the present Amended and Restated Certificate of Incorporation is hereby
amended and restated to read in full as set forth herein:
ARTICLE I
The name of the Corporation is SYNAPTIC PHARMACEUTICAL CORPORATION
(the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "General Corporation Law").
ARTICLE IV
The total number of shares of all classes of stock that the
Corporation shall have authority to issue is 26,000,000 shares, consisting of
25,000,000 shares of Common Stock, par value $.01 per share (the "Common
Stock"), and 1,000,000 shares of Preferred Stock, par value $.01 per share
(the "Preferred Stock").
The following is a description of each class of stock of the
Corporation and a statement of the designations, powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions, of each such class:
(a) COMMON STOCK
Section 1. Voting Rights. The holders of shares of Common Stock
shall be entitled to one vote for each share so held with respect to all
matters voted on by the stockholders of the Corporation. In any election of
directors, no holder of shares of Common Stock shall be entitled to cumulate
his or her votes by giving one candidate more than one vote per share.
Section 2. Other Rights. Each share of Common Stock issued and
outstanding shall be identical in all respects one with the other. In the
event any dividend is paid on any shares of Common Stock, the same dividend
shall be paid on all shares of Common Stock outstanding at the time of such
payment. Except for and subject to those rights expressly granted to the
holders of the Preferred Stock, or except as may be provided by the General
Corporation Law, the holders of Common Stock shall have exclusively all other
rights of stockholders.
(b) PREFERRED STOCK
Preferred Stock may be issued from time to time in one or more
series, each of such series to have such terms as stated in the resolution or
resolutions providing for the establishment of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Except as
otherwise expressly stated in the resolution or resolutions providing for the
establishment of a series of Preferred Stock, any shares of Preferred Stock
which may be redeemed, purchased or acquired by the Corporation may be
reissued except as otherwise expressly provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of
stock for the purpose of voting by classes unless expressly provided in the
resolution or resolutions providing for the establishment thereof.
Authority is hereby expressly granted to the Board of Directors of
the Corporation to issue, from time to time, shares of Preferred Stock in one
or more series, and, in connection with the establishment of any such series
by resolution or resolutions, to determine and fix such voting powers, full or
limited, or no voting powers, and such other powers, designations, preferences
and relative, participating, optional and other rights, and the
qualifications, limitations and restrictions thereof, including, without
limitation, dividend rights, conversion rights, redemption privileges and
liquidation preferences, as shall be stated in such resolution or resolutions,
all to the fullest extent permitted by the General Corporation Law. Without
limiting the generality of the foregoing, the resolution or resolutions
providing for the establishment of any series of Preferred Stock may, to the
extent permitted by law, provide that such series shall be superior to, rank
equally with or be junior to the Preferred Stock of any other series. Except
as otherwise expressly provided in the resolution or resolutions providing for
the establishment of any series of Preferred Stock, no vote of the holders of
shares of Preferred Stock or Common Stock shall be a prerequisite to the
issuance of any shares of any series of the Preferred Stock authorized by and
complying with the conditions of this Restated Certificate.
ARTICLE V
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of the General Corporation Law or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of the
General Corporation Law, order a meeting of the creditors or class of
creditors and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three fourths in value of
the creditors or class of creditors, or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise
or arrangement and to any reorganization of this Corporation as a consequence
of such compromise or arrangement, the said compromise or arrangement and the
said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.
ARTICLE VI
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, but the foregoing provision shall not eliminate
or limit the liability of a director (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 General Corporation Law, or
(iv) for any transaction from which the director derived any improper personal
benefit. If the General Corporation Law is amended after the date of
incorporation of the Corporation to authorize corporate 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 General Corporation Law, as so amended.
ARTICLE VII
The Board of Directors of the Corporation is expressly authorized
and empowered to adopt, alter, amend or repeal the By-laws of the Corporation
in any manner not inconsistent with the laws of the State of Delaware or this
Restated Certificate, subject to the power of the stockholders of the
Corporation to adopt, alter, amend or repeal such By-laws.
ARTICLE VIII
Whenever the vote of stockholders at a meeting thereof is required
or permitted to be taken for or in connection with any corporate action by any
provision of the General Corporation Law, such meeting and vote may not, as
otherwise permitted by Section 228 of the General Corporation Law, be
dispensed with by consents in writing to such corporate action. Such vote
must be taken at a meeting of the stockholders, duly noticed and held in
accordance with the provisions of this Restated Certificate, the By-laws of
the Corporation and the General Corporation Law.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
and seal this 19th day of December, 1995.
SYNAPTIC PHARMACEUTICAL
CORPORATION
SEAL
By: /s/ Kathleen P. Mullinix
------------------------
Kathleen P. Mullinix
President and Chief
Executive Officer
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
SYNAPTIC PHARMACEUTICAL CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
SYNAPTIC PHARMACEUTICAL CORPORATION, a corporation organized and
existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Amended and Restated Certificate of
Incorporation of the Corporation, the Board of Directors on December 19, 1995,
adopted resolutions to create a series of 200,000 (two hundred thousand) shares
of Preferred Stock designated as "Series A Junior Participating Preferred
Stock."
The designation and number of shares thereof and the voting and
other powers, preferences and relative, participating, optional or other rights
of the shares of such series and the qualifications, limitations and
restrictions thereof are as follows:
Series A Junior Participating Preferred Stock
1. Designation and Amount. There shall be a series of Preferred
Stock that shall be designated as "Series A Junior Participating Preferred
Stock," and the number of shares constituting such series shall be 200,000.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, however, that no decrease shall reduce the number of
shares of Series A Junior Participating Preferred Stock to less than the number
of shares then issued and outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating Preferred
Stock, in preference to the holders of shares of any class or series of stock of
the Corporation ranking junior to the Series A Preferred Stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the 15th day of January, April, July and October in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $.025
or (b) the Adjustment Number (as defined below) times the aggregate per share
amount of all cash dividends, and the Adjustment Number times the aggregate per
share amount (payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the voting Common Stock, par value $.01 per share, of the Corporation (the
"Common Stock") since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. The "Adjustment Number" shall initially be 1000. In the event
the Corporation shall at any time after December 19, 1995 (the "Rights
Declaration Date"), (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Junior Participating Preferred Stock as provided in paragraph
(A) above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.25 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Junior Participating Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred
Stock shall entitle the holder thereof to a number of votes equal to the
Adjustment Number on all matters submitted to a vote of the stockholders of the
Corporation.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Junior Participating Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six
quarterly dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") that shall extend until
such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all shares of
Series A Junior Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period, any
provision of the Amended and Restated Certificate of Incorporation to the
contrary notwithstanding, all holders of Preferred Stock (including holders of
the Series A Junior Participating Preferred Stock) upon which these or like
voting rights have been conferred and are exercisable (the "Voting Preferred
Stock") with dividends in arrears in an amount equal to six quarterly dividends
thereon, voting as a class, irrespective of series, shall have the right to
elect two Directors.
(ii) During any default period, such voting right of
the holders of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such voting right nor the right
of the holders of any other series of Voting Preferred Stock, if any, to
increase, in certain cases, the authorized number of Directors shall be
exercised unless holders of ten percent in number of shares of Voting Preferred
Stock outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock or any other class of stock shall not
affect the exercise by the holders of Voting Preferred Stock of such voting
right. At any meeting at which the holders of Voting Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two
Directors or, if such right is exercised at an annual meeting, to elect two
Directors. If the number that may be so elected at any special meeting does not
amount to the required number, the holders of the Voting Preferred Stock shall
have the right to make such increase in the number of Directors as shall be
necessary to permit the election by them of the required number. After the
holders of the Voting Preferred Stock shall have exercised their right to elect
Directors in any default period and during the continuance of such period, the
number of Directors shall not be increased or decreased except by vote of the
holders of Voting Preferred Stock as herein provided or pursuant to the rights
of any equity securities ranking senior to or pari passu with the Series A
Junior Participating Preferred Stock.
(iii) Unless the holders of Voting Preferred Stock
shall, during an existing default period, have previously exercised their right
to elect Directors, the Board of Directors may order the calling of a special
meeting of the holders of Voting Preferred Stock, which meeting shall thereupon
be called by the Chief Executive Officer, the President, a Vice President or the
Secretary of the Corporation. Notice of such meeting and of any annual meeting
at which holders of Voting Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of Voting Preferred
Stock by mailing a copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be called for a
time not earlier than 20 days and not later than 60 days after such order or
request, any provision of the Amended and Restated Certificate of Incorporation
to the contrary notwithstanding, such meeting may be called on similar notice by
any stockholder or stockholders owning in the aggregate not less than ten
percent of the total number of shares of Voting Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such special
meeting shall be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of Stock of the Corporation if applicable, shall
continue to be entitled to elect the whole number of Directors until the holders
of Voting Preferred Stock shall have exercised their right to elect two
Directors voting as a class, after the exercise of which right (x) the Directors
so elected by the holders of Voting Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of Directors
may (except as provided in paragraph (C)(ii) of this Section 3) be filled by
vote of a majority of the remaining Directors theretofore elected by the holders
of the class of stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the holders of
a particular class of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Voting Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors elected b the holders
of Voting Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the Amended and
Restated Certificate of Incorporation or By-Laws irrespective of any increase
made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such
number being subject, however, to change thereafter in any manner provided by
law or in the Amended and Restated Certificate of Incorporation or By-Laws).
Any vacancies in the Board of Directors effected by the provisions of clauses
(y) and (z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock and Non-voting Common Stock as set forth herein)
for taking any corporation action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
A Junior Participating Preferred Stock outstanding shall have been paid in full,
the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Stock, except dividends paid ratably on
the Series A Junior Participating Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (both as to dividends and upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock, or any shares
of stock ranking on a parity with the Series A Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to any conditions and restrictions on issuance
set forth herein.
6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior Participating
Preferred Stock, unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received $10.00 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the holders
of shares of Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock and the holders of shares of the
non-voting common stock, par value $.01 per share (the "Non-voting Common
Stock") shall have received an amount per share (the "Common Adjustment") equal
to the quotient obtained by dividing (i) the Series A Liquidation Preference by
(ii) the Adjustment Number. Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred Stock, Common
Stock and Non-voting Common Stock, respectively, holders of Series A Junior
Participating Preferred Stock and holders of shares of Common Stock and
Non-voting Common Stock shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment Number to
1 with respect to such Preferred Stock and Common Stock or Non-voting Common
Stock, as the case may be, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred
Stock, if any, that rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock and
Non-voting Common Stock on a per share basis.
7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to the Adjustment
Number times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
10. Amendment. At any time that any shares of Series A Junior
Participating Preferred Stock are outstanding, the Certificate of Incorporation
of the Corporation shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Series A Junior Participating Preferred Stock, voting separately as a class.
11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, the undersigned has executed and subscribed this
Certificate and does affirm the foregoing as true under the penalties of perjury
this 19th day of December, 1995.
SYNAPTIC PHARMACEUTICAL CORPORATION
By:/s/ Kathleen P. Mullinix
------------------------
Kathleen P. Mullinix
President and Chief Executive Officer
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SYNAPTIC PHARMACEUTICAL CORPORATION
The undersigned, KATHLEEN P. MULLINIX, being the duly elected
President of SYNAPTIC PHARMACEUTICAL CORPORATION, a corporation organized and
existing under the laws of the State of Delaware, on behalf of said corporation
hereby certifies that:
FIRST: The name of the corporation is SYNAPTIC PHARMACEUTICAL
CORPORATION (hereinafter called the "Corporation").
SECOND: The date of filing of the original Certificate of
Incorporation of the Corporation with the Secretary of the State of the
State of Delaware was January 16, 1987, under the name "Neurogenetic
Corp."
THIRD: There is hereby added to the Corporation's Amended and
Restated Certificate of Incorporation a new ARTICLE IX as follows:
"ARTICLE IX
The authorized number of directors of the Corporation shall be not
less than 3 and not more than 15. The number of directors within this
range shall be stated in the Corporation's By-laws, as they may be amended
from time to time. Effective as of the annual meeting of stockholders in
1996, the Board of Directors shall be divided into three classes: Class
I, Class II and Class III. The term of office of the directors in one
class shall expire at each annual meeting of stockholders (or, when the
respective successors of the directors in such class shall have been
elected and shall have qualified, if later) or upon the resignation,
removal from office, death or incapacity of any such director, if earlier.
The initial term of office of Class I directors shall expire at the annual
meeting of stockholders in 1997, the initial term of office of Class II
directors shall expire at the annual meeting of stockholders in 1998, and
the initial term of office of Class III directors shall expire at the
annual meeting of stockholders in 1999 (or, as to each director of each
class, when his successor shall have been elected and shall have
qualified, if later) or upon his resignation, removal from office, death
or incapacity, if earlier. At each annual meeting of stockholders
beginning in 1997, successors to a class of directors whose term expires
at the annual meeting shall be elected for a three-year term and until
their successors shall be elected and shall qualify.
At any time that the By-laws are amended to change the authorized
number of directors, the Board of Directors shall determine the class or
classes to which the increased or decreased number of directors shall be
apportioned; provided, however, that the number of directors in each class
shall be as nearly equal as possible. No decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director.
The election of directors of the Corporation need not be by written
ballot, unless the By-laws of the Corporation shall so provide.
Any or all of the directors of the Corporation may be removed from
office at any time, but only for "cause," and only with the affirmative
vote of the holders of at least sixty percent (60%) of the outstanding
stock of the Corporation then entitled to vote generally for the election
of directors, given at a duly called annual or special meeting of
stockholders. For purposes of this Article IX, "cause" shall mean: (i)
conviction of a felony; (ii) declaration of unsound mind by order of
court; (iii) gross dereliction of duty; (iv) commission of an action
involving moral turpitude; or (v) commission of an action which
constitutes intentional misconduct or a knowing violation of law if such
action in either event results both in an improper substantial personal
benefit and a material injury to the Corporation.
The directors remaining in office, acting by a majority vote, or a
sole remaining director, although less than a quorum, are hereby expressly
delegated the exclusive power to fill any vacancies in the Board of
Directors, however occurring, whether by an increase in the number of
directors or as a result of the resignation, removal from office, death or
incapacity of a director or otherwise, and any director so chosen shall
hold office until the next election of the class for which such director
shall have been chosen and until his successor shall have been elected and
shall have qualified, or until his earlier resignation, removal from
office, death or incapacity.
This Article IX may not be altered, amended, or repealed except by
the affirmative vote of at least eighty percent (80%) of the outstanding
stock entitled to vote thereon and the affirmative vote of a majority of
the Board of Directors."
FOURTH: The foregoing amendment of the Corporation's Amended and
Restated Certificate of Incorporation has been duly adopted by the Board
of Directors and the stockholders of this Corporation in accordance with
the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, I have executed this Certificate of Amendment on
this 4th day of June, 1996.
/s/Kathleen P. Mullinix
-------------------------------
Kathleen P. Mullinix, President
Adopted March 1992
as Amended Through
June 4, 1996
------------------
SYNAPTIC PHARMACEUTICAL CORPORATION
(the "Corporation")
Amended and Restated By-laws
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The Corporation 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
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of New York, State of New York, at such
place as may be fixed from time to time by the board of directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the
year 1987, shall be held on the first Thursday of May if not a legal holiday,
and if a legal holiday, then on the next secular day following, at 11:00 A.M.,
or at such other date and time as shall be designated from time to time by the
board of directors and stated in the notice of the meeting, at which they shall
elect by a plurality vote a board of directors, and transact such other business
as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not less than ten nor more than sixty days before the date of
the meeting.
Section 4. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination
of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman of the board or the president and
shall be called by the chairman of the board or the president or secretary at
the request in writing of a majority of the members of the board of directors.
Such request shall state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given, not less than ten nor more than sixty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty 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 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the shares of capital stock having voting power present
in person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of law or
of the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on or
after three years from its date, unless the proxy provides for a longer period.
Section 11. Written notice of the intent by any stockholder to make
a nomination of any person for election as a director at a meeting of
stockholders must be received by the secretary of the Corporation not later than
(i) with respect to an election to be held at an annual meeting of stockholders,
ninety days in advance of the annual meeting and (ii) with respect to an
election to be held at a special meeting of stockholders for the election of
directors, the close of business on the seventh day following the day on which
notice of such meeting is first given to stockholders. The notice shall
contain: (A) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (B) a representation
that the stockholder is a holder of record of shares of stock having power to
vote at the meeting and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice: (C) a description of
all arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (D) the
citizenship of each nominee proposed by such stockholder; (E) the information
that would have been required to be included in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission had each nominee
been nominated, or intended to be nominated, by the board of directors of the
Corporation; and (F) the written consent of each nominee to serve as a director
of the Corporation if so elected.
ARTICLE III
DIRECTORS
GENERAL
Section 1. The number of directors constituting the whole board
shall be eight. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article or as otherwise
provided in the Corporation's certificate of incorporation, and each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 2. 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, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner provided by law.
Section 3. The business of the Corporation shall be managed by or
under the direction of its board of directors which may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by law or
by the certificate of incorporation or by these By-laws directed or required to
be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected board of
directors may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board of directors.
Section 7. Special meetings of the board may be called by the
president on twenty-four hours' notice to each director, either personally, by
mail, by telegram or by telecopier. Special meetings shall be called by the
president or secretary in like manner and on like notice on the written request
of two directors.
Section 8. At all meetings of the board of directors a majority of
the directors shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by law or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these By-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these By-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, be resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. 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. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board of directors, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the By-laws of the Corporation; and, unless the resolution or the
certificate of incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the certificate of
incorporation or these By-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving
the Corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like compensation for
attending committee meetings.
REMOVAL OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or By-laws, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of law or of the
certificate of incorporation or of these By-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by hand, by telegram or by telecopy.
Section 2. Whenever any notice is required to be given under the
provisions of law or of the certificate of incorporation or of these By-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The principal officers of the Corporation shall be
chosen by the board of directors and shall be a president, a vice-president, a
secretary and a treasurer. The board of directors may also choose additional
vice-presidents, and one or more assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these By-laws otherwise provide.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all principal officers of the
Corporation shall be fixed by the board of directors.
Section 5. The officers of the Corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
Corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of
the Corporation, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall preside at the meetings
of the stockholders and the board of directors. He shall have such other powers
and perform such other duties as are provided in these By-laws and, in addition
thereto, as the board of directors may from time to time determine.
Section 7. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the Corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the Corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the Corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the board of directors.
Section 12. The treasurer shall disburse the funds of the
Corporation as may be ordered by the board of directors, taking proper vouchers
for such disbursements, and shall render to the president and the board of
directors, at its regular meetings, or when the board of directors so requires,
an account of all his transactions as treasurer and of the financial condition
of the Corporation.
Section 13. If required by the board of directors, the treasurer
shall give the Corporation a bond (which shall be renewed every six years) in
such sum and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of his office and for
the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of shares of stock of 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 a vice-president
and the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the Corporation, certifying the number of shares owned by him in
the Corporation.
Section 2. Any of or all the signatures on the certificate may be
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 by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to 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. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require 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
and/or to give the Corporation a bond in such sum 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.
TRANSFERS OF STOCK
Section 4. Upon surrender to the Corporation or the transfer agent
of the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. 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 be not more than sixty nor less than ten days before the date of
such meetings, nor more than sixty days prior to any other action. 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.
REGISTERED STOCKHOLDERS
Section 6. 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 to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by law.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. 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 at any regular or special meeting, pursuant
to law. 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 2. 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 directors from time to time, in their absolute discretion, deem 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 directors shall deem conducive to the interests of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the Corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the Corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. Except as otherwise provided in the certificate of
incorporation, these By-laws, or any of them, may be altered, amended or
repealed, or new By-laws may be made, at any annual or special meeting, by the
stockholders having at least 67% of the total voting power of the Corporation,
or at any regular or special meeting of the Board of Directors, by vote of a
majority of the whole Board. By-laws made, altered or amended by the Board
shall be subject to alteration, amendment or repeal by the stockholders having
at least 67% of the total voting power of the Corporation.
ARTICLE IX
INDEMNIFICATION
Section 1. The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was or has agreed to become a director,
officer, employee or agent of the Corporation, or is or was serving or has
agreed to serve at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, against costs, charges, expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, 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. 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 2. The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was or has agreed to
become a director, officer, employee or agent of the Corporation, or is or was
serving or has agreed to serve at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, or by reason of any action alleged to have been taken
or committed in such capacity, against costs, charges and expenses (including
attorney's fees) actually and reasonably incurred by him or on his behalf in
connection with the defense or settlement of such action or suit and any appeal
therefrom, 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, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses which the Court of Chancery or
such other court shall deem proper.
Section 3. Expenses incurred in connection with a civil, criminal,
administrative or investigative action, suit or proceeding, or threat thereof,
may be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article.
Section 4. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article IX shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any By-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in 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.
MAY, 1996
CIBA-GEIGY Limited
and
SYNAPTIC PHARMACEUTICAL CORPORATION
RESEARCH & LICENSE AGREEMENT
concerning [***]
[*** CONFIDENTIAL TREATMENT REQUESTED]
RESEARCH AND LICENSE AGREEMENT
THIS AGREEMENT is made as of the day of May, 1996 between: CIBA-GEIGY
Limited, a Swiss corporation having its principal place of business at
Klybeckstrasse 141, CH-4002 Basel, Switzerland (hereinafter referred to as
"CIBA-GEIGY"), and SYNAPTIC PHARMACEUTICAL CORPORATION, a Delaware corporation
having its principal place of business at 215 College Road, Paramus, New Jersey
07652-1410, USA (hereinafter referred to as "SYNAPTIC").
RECITALS
(A) Pursuant to a Research and License Agreement made between the parties
hereto and dated as of the 4th August, 1994 ("the 1994 Agreement")
CIBA-GEIGY and SYNAPTIC have been collaborating in a research programme
[***] directed to discovering and developing compounds useful for treating
obesity and eating disorders [***]
(B) Due to progress made in the [***], CIBA-GEIGY and SYNAPTIC are interested
in collaborating in an additional research programme to discover and
develop compounds which, [***] are also useful in treating obesity and
eating disorders, as well as other metabolic disorders, and in connection
therewith, desire to reallocate between the [***] and the new research
programme SYNAPTIC scientists originally dedicated to the [***] and funded
by CIBA-GEIGY under the 1994 Agreement.
(C) CIBA-GEIGY is willing to fund the scientists reallocated from the [***] to
the new research programme and SYNAPTIC is willing to reallocate such
scientists and accept such funding in accordance with the terms of this
Agreement and of the 1994 Agreement as supplemented by Supplement No. 1
to such Agreement of even date herewith ("Supplement No. 1"). In return
for this research support, SYNAPTIC will grant CIBA-GEIGY the right to use
[***] for the discovery of such compounds for ultimate manufacture and
sale, and an exclusive world-wide right to develop, manufacture, use and
sell such compounds.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set out, the parties agree as follows:
SECTION 1
Definitions
1.0 General. Capitalised terms used and not defined herein shall have the
meanings ascribed to them in the 1994 Agreement. When used in this
Agreement, each of the following terms shall have the meanings set out
below:
1.1 "Affiliate" means, with respect to any entity, any other entity
[*** CONFIDENTIAL TREATMENT REQUESTED]
1
controlling, controlled by or under common control with that entity, but
only for so long as such control exists. One entity shall be deemed to
control another entity if it holds not less than [***] of the voting stock
of that other entity or, if lower, the maximum percentage of voting stock
of the other entity permitted to be held under the laws of any country in
which such entity is registered.
1.2 "Assay" means a proprietary assay for [***]
1.3 "Early Development Compound" means a compound accepted by CIBA-GEIGY for
pre-clinical development and approved for the carrying out of Phase I and
Phase II trials.
1.4 "Effective Date" shall mean the 4th August, 1995.
1.5 "Full Development Compound" means a compound which has been approved by
CIBA-GEIGY for Phase III clinical development.
1.6 "Field" means [***]
1.7 "FTE" means a researcher employed by SYNAPTIC or CIBA-GEIGY and assigned
to work on the Project with such time and effort to constitute one
scientist working on the Project on a full time basis consistent with
normal business and scientific practice (e.g. at least forty (40) hours
per week of dedicated effort for at least 48 weeks per year).
1.8 "Half-Year" means a period of six (6) calendar months commencing on the
1st January or the 1st July in any Year.
1.9 "Net Sales" means the total amount invoiced to un-licensed third parties
for sales of Products in each Half-Year by CIBA-GEIGY, its Affiliates or
sublicensees, less all trade, quantity and cash discounts actually
allowed, credits or allowances actually granted on account of rejections,
returns, billing errors, or retroactive price reductions, and duties,
taxes and other governmental charges determined in accordance with
CIBA-GEIGY's normal accounting procedures.
1.10 [***]
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[***]
1.11 "Patent Rights" means patents and patent applications owned or controlled
by SYNAPTIC and/or CIBA-GEIGY [***] and all divisions, continuations,
continuations-in-part, reissues, extensions (which shall be deemed to
include Supplementary Protection Certificates) and foreign counterparts
thereof, at least one claim of which covers the manufacture, use or sale
of Products.
1.12 "Product" means any commercial form of a Project Compound (including,
specifically, acids, esters, salts and pro-drug forms, enantiomers,
metabolites, solvates, polymorphs and special formulations) or Project
Technology, including diagnostic testing services and/or products, made,
used or sold for a Project Use.
1.13 "Project" means a collaborative research and development project to be
carried out by SYNAPTIC and CIBA-GEIGY in the Field in accordance with the
terms of this Agreement and directed to the design and development of
compounds for Project Uses.
1.14 "Project Compound" means [***]
1.15 "Project Funds" means financial support provided to SYNAPTIC by CIBA-GEIGY
to support the Project. All Project Funds will be spent at SYNAPTIC,
except in the event of termination as described in Sections 5.2 through
5.5.
1.16 "Post-Project Term" means the period of thirty-six months immediately
following the Project Term.
1.17 "Project Team" means a committee, comprising [***] which will have
responsibility for planning and directing the operational aspects of the
Project subject to the provisions of Section 2.6.
1.18 "Project Technology" means [***]
1.19 "Project Term" means a period commencing as of the Effective Date and
ending on (i) the 3rd August, 1998 or, if extended pursuant to Section
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3
5.1, the 3rd August, 1999; or (ii) the date of termination of the Project
pursuant to any of Sections 5.2 through 5.5, if earlier.
1.20 "Project Use" means and includes the treatment in humans of eating or
metabolic disorders, or obesity, and/or the diagnosis of any such
disorders or conditions.
1.21 "Steering Committee" means the joint steering committee comprising [***]
which, subject to the provisions of Section 2.5, will have responsibility
for monitoring and directing the activities of the Project Team.
1.22 "Year" means any period of twelve (12) calendar months commencing on the
1st January in any calendar year.
SECTION 2
Planning and Execution of Project
2.0 The Project. Not later than the 31st May, 1996 the Project Team will
establish an initial Research Plan which will be submitted to the Steering
Committee for approval within two months after the date of signature of
this Agreement. Thereafter, during the Project Term the parties shall
engage in the Project in accordance with the terms of the Research Plan,
as modified from time to time in accordance with Section 2.1.
2.1 Planning and Review. During the Project Term the Project Team will meet
at least [***] to plan and direct the operational phases of the Project,
and the Steering Committee will meet at least [***] to monitor the
progress of the Project and to provide strategic direction to the Project
Team. [***]
The Research Plan may be modified at any time by [***] in the light of
experience gained in the course of the Project. The Project Team shall
endeavour to assign specific tasks to both SYNAPTIC and CIBA-GEIGY so as
to maximise progress of the Project and to avoid any duplication of
research efforts.
2.2 Conduct of Studies. All studies done in connection with the Project shall
be carried out in strict compliance with all applicable laws, regulations,
or guidelines governing the conduct of research at the site where such
studies are being conducted. SYNAPTIC and CIBA-GEIGY shall both comply
with all laws and regulations applicable to the care and use of
experimental animals at the site where the studies are conducted. In
addition, all animals utilised in the Project shall be provided humane
care and treatment in accordance with the most acceptable current
veterinary practices.
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2.3 Personnel of Steering Committee. The Steering Committee shall be formed
promptly following execution of this Agreement, but in no case later than
thirty (30) days after the Effective Date. Each party shall be entitled
to appoint [***] to act as its representatives on the Steering Committee.
Both CIBA-GEIGY and SYNAPTIC shall have the ability to change their
representation on the Steering Committee as deemed appropriate, but will
notify the other party promptly of any such change.
2.4 Personnel of Project Team. The Project Team shall be formed promptly
following execution of this Agreement. Each party shall be entitled to
appoint [***] to act as its representatives on the Project Team. Both
CIBA-GEIGY and SYNAPTIC shall have the ability to change their
representation on the Project Team as deemed appropriate, but will notify
the other party promptly of any such change. The Project Team shall report
to and operate under the overall direction of the Steering Committee.
2.5 Responsibilities of Steering Committee. The Steering Committee shall
monitor and direct the activities of the Project Team, approve and decide
on the direction of the Project (within the terms of this Agreement), and
ensure high performance by both parties.
Any issues which cannot be resolved by the Steering Committee shall be
referred to a Management Committee, comprising [***], for resolution. The
members of the Management Committee are currently, from CIBA-GEIGY: [***]
and from SYNAPTIC: [***]
2.6 Responsibilities of the Project Team. The Project Team shall elaborate
and coordinate action plans and will be responsible for the economic use
of capacities and for the fulfilment of the Research Plan approved by the
Steering Committee. It reports to the Steering Committee.
2.7 Exclusivity of Research. [***] For the avoidance of doubt, for the
purposes of this Section 2.7 any entity other than Sandoz Limited, of
Basle, Switzerland, or any company acquiring the pharmaceuticals business
of CIBA-GEIGY as part of the merger of Sandoz Limited and CIBA-GEIGY,
which at the Effective Date was not an Affiliate of a party shall remain a
third party notwithstanding that it may later become an Affiliate. Any
such third party shall be bound by obligations of confidentiality no less
stringent than those set out in this Agreement, and, unless otherwise
agreed to by the other party, shall be obliged to transfer the results of
its research to the parties to this Agreement as though the work had been
undertaken by the party on whose behalf the research is being carried out.
2.8 Joint Project Team and Steering Committee Meetings. It is contemplated
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that members of the Project Team and Steering Committee may also be members of
the Project Team and Steering Committee for the [***]. In view of this
potential overlap in membership, as well as the potential value perceived by
both parties in having the two Project Teams and Steering Committees interact
and share scientific data and observations regarding their respective projects,
it is also contemplated that the two Project Teams and Steering Committees may
hold joint meetings, prepare single sets of minutes reflecting such meetings and
prepare joint reports such as those required by Section 4.0.
SECTION 3
Funding of Project
3.0 Funding. In consideration of the research performed by SYNAPTIC as part
of the Project, CIBA-GEIGY shall provide Project Funds to SYNAPTIC during
the Project Term as follows:
3.1 Amount. For each period of twelve (12) months from first anniversary of
the Effective Date Project Funds shall be an amount equal to [***] (as
adjusted for inflation pursuant to the Bureau of Labor Statistics Consumer
Price Index for Urban Consumers, New York, N.E. New Jersey Metropolitan
Region Price Index ("the CPI")) multiplied by the number of SYNAPTIC FTEs
which the Steering Committee has decided should be employed on the Project
during such period in accordance with Section 3.3. This figure shall be
subject to further adjustment for inflation pursuant to the CPI on each
subsequent anniversary of the Effective Date.
3.2 Payment. Project Funds shall be paid to SYNAPTIC by CIBA-GEIGY in
substantially equal quarterly instalments in advance on or before the
first day of each calendar quarter, namely: January 1, April 1, July 1,
and October 1 of each Year during the Project Term; PROVIDED HOWEVER that
the first payment, which shall be made at least thirty (30) days prior to
the first anniversary of the Effective Date, shall be equal to (a) the
quarterly payment plus (b) a pro-rated portion of the quarterly payment
(based on the number of days between the first anniversary of the
Effective Date and the beginning of the first complete calendar quarter
following such anniversary) but no additional quarterly payment shall be
payable on the first day of such complete calendar quarter; AND PROVIDED
FURTHER that the final payment shall be reduced pro rata according to the
number of days between the end of the preceding calendar quarter and the
date of expiry hereof, so that the amount of the first and last payments
hereunder are equal to the sum of the instalments for two complete
calendar quarters except only for adjustment of the last payment in
accordance with Section 3.1.
3.3 Allocation of Resources by SYNAPTIC. SYNAPTIC shall at substantially all
times during the Project Term assign such number of FTEs to work on the
Project as shall be agreed from time to time by the Steering Committee,
which number shall be equal to [***] less the number of FTEs assigned from
time to time to work on the [***] in accordance with the 1994 Agreement as
supplemented by Supplement No. 1. While the level of training and
research experience of these FTEs may vary from time to time, SYNAPTIC
will use its best reasonable efforts to ensure that at
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least [***] of the aggregate number of FTE's assigned to the Project and [***]
will have educational degrees of Ph.D. or M.D., or research experience of
greater than ten (10) years in a relevant scientific field that qualifies them
as equivalent to a Ph.D. or M.D. level researcher. SYNAPTIC shall keep accurate
records showing manpower utilisation on the Project and shall produce such
records to CIBA-GEIGY at any time on request.
3.4 Allocation of Resources by CIBA-GEIGY. CIBA-GEIGY shall at all times
reasonably required for the purposes of the Project allocate sufficient
resources of suitably qualified and experienced scientists to perform
those tasks assigned to it by the Project Team. If it should fail to do
so, or if there should be a dispute between the parties as to whether
CIBA-GEIGY is fulfilling its obligations in this regard which the
Management Committee is not able to resolve, [***]
SECTION 4
Results of Project
4.0 Reports. The Project Team shall prepare or cause to be prepared
confidential comprehensive written reports at least [***] during the
Project Term. These reports shall describe in detail the progress of the
Project, [***] and shall be distributed to the members of the Steering
Committee.
4.1 Experimental Techniques. During the Project Term both SYNAPTIC and
CIBA-GEIGY shall disclose Project Technology to each other so far as
necessary for the purposes of the Project. Such disclosure may include
limited visits by CIBA-GEIGY and SYNAPTIC to the facilities of the other to
permit discussion and observation of Project Technology and Assays, on a
frequency and duration to be mutually agreed by the Project Team. During
the Project Term SYNAPTIC shall provide assistance as reasonably necessary
to enable [***]. In the event that SYNAPTIC uses the services of any
third party to develop equipment required for an Assay, such equipment
shall be supplied to CIBA-GEIGY at cost of manufacture. Development
costs shall not be charged.
4.2 Samples. During the Project Term both SYNAPTIC and CIBA-GEIGY shall
provide each other with [***]
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4.3 Responsibilities of the Parties.
(a) Responsibilities of SYNAPTIC:
During the Project Term SYNAPTIC will provide, insofar as it is
relevant to the Project, molecular biology expertise, [***].
(b) Responsibilities of CIBA-GEIGY:
1. During the Project Term and for so long as CIBA-GEIGY shall
have a license under Section 6.0(a) it will [***].
2. During the Project Term and the Post-Project Term CIBA-GEIGY
will:-
(i) use no less efforts than it employs with regard to its own
compounds that are being actively pursued, to develop and
commercialise the Products;
(ii) promptly notify SYNAPTIC of the selection of a particular
Project Compound as an Early Development Compound; and
(iii) provide SYNAPTIC with [***] report summarising the efforts
devoted to any such Early Development Compound during the [***]
preceding such report. CIBA-GEIGY's obligation to provide such
reports shall continue with respect to each Early Development
Compound until development thereof is terminated or upon the first
sale of a Product consisting of or containing such Project Compound,
whichever is the later.
4.4 Patentable Inventions. In the event that a patentable invention is
conceived or reduced to practice in the course, and within the scope, of
the Project by SYNAPTIC or CIBA-GEIGY, the party making the invention
shall disclose sufficient details thereof to the other party in sufficient
time for the other party to comment thereon before any application for a
patent therefor is filed, it being understood, however, that the party
making the invention shall make the final decision with respect to any
such filing. The party whose employees are inventors of patentable
technology shall have the right to file or cause to have filed a patent
application covering such invention. In the event SYNAPTIC or CIBA-GEIGY
chooses not to file a patent application for an invention made by its
employees, the other party will be given the opportunity to pursue patent
protection on that invention at its own expense; PROVIDED, HOWEVER, that
in this event ownership in the patent will be assigned to the party that
pursues the patent, and the inventing party shall be granted a
royalty-free, non-exclusive license to practice the patented invention.
SYNAPTIC shall own any such patent application and any patent or patents
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maturing therefrom on inventions made by SYNAPTIC employees, and CIBA-GEIGY
shall own any such patent applications and any patent or patents maturing
therefrom on inventions made by CIBA-GEIGY employees. Each party shall bear the
expenses incurred in the filing, prosecution, or maintenance of patent
applications or patents which are owned by or assigned to it, in accordance with
the foregoing provisions of this Section.
4.5 [***]
4.6 Filing and Prosecution of Patent Applications on [***].
[***]
4.7 Assistance.
(a) If so requested by the party filing a patent application pursuant to
Sections 4.4 or 4.6, the other party will provide reasonable
assistance to the filing party if such assistance is necessary or
desirable in order to obtain the optimum patent protection for the
invention.
(b) Each party agrees to notify the other party promptly if it should
become aware of any infringement or threatened infringement of the
Patent Rights by a third party, and in the event that the owner of
the Patent Rights institutes proceedings against the third party to
restrain or prevent the infringement, the other party will, if so
requested, provide reasonable assistance to the owner at the owner's
expense.
4.8 Confidentiality. Except as otherwise expressly provided in this
Agreement, both SYNAPTIC and CIBA-GEIGY, and their employees, agents,
consultants and others having access to Project Technology, Assays,
information [***] including but not limited to the Steering Committee and
its individual members, shall use their best efforts to retain in
confidence all Project Technology, information and samples received from
each other prior to or during the course of the Project. A party
receiving such Project Technology shall handle it with the same degree of
care as regards confidentiality as it does its own proprietary technology,
information and [***]. Such information may, however, be
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disclosed if and to the extent reasonably necessary to allow SYNAPTIC or
CIBA-GEIGY and its respective Affiliates, their employees, agents,
consultants and others having access to Project Technology, Assays,
information and samples received from each other prior to or during the
course of the Project, including but not limited to the Project Team, the
Steering Committee, the Management Committee, and their individual
members, to prosecute or defend against litigation with third parties, to
file and prosecute patent applications, or to comply with governmental
regulations. Moreover, SYNAPTIC and CIBA-GEIGY may disclose confidential
Project Technology to third parties to the extent needed to fulfil the
objectives of the Project, with the prior written approval of the other
party.
Such obligation of confidentiality, as to SYNAPTIC, CIBA-GEIGY and third
parties, shall be waived as to information which (i) is in the public
domain at the time of disclosure; (ii) comes into the public domain
through no fault of the party claiming waiver; (iii) was known to the
party claiming waiver prior to its disclosure by the other; or (iv) is
disclosed to the party claiming waiver by a third party having a lawful
right to make such disclosure.
The above obligation of confidentiality shall be modified after expiry of
the Post-Project Term, such that SYNAPTIC and CIBA-GEIGY can pursue
exploitation of the Project Technology with third parties, to the extent
of the rights licensed to them respectively hereunder, after expiry of the
Post-Project Term. Should CIBA-GEIGY terminate the Agreement prematurely
in accordance with Section 5.2, SYNAPTIC's obligation of confidentiality
as to CIBA-GEIGY's Project Technology shall be eliminated.
In the event of a breach, or threat of breach, of the obligations of
confidentiality provided herein, the course of action or remedies
available to the damaged party shall include, but not be limited to,
injunctive relief.
4.9 Publications. While it is understood that both CIBA-GEIGY and SYNAPTIC
shall be free to publish the results of their respective studies carried
out under this Agreement, both SYNAPTIC and CIBA-GEIGY agree to provide
the other the opportunity to review any proposed abstracts, posters and
other material or information to be published or presented at a scientific
meeting, and any manuscripts at least thirty (30) days prior to their
intended presentation or submission for publication and, at either party's
request, shall delay presentation or submission for a period sufficient to
permit adequate steps to be taken to secure patent protection for any
patentable subject matter referred to therein. The reviewing party shall
carry out its review with reasonable promptness and approval for
publication shall not be unreasonably withheld. SYNAPTIC and CIBA-GEIGY
will delay or refrain from publication if either party can demonstrate
this to be contrary to its interests or damaging to the Project.
10
SECTION 5
Term and Termination
5.0 Term. This Agreement shall come into operation as of the Effective Date
and shall remain in force until the expiration of all royalty obligations
pursuant to Section 6, unless sooner terminated in accordance with the
provisions of Section 5.2.
5.1 Extension. CIBA-GEIGY may extend the Project Term for a further period of
twelve (12) months provided it serves on SYNAPTIC notice of its wish to do
so not later than the 4th August, 1997. Such extension shall be on
substantially the same terms as set out herein, mutatis mutandis, with
such extension contemplating additional funding by CIBA-GEIGY at the same
index-adjusted rate per FTE per year in accordance with Section 3.1 and
continuing studies on the Project pursuant to direction by the Steering
Committee. Any extensions beyond the fourth year would be by mutual
agreement.
5.2 Termination for Breach. If either party shall be in material default of
any of its obligations under this Agreement and shall fail to remedy such
default within sixty (60) days after written notice thereof specifying the
nature of such default then, notwithstanding anything to the contrary
contained in this Agreement, the party not in default shall have the
option of terminating this Agreement by giving written notice of
termination to the party in default, which option, if it is to be
exercised, must be exercised within thirty (30) days of the expiry of the
sixty (60) days allowed to correct the default.
5.3 Termination of the Project for Bankruptcy. Either party shall have the
right, at its option, to terminate the Project forthwith in the event that
the other party shall become involved in insolvency, dissolution,
bankruptcy or receivership proceedings affecting the operation of that
other party's business to such an extent that it is incapable of
fulfilling its obligations hereunder, except that in the event of an
involuntary bankruptcy filing against either party, that party shall have
sixty (60) days to remedy the situation before the Project may be
terminated.
5.4 Change of Control. Either party may terminate the Project twelve months
after the other party merges with or is taken over by another entity if
the terminating party can demonstrate to the reasonable satisfaction of
the other party that such merger or change of ownership or control is
adversely affecting, or has adversely affected, its interests (e.g.
because such other entity is a competitor of the terminating party,
because the other party would not be in a position to continue the
Project, etc.) provided that it serves written notice of termination on
the other party not less than three months before the date of termination.
It is expressly agreed that this right shall not be exercised by SYNAPTIC
on the merger of CIBA-GEIGY and Sandoz Limited, Basel, Switzerland.
5.5 Third Party Patents. If CIBA-GEIGY or SYNAPTIC is prevented from
effectively pursuing the Project with the use of SYNAPTIC Project
Technology as a result of an issued patent owned by a third party, the
11
party so prevented shall have the option of terminating the Project by
giving written notice of termination to the other. Should CIBA-GEIGY or
SYNAPTIC become aware of a blocking patent, or be notified that by
practicing Project Technology or Assays it is infringing a third party
patent, it will immediately inform the other party.
5.6 Effect of Termination or Expiry. Termination or expiry of this Agreement
shall not affect the rights and obligations of the parties accrued under
this Agreement prior to termination or expiry, all of which shall survive
such termination or expiry. In addition the liabilities of the parties
for any breach of this Agreement shall survive any such termination or
expiry. Sections 1.0 through 1.22, 4.2 (the last sentence only) 4.4 (the
second paragraph only),4.5, 4.6, 4.7, 4.8, 5.4, 6.1 through 6.6, 7, 8.3
and 8.5 shall, except to the extent expressly limited by their terms or by
other provisions of this Agreement, also survive any such termination or
expiry. Any Project Funds paid by CIBA-GEIGY but not committed by
SYNAPTIC at termination shall be refunded to CIBA-GEIGY, and CIBA-GEIGY
shall have no further obligation to pay Project Funds.
Notwithstanding anything to the contrary contained in this Agreement, if
this Agreement is terminated by either party pursuant to Section 5.2,
then, in addition to the provisions referred to in the preceding
paragraph, the provisions hereof pursuant to which the non-terminating
party grants any license to the terminating party shall survive such
termination to the extent provided therein.
5.7 Cooperation during the Post-Project Term: During the Post-Project Term
the Steering Committee will meet at least once per year at a venue to be
mutually agreed to exchange information concerning Project Compounds.
SECTION 6
Commercial Rights and Payments
6.0 (a) SYNAPTIC hereby grants to CIBA-GEIGY the following licences:
(i) during the Project Term and the Post-Project Term: an
exclusive, worldwide licence to use, for the sole purpose of
discovering and/or developing Project Compounds to be employed for
Project Uses, all SYNAPTIC Project Technology and Assays and all
SYNAPTIC Patent Rights which would be infringed by the exercise by
CIBA-GEIGY of its rights under this Agreement, subject to the
reservation in favour of SYNAPTIC of the right to use all the said
Project Technology, Assays and Patent Rights for the purposes of
this Agreement and for other purposes not falling within the scope
of the licence hereby granted; and
(ii) following the Post-Project Term, a non-exclusive, worldwide,
licence to use, for the sole purpose of identifying or discovering
and developing compounds to be employed for Project Uses and
negative testing of compounds for Project Uses, all such SYNAPTIC
Project Technology and Assays and all SYNAPTIC Patent Rights which
would be infringed by CIBA-GEIGY's exercise of its rights under this
Agreement. Such licence shall be royalty-free unless the compound
12
being developed is a Project Compound, in which case royalties shall
be payable in respect of such Project Compound in accordance with
the provisions of this Section 6.
(iii) an exclusive, worldwide, royalty-bearing licence under
SYNAPTIC's Patent Rights for the life of those patents to
manufacture, have manufactured, use and sell Products developed from
Project Compounds or Project Technology identified or discovered
during the Project Term or existing as at the Effective Date.
(b) CIBA-GEIGY hereby grants to SYNAPTIC the following licences:
(i) during the Project Term a sole, worldwide, royalty-free
licence to use exclusively for the purposes of the Project all
CIBA-GEIGY Project Technology in the Field and all CIBA-GEIGY's
Patent Rights which would be infringed by SYNAPTIC's performance of
its obligations under this Agreement; and
(ii) following the Project Term a non-exclusive royalty-free
licence to use all CIBA-GEIGY Project Technology and all CIBA-GEIGY
Patent Rights (not being Patent Rights in respect of CIBA-GEIGY
compounds) for uses that are neither Project Uses nor uses for
indications the subject of an agreement concluded between CIBA-GEIGY
and SYNAPTIC following the exercise by CIBA-GEIGY of the rights set
out in Section 6.0 (d) below.
(c) The licences granted pursuant to Section 6.0(a) above shall not be
sub-licensable by CIBA-GEIGY except so far as necessary to enable
Products to be manufactured, used and/or sold by CIBA-GEIGY's
Affiliates and/or third party sub-licensees.
(d) If as a result of the Project, and during the Project Term SYNAPTIC
should discover uses for [***] other than a Project Use, SYNAPTIC
will report such discovery to CIBA-GEIGY together with all
scientific evidence available to it to support the hypothesis that
such use could be of therapeutic importance. Within one hundred and
twenty (120) days of receipt of such information, CIBA-GEIGY will
notify SYNAPTIC whether it wishes to exercise rights of first
negotiation for rights to such discovery, and shall, if it chooses
to exercise such rights, conclude an agreement to that effect with
SYNAPTIC within a further ninety (90) days.
(e) Should CIBA-GEIGY fail to exercise its rights of first negotiation
within the one hundred and twenty (120) day period referred to in
sub-section (d) above, or fail to conclude an agreement with
SYNAPTIC during the ninety (90) day period referred to in that sub-
section, SYNAPTIC shall be free to pursue the exploitation of such
discovery on its own or with other partners, subject to payment to
CIBA-GEIGY of compensation to be negotiated in good faith for the
core research funding by CIBA-GEIGY under this Agreement, such
compensation to be paid only out of sums received by SYNAPTIC either
from the sale of products consisting of or containing compounds
discovered or developed using such discovery and/or received by
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SYNAPTIC either as a lump sum or as royalties from any third party
on sales of such products. In assessing what, if any, compensation
should be paid to CIBA-GEIGY regard shall be had to the extent of
CIBA-GEIGY's financial or other contribution to the discovery and to
the amount of further research and development effort required to be
invested by SYNAPTIC and/or the third party.
(f) If during the Post-Project Term SYNAPTIC should identify or discover
a Project Compound (hereinafter referred to as a "Post-Project
Compound") it will notify CIBA-GEIGY promptly and supply CIBA-GEIGY
with a sample of the compound and as much information relating to
the compound as SYNAPTIC has available to it to support the
hypothesis that such compound could be of therapeutic importance.
CIBA-GEIGY shall notify SYNAPTIC within one hundred and twenty (120)
days of the date of receipt of the sample and information whether it
wishes to negotiate for rights to the compound. On receipt of
notice from CIBA-GEIGY that it wishes to negotiate for a licence of
the rights to the compound SYNAPTIC shall as soon as practicable
notify CIBA-GEIGY of the terms on which it is prepared to grant a
licence to CIBA-GEIGY. The parties will then negotiate the terms
of the licence in good faith. If the parties fail to reach
agreement on the principal terms of the licence within ninety (90)
days, or if CIBA-GEIGY should decline the compound or fail to notify
SYNAPTIC within the one hundred and twenty (120) day period that it
wishes to negotiate for a licence to the compound SYNAPTIC shall be
free to offer rights to the compound to a third party. However, if
CIBA-GEIGY had notified SYNAPTIC that it wished to negotiate for a
licence, SYNAPTIC shall not thereafter license or offer to license
the compound to a third party on terms more favourable to the third
party than those offered to CIBA-GEIGY without first offering the
same terms to CIBA-GEIGY. Notwithstanding anything hereinbefore
contained SYNAPTIC shall not offer a Post-Project Compound to a
third party nor itself develop a Post-Project Compound for a Project
Use if such Post-Project Compound is an analog of a Project Compound
which is under development by CIBA-GEIGY or of which CIBA-GEIGY
notifies SYNAPTIC it intends to commence development during the
Post-Project Term unless and until CIBA-GEIGY subsequently
discontinues development of such Post-Project Compound. CIBA-GEIGY
will advise SYNAPTIC promptly in the event of it discontinuing
development of such a Post-Project Compound.
6.1 Royalties. In further consideration of the collaboration with SYNAPTIC
and of the licenses granted to CIBA-GEIGY hereunder:
(a) CIBA-GEIGY shall pay to SYNAPTIC a royalty on Net Sales of Products
in countries where the sale of such Products is covered by a claim
of the Patent Rights ("Patented Products") as follows:
(i) In each Year [***] per cent of the first Five hundred million
US Dollars (US $500,000,000) of Net Sales in such Year; and
[*** CONFIDENTIAL TREATMENT REQUESTED]
14
(ii) thereafter in such Year, [***] per cent of Net Sales in such
Year in excess of Five hundred million US Dollars (US
$500,000,000).
(b) In the case of Net Sales of Products in countries where the sale of
the Products is not covered by a claim of the Patent Rights
("Unpatented Products") the rate of the royalty payable in respect
of such Net Sales shall be reduced to one half of the royalty rate
payable pursuant to Section 6.1 (a).
(c) If the aggregate Net Sales of Patented Products and Unpatented
Products in any Year should exceed five hundred million US dollars
($500,000,000), sales of each category of Products shall be deemed
to have taken place in the same proportions throughout the Year.
(For example, if Net Sales of Products in any year totalled $900
million of which $600 million were of Patented Products and $300
million were of Unpatented Products the royalties due on such sales
would be calculated as follows:
Patented Products:
$500 million x 2/3 at [***] million
$400 million x 2/3 at [***] million
Unpatented Products:
$500 million x 1/3 at [***] million
$400 million x 1/3 at [***] million
Total royalties = [***]
(d) CIBA-GEIGY's obligation to pay SYNAPTIC royalties under this
Agreement shall commence on the first commercial launch of a
Product for a Project Use and shall continue, for Patented Products
until expiry of the last to expire of the Patent Rights and for
Unpatented Products for a period of ten (10) years from the date of
first commercial launch, in each case on a country-by-country basis.
Only one royalty will be due on the sale of a specific Product,
regardless of the number of patent claims covering such Product. If
the patents relating to a Patented Product expire, lapse or are
revoked before the expiry of ten (10) years from the launch date in
any country, the Product shall be treated as an Unpatented Product
for the remainder of the ten (10) year period.
6.2 Payment. Royalty payments shall be calculated for each Half-Year, and
made within ninety (90) days of the end of such Half-Year. CIBA-GEIGY
shall provide a statement and accounting with each payment, including a
breakdown of Net Sales during the applicable Half-Year and the calculation
of the royalty.
6.3 Blocked Currency. In each country in which the local currency is blocked
and cannot be removed from the country, at CIBA-GEIGY's election royalty
accrued in each such country shall be paid to SYNAPTIC in local currency
by deposit in a local bank designated by SYNAPTIC.
[*** CONFIDENTIAL TREATMENT REQUESTED] 15
6.4 Royalty Reduction. In the event that CIBA-GEIGY must obtain a separate
license from a third party in order to practice SYNAPTIC Project
Technology or use an Assay, the amount of royalty payable to SYNAPTIC
pursuant to Section 6.1 with respect to any Half-Year shall be reduced by
an amount equal to that paid or to be paid to the third party with respect
to the same period, but in no case shall the royalty amount paid to
SYNAPTIC with respect to any such period be less than one half of the
amount of the royalty otherwise due with respect to such period.
Each party shall notify the other as soon as practicable after it becomes
aware of the existence of any third party patent rights which would
prevent CIBA-GEIGY from practicing SYNAPTIC Project Technology.
Thereafter the parties will meet to discuss the action to be taken in
relation to any such blocking patent rights. CIBA-GEIGY shall be entitled
to approach the owner of such patent rights to negotiate for an un-
blocking license. If it does so, it shall negotiate with such owner in
good faith with a view to obtaining the best possible license terms from
such owner, and shall keep SYNAPTIC informed of the progress of such
negotiations. SYNAPTIC shall have the right to participate with
CIBA-GEIGY in such negotiations.
6.5 Audit Rights. Either party shall have the right to audit the books of the
other party once a Year to verify the accuracy of the royalty payments.
Such audit will be performed by an independent certified public accountant
at the expense of the party seeking the audit, unless the audit reveals a
greater than five percent (5%) discrepancy in the royalty amount that
should have been paid in comparison to that actually paid, in which case
the expense of the audit will be borne by the other party. Both SYNAPTIC
and CIBA-GEIGY shall keep fair and accurate records on the use of Project
Technology and Assays in drug discovery and compound research.
6.6 Milestone Payments.
(a) Subject to the last sentence of this Section 6.6, CIBA-GEIGY will
pay to SYNAPTIC milestone payments as follows:
(i) On acceptance by CIBA-GEIGY of each Project Compound as an
Early Development Compound: [***]
(ii) On acceptance by CIBA-GEIGY of each Project Compound as a Full
Development Compound: [***]
(iii) Upon the submission of each NDA or similar application for a
Project Compound in one of the following countries, namely:
the US; a key country in Europe (UK, Germany, or France); or
Japan: [***]
(iv) Upon approval for marketing of each Project Compound
(including approval of the price and approval for
reimbursement, if applicable) in one of the following
countries, namely: the US; a key country in Europe (UK,
[*** CONFIDENTIAL TREATMENT REQUESTED] 16
Germany, or France); or Japan: [***]
(b) [***] PROVIDED ALWAYS that the amount creditable against royalties
in any Half-Year shall not exceed fifty per cent of the royalties
due in respect of such period, the balance being carried forward to
be credited against royalties due in respect of future periods.
(c) If a Project Compound fails during development and is replaced by
another Project Compound ("the New Project Compound") and if the New
Project Compound has the same mechanism of action [***] as that of
the failed Project Compound, then notwithstanding anything to the
contrary contained herein, milestones already paid with respect to
the failed Project Compound will be credited against milestones
payable with respect to the New Project Compound.
SECTION 7
Disclosure of Agreement
7.0 Disclosure of Agreement. Except as required by law, neither SYNAPTIC nor
CIBA-GEIGY shall release to any third person or publish in any way any
non-public information with respect to the terms of this Agreement or
concerning their cooperation without the prior written consent of the
other, which consent will not be unreasonably withheld. The form, content
and timing of any such announcement shall be agreed by the parties in
advance.
The text of any press release to be issued by SYNAPTIC and/or CIBA-GEIGY
concerning the conclusion of this Agreement as well as the precise date
and timing of the press release shall be agreed by the parties in writing
in advance, such agreement not to be unreasonably withheld or delayed.
SECTION 8
Miscellaneous Provisions
8.0 No Agency. It is understood and agreed that SYNAPTIC and CIBA-GEIGY shall
each have the status of an independent contractor under this Agreement and
that nothing in this Agreement shall be construed as authorisation for
either party to act as agent for the other. SYNAPTIC members of the
Project Team, Steering Committee, and Management Committee shall be and
shall remain employees of SYNAPTIC, and CIBA-GEIGY members of the Project
Team, Steering Committee, and Management Committee shall be and shall
remain employees of CIBA-GEIGY, and neither party shall incur any
liability for any act or failure to act by employees of the other party.
8.1 Force Majeure. The obligations of each party hereto shall be suspended
during such time and to the extent that fulfillment of any such obligation
shall be prevented by acts beyond the reasonable control of the party
affected thereby.
[*** CONFIDENTIAL TREATMENT REQUESTED] 17
8.2 Amendment. This Agreement may not be amended, supplemented, or otherwise
modified except by an instrument in writing signed by both parties.
8.3 Entire Agreement. This Agreement together with the [***] as supplemented
by Supplement No. 1, represents the entire agreement and understanding
between the parties relating to the subject matter hereof, and supersedes
all written or oral agreements, consents or understandings (if any) with
respect thereto given or made between the parties prior to the date
hereof.
8.4 Waivers. Any obligation of either party hereunder may be waived by a
written instrument signed by the other party. Any delay or omission on
the part of any party in the exercise of its strict rights hereunder will
not impair those rights nor will it constitute a renunciation or waiver of
those rights. Any waiver by any party of any term or condition of this
Agreement in any one instance shall not be deemed or construed to be a
waiver of such term or condition for any other instance in the future
(whether similar or dissimilar) or of any subsequent breach hereof.
8.5 Applicable Law. This Agreement shall be construed and the rights of the
parties determined in accordance with the laws of the State of New York
without regard to the principles of conflict of laws. The venue of any
legal proceedings to resolve any dispute between the parties shall be New
York, New York State.
8.6 Headings. The headings of the Sections of this Agreement are for general
information and reference only, and this Agreement shall not be construed
by reference to such titles.
8.7 Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been
sufficiently given for all purposes hereof if mailed by first class
certified or registered mail, postage prepaid, addressed to the party to
be notified at its address shown below or such other address as may have
been furnished in writing to the notifying party.
To CIBA-GEIGY:
CIBA-GEIGY Limited
Legal Department
Klybeckstrasse 141
CH-4002 Basel
Switzerland
Attention : The Head of Legal Department
To SYNAPTIC:
Synaptic Pharmaceutical Corporation
215 College Road
Paramus
New Jersey 07562-1410
USA
Attention: The President
[*** CONFIDENTIAL TREATMENT REQUESTED] 18
AS WITNESS the signatures of the authorised representatives of the parties
hereto the day and year first above written.
SYNAPTIC PHARMACEUTICAL CORPORATION
Signature: /s/Kathleen P. Mullinix
-----------------------
Name: Kathleen P. Mullinix
Title: President
CIBA-GEIGY Limited
Signatures:/s/Dr. D.W. Scholer /s/R.E. Walker
------------------- ----------------
Names: Dr. D.W. Scholer R.E. Walker
Titles: R & D Alliances Division Counsel
19
MAY, 1996
SYNAPTIC PHARMACEUTICAL CORPORATION
and
CIBA-GEIGY Limited
SUPPLEMENT NO. 1
to the Research & License Agreement
between the parties made as of the 4th August, 1994
SUPPLEMENT NO. 1
THIS SUPPLEMENT NO. 1 is made as of the 31st day of May, 1996 between:
CIBA-GEIGY Limited, a Swiss corporation having its principal place of business
at Klybeckstrasse 141, CH-4002 Basel, Switzerland (hereinafter referred to as
"CIBA-GEIGY"), and SYNAPTIC PHARMACEUTICAL CORPORATION, a Delaware corporation
having its principal place of business at 215 College Road, Paramus, New Jersey
07652-1410, USA (hereinafter referred to as "SYNAPTIC").
WHEREAS:
(A) By a Research and Development Agreement (hereinafter referred to as "the
PP Receptor Agreement") made between the parties hereto as of the Fourth
day of August, 1994, CIBA-GEIGY and SYNAPTIC agreed that during a period
of 36 months they would collaborate in a research programme aimed at
discovering and developing compounds which, through the modulation of
[***] (as defined in the [***] Agreement), are useful in treating obesity,
eating disorders and/or one or more cardiovascular diseases, such as
congestive heart failure and hypertension (hereinafter referred to as "the
[***] Programme").
(B) The parties wish to extend the period of collaboration under the [***]
Agreement from 36 months to 48 months, and to enter into a further
collaborative research programme aimed at the discovery and development of
compounds which, through [***] are useful in treating obesity and eating
and metabolic disorders (hereinafter referred to as "the [***]
Programme").
(C) The parties have agreed to amend the [***] Agreement and to enter into an
additional Research and Development Agreement for the [***] Programme
(hereinafter referred to as "the [***] Agreement") on terms hereinafter
appearing.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
hereinafter set out, the parties hereby agree as follows:
1. DEFINITIONS
When used in this Agreement capitalised words shall have the same meanings
as in the [***] Agreement and in the [***] Agreement.
2. AMENDMENT OF THE PP RECEPTOR AGREEMENT
With effect from the fourth day of August, 1995, the [***] Agreement shall
be amended as follows:
2.1 Sections [***], 2.0, 2.1, [***], 3.0, 3.2, 4.0, 4.1, 4.2, 4.3(a),
4.3(b)(1) and 6.0(b)(i) are hereby amended by deleting therefrom the
reference therein to "the term of this Agreement" and by substituting
therefor the words "the Project Term".
[*** CONFIDENTIAL TREATMENT REQUESTED] 1
2.2 Section 1.14 is hereby amended by deleting therefrom the words [***]
2.3 Section 1.15 is hereby amended by adding immediately prior to the period
in the first sentence contained therein the following:
"and in the case of financial support provided with respect to the
twelve (12) month period beginning in August, 1995, to support both
the Project and the [***] Project."
2.4 There are hereby added immediately following Section 1.20 the following
new Sections:
"1.21 "[***] Agreement" means the Research and Development Agreement
dated as of the 31st May, 1996, and made effective as of the
Fourth day of August, 1995.
1.22 "[***] Project" means the collaborative research programme relating
to [***] that is the subject of the [***] Agreement.
1.23 "Project Term" means the period commencing as of the Effective Date
and ending on the Third day of August, 1998, or the date of
termination of this Agreement pursuant to Section 5.2, if earlier.
1.24 "Post-Project Term" means the period of thirty-six (36) months
immediately following the Project Term."
2.5 There is hereby added immediately following Section 2.7 the following new
Section:
"2.8 Joint Project Team and Steering Committee Meetings. It is
contemplated that members of the Project Team and Steering Committee
may also be members of the Project Team and Steering Committee for
the [***] Project. In view of this potential overlap in membership,
as well as the potential value perceived by both parties in having
the two Project Teams and Steering Committees interact and share
scientific data and observations regarding their respective
projects, it is also contemplated that the two Project Teams and
Steering Committees may hold joint meetings, prepare single sets of
minutes reflecting such meetings and prepare joint reports such as
those required by Section 4.0."
2.6 The following text shall be substituted for the existing text of Section
3.1:
"Amount. Project Funds for the twelve month period beginning as
of the Effective Date shall be [***] and Project Funds for the
twelve month period beginning as of the Fourth day of August, 1995
shall be [***]
[*** CONFIDENTIAL TREATMENT REQUESTED]
2
[***]. For each period of twelve (12) months thereafter Project
Funds shall be an amount equal to [***], (as adjusted for inflation
pursuant to the Bureau of Labor Statistics Consumer Price Index for
Urban Consumers, New York, N.E. New Jersey Metropolitan Region Price
Index ("the CPI")) multiplied by the number of SYNAPTIC FTEs which
the Steering Committee has decided should be employed on the Project
during such period. This figure shall be subject to adjustment for
inflation pursuant to the CPI on each subsequent anniversary of the
Effective Date."
2.7 The following sentence shall be substituted for the first two sentences of
Section 3.3:
"SYNAPTIC shall at substantially all times during the Project Term
assign such number of FTEs to work on the Project as shall be agreed
from time to time by the Steering Committee."
2.8 Sections 4.3(b)(2) and 6.0(a)(i) are hereby amended by deleting therefrom
the references therein to "the term of this Agreement and for thirty-six
(36) calendar months after the expiry thereof" and by substituting
therefor the words "the Project Term and the Post-Project Term."
2.9 The third paragraph of Section 4.7 is hereby amended by deleting therefrom
the reference therein to "the Agreement" and the reference therein to "the
Agreement plus thirty-six (36) months and by substituting therefor the
words "the Post-Project Term".
2.10 The following text shall be substituted for the text of Section 5.0:
"Term. This Agreement shall remain in effect from the Effective Date
until the expiration of all royalty obligations pursuant to Section
6, unless sooner terminated in accordance with the provisions of
Section 5.2 or 5,3."
2.11 Section 5.1 is hereby amended by deleting the reference therein to "this
Agreement" and substituting therefor the words "the Project Term".
2.12 The following text shall be substituted for the text of Section 5.4:
"Effect of Termination or Expiry. Termination or expiry of this
Agreement shall not affect the rights and obligations of the parties
accrued under this Agreement prior to termination or expiry, all of
which shall survive such termination or expiry. In addition the
liabilities of the parties for any breach of this Agreement shall
survive any such termination or expiry. Sections 1.0 through 1.24,
4.2 (the last sentence only) 4.4 (the second paragraph only),4.5,
4.6, 4.7, 4.8, 5.4, 6.1 through 6.6, 7, 8.3 and 8.5 shall also,
except to the extent expressly limited by their terms or by other
provisions of this Agreement, also survive any such termination or
expiry. Any Project Funds paid by CIBA-GEIGY but not committed by
[*** CONFIDENTIAL TREATMENT REQUESTED]
3
SYNAPTIC at termination shall be refunded to CIBA-GEIGY, and CIBA--
GEIGY shall have no further obligation to pay Project Funds.
Notwithstanding anything to the contrary contained in this
Agreement, if this Agreement is terminated by either party pursuant
to Section 5.2, then, in addition to the provisions referred to in
the preceding paragraph, the provisions hereof pursuant to which the
non-terminating party grants any license to the terminating party
shall survive such termination (to the extent provided therein)."
2.13 Save as amended hereby the [***] Agreement shall continue in full force
and effect.
3. [***] AGREEMENT
Contemporaneously with the execution of this Supplement No. 1, the parties
will enter into the [***] Agreement.
4. FUNDING OF [***] AND [***] PROGRAMMES
Section 3.3 of the [***] Agreement originally required SYNAPTIC at
substantially all times during the term of that Agreement to assign [***]
FTEs to work on the [***] Programme. The parties acknowledge that as from
the Fourth August, 1995, due to progress made in such Programme, the
resources required to be devoted by SYNAPTIC to the [***] Programme have
diminished and have therefore agreed that it is desirable (i) to allocate
fewer than [***] FTEs to the [***] Programme and (ii) to allocate those of
the [***] FTEs no longer required for that Programme to the [***]
Programme. Accordingly, the parties agree that, from and after the
Fourth day of August, 1995, SYNAPTIC shall assign [***] FTEs in aggregate
to the two Programmes, and CIBA shall fund the cost of [***] SYNAPTIC FTEs
in the aggregate for the two Programmes. While the level of training and
research experience of these FTEs may vary from time to time, SYNAPTIC
will use its reasonable best efforts to ensure that at least [***] of the
aggregate number of FTE's assigned to the two Programmes will have
educational degrees of Ph.D. or M.D., or research experience of greater
than ten (10) years in a relevant scientific field that qualifies them as
equivalent to a Ph.D. or M.D. level researcher.
5. ENTIRE AGREEMENT
This Supplement No. 1, together with the [***] Agreement, the Series 4
Stock Purchase Agreement referred to in the [***] Agreement and the [***]
Agreement, represents the entire agreement and understanding between the
parties relating to the subject matter hereof, and supersedes all written
or oral agreements, consents or understandings (if any) with respect
thereto given or made between the parties prior to the date
hereof.
[*** CONFIDENTIAL TREATMENT REQUESTED] 4
AS WITNESS the signatures of the representatives of the parties hereto the day
and year first above written.
SYNAPTIC PHARMACEUTICAL CORPORATION
By: /s/Kathleen P. Mullinix
-----------------------
Name: Kathleen P. Mullinix
Title: President
CIBA-GEIGY Limited
By: /s/Dr. D.W. Scholer /s/R.E. Walker
------------------- -----------------
Names: Dr. D.W. Scholer R.E. Walker
Titles: R & D Alliances Division Counsel
5
1996 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
of
SYNAPTIC PHARMACEUTICAL CORPORATION
1. Purpose of the Plan. This Nonemployee Director Stock Option Plan (the
"Plan") is intended as an incentive to retain and attract persons of training,
experience and ability to serve as independent directors on the Board of
Directors of Synaptic Pharmaceutical Corporation, a Delaware corporation (the
"Company"), to encourage the sense of proprietorship of such persons and to
stimulate the active interest of such persons in the development and financial
success of the Company. It is further intended that the options granted
pursuant to this Plan (the "Options") will not be incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. Administration. The Plan shall be administered by the Board of
Directors of
the Company. Subject to the terms of the Plan, the Board shall have the power
to construe the provisions of the Plan, or of Options granted hereunder, to
determine all questions arising thereunder, and to adopt and amend such rules
and regulations for administering the Plan as the Board deems desirable.
Notwithstanding the foregoing, the Board shall have no discretion with respect
to the selection of directors for participation in the plan or the timing,
pricing or amount of any grant or award hereunder.
3. Stockholder Approval. All Options granted pursuant to this Plan are subject
to, and may not be exercised before, the approval of this Plan by the
affirmative vote of the holders of a majority of the outstanding shares of the
Common Stock, par value $.01 per share (the "Common Stock"), of the Company that
are present, or represented, and entitled to vote at a meeting of the Company's
stockholders.
4. Designation of Participants; Automatic Grant of Options. Each director of
the Company who is not an employee of the Company or any Subsidiary (as
hereinafter defined) of the Company (any such director being hereinafter
referred to as a "Nonemployee Director") shall be granted Options as described
hereunder. Each Nonemployee Director who is a director as of the Effective Date
(as hereinafter defined) shall automatically be granted Options to purchase
2,500 shares of Common Stock at the Effective Date. Thereafter, each individual
who becomes a Nonemployee Director shall automatically be granted Options to
purchase 2,500 shares of Common Stock (subject to adjustment as provided in
Paragraph 11) on the date such person first becomes a Nonemployee Director.
Furthermore, as of the first day of June of each year commencing with June 1,
1997, each Nonemployee Director shall automatically be granted Options to
purchase an additional 2,500 shares of Common Stock (subject to adjustment as
provided in Paragraph 11) on such date, so long as such individual is then
serving as a Nonemployee Director. Notwithstanding the foregoing, in the case
of any grant of Options made on a date subsequent to the Effective Date, such
grant shall only be made if the number of shares subject to future grant under
this Plan is sufficient to make all automatic grants required to be made
pursuant to this Plan on such date of grant. As used herein, the term
"Subsidiary" of the Company shall mean any corporation of which the Company
directly or indirectly owns shares representing more than 50% of the voting
power of all classes or series of capital stock of such corporation which have
the right to vote generally on matters submitted to a vote of the stockholders
of such corporation.
5. Option Agreement. Each Option granted hereunder shall be embodied in a
written option agreement ("Option Agreement"), which shall be subject to the
terms and conditions set forth above and shall be signed by the Optionee and by
the Chief Executive Officer, the Chief Operating Officer, or any Vice President
of the Company for and on behalf of the Company. Such an Option Agreement shall
be in the form attached as Exhibit A hereto.
6. Common Stock Reserved for the Plan. Subject to adjustment as provided in
Paragraph 11 hereof, a total of 250,000 shares of Common Stock shall be reserved
for issuance upon the exercise of Options granted pursuant to this Plan. The
Board of Directors and the appropriate officers of the Company shall from time
to time take whatever actions are necessary to execute, acknowledge, file and
deliver any documents required to be filed with or delivered to any governmental
authority or any stock exchange or transaction reporting system on which shares
of Common Stock are listed or quoted in order to make shares of Common Stock
available for issuance to an Optionee (as hereinafter defined) pursuant to this
Plan. Common Stock subject to Options that are forfeited or terminated or
expire unexercised in such a manner that all or some of the shares subject
thereto are not issued to an Optionee shall immediately become available for the
granting of Options. As used herein, the term "Optionee" shall mean any
Nonemployee Director to whom Options are granted hereunder.
7. Option Price.
(a) The purchase price of each share of Common Stock that is subject to
an Option (each, an "Option Share") granted pursuant to this Plan shall be 100%
of the Fair Market Value of such share of Common Stock on the date the Option is
granted.
(b) The Fair Market Value of a share of Common Stock on a particular date
shall be deemed to be (i) if the shares of Common Stock are listed on a national
securities exchange, the closing sales price per share of Common Stock on the
principal such national securities exchange on that date, or, if there shall
have been no such sale so reported on that date, on the last preceding date on
which such a sale was so reported, (ii) if the shares of Common Stock are not so
listed but are quoted in the NASDAQ National Market System, the closing sales
price per share of Common Stock on the NASDAQ National Market System on that
date, or, if there shall have been no such sale so reported on that date, on the
last preceding date on which such a sale was so reported or (iii) if the Common
Stock is not so listed or quoted, the mean between the closing bid and asked
price on that date, or, if there are no quotations available for such date, on
the last preceding date on which such quotations shall be available, as reported
by NASDAQ, or, if not reported by NASDAQ, by the National Quotation Bureau, Inc.
8. Option Period. Each Option granted pursuant to this Plan shall terminate
and be of no force and effect with respect to any shares of Common Stock not
purchased by the Optionee upon the earliest to occur of the following: (a) the
expiration of ten years following the date upon which the Option is granted; (b)
the expiration of one year following the date upon which the Optionee ceases to
be a Nonemployee Director by reason of death or disability; or (c) the
expiration of three months following the date on which the Optionee ceases to be
a Nonemployee Director for any reason other than death or disability.
9. Exercise of Options.
(a) Subject to the other provisions of this Plan, each Option granted
pursuant to this Plan shall be exercisable as of any date of determination as to
that number of Option Shares which is equal to the product of (i) the total
number of Option Shares initially subject to such Option, and (ii) 1/24th
multiplied by the number of full calendar months (not to exceed 24) which shall
have elapsed during the period commencing on the date of grant thereof and
ending on such date of determination.
(b) An Option may be exercised solely by the Optionee during his lifetime
or after his death by the person or persons entitled thereto under his will or
the laws of descent and distribution.
(c) In the event that an Optionee ceases to serve as a Nonemployee
Director for any reason other than death or disability, an Option granted to
such Optionee may be exercised only to the extent such Option was exercisable at
the time he ceased to serve in such capacity.
(d) In the event that an Optionee ceases to serve as a Nonemployee
Director by reason of death or disability at a time when an Option granted
hereunder is still in force and unexpired under the terms of Paragraph 8 hereof,
each such unmatured Option shall be accelerated. Such acceleration shall be
effective as of the date of death or disability, as appropriate, and each Option
so accelerated shall be exercisable in full for so long as it is still in force
and unexpired under the terms of Paragraph 8 hereof.
(e) The purchase price of the shares as to which an Option is exercised
shall be paid in full at the time of the exercise. Such purchase price shall be
payable in cash or by means of tendering theretofore owned Common Stock which
has been held by the Optionee for more than six months, valued at Fair Market
Value on the date of exercise, or any combination thereof. No holder of an
Option shall be, or have any of the rights or privileges of, a stockholder of
the Company in respect of any shares subject to any Option unless and until
certificates evidencing such shares shall have been issued by the Company to
such holder.
10. Assignability. No Option shall be assignable or otherwise transferable
except by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder. Any attempted
assignment of an Option in violation of this Paragraph 10 shall be null and
void.
11. Adjustments.
(a) The existence of outstanding Options shall not affect in any manner
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
capital stock of the Company or its business or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock (whether or not such issue is prior to, on a parity with or junior to the
Common Stock) or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding of any kind, whether or not of a character similar to that of
the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock or declaration of a dividend payable in shares of Common
Stock or capital reorganization or reclassification or other transaction
involving an increase or reduction in the number of outstanding shares of Common
Stock, the Board of Directors may adjust proportionally (i) the number of shares
of Common Stock reserved under these Options; and (ii) the exercise price of
such Options. In the event of any consolidation or merger of the Company with
another corporation or entity or the adoption by the Company of a plan of
exchange affecting the Common Stock or any distribution to holders of Common
Stock of securities or property (other than normal cash dividends or dividends
payable in Common Stock), the Board of Directors shall make such adjustments or
other provisions as it may deem equitable, including adjustments to avoid
fractional shares, to give proper effect to such event. In the event of a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Board of Directors shall be authorized to
issue or assume stock options by means of substitution of new options for
previously issued options or an assumption of previously issued options, or to
make provision for the acceleration of the exercisability of, or lapse of
restrictions with respect to, the termination of unexercised options in
connection with such transaction.
(c) An Option shall become fully exercisable upon a Change in Control (as
hereinafter defined) of the Company. For purposes of this Plan, a "Change of
Control" shall be conclusively deemed to have occurred if (and only if) any of
the following events shall have occurred: (a) there shall have occurred an event
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A (or in response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company is then subject to such reporting requirement;
(b) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) shall have become the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding voting securities without prior approval of at least two-thirds of
the members of the Board of Directors in office immediately prior to such
person's attaining such percentage interest; (c) the Company is a party to a
merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board of Directors in office
immediately prior to such transaction or event constitute less than a majority
of the Board of Directors thereafter or (d) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
12. Purchase for Investment. Unless the Options and shares of Common Stock
covered by this Plan have been registered under the Securities Act of 1933, as
amended, each person exercising an Option under this Plan may be required by the
Company to give a representation in writing in form and substance satisfactory
to the Company to the effect that he is acquiring such shares for his own
account for investment and not with a view to, or for sale in connection with,
the distribution of such shares or any part thereof.
13. Taxes. The Company may make such provisions as it may deem appropriate for
the withholding of any taxes that it determines is required in connection with
any Options granted to any Optionee hereunder.
14. Amendments or Termination. The Board of Directors of the Company may
amend, alter or discontinue this Plan, except that (a) no amendment or
alteration that would impair the rights of any Optionee under any Option that he
has been granted shall be made without his consent, (b) no amendment or
alteration shall be effective prior to approval by the Company's stockholders to
the extent such approval is then required pursuant to Rule 16b-3 (or any
successor provision) under the Exchange Act in order to preserve the
applicability of any exemption provided by such rule to any Option then
outstanding (unless the holder of such Option consents) or to the extent
stockholder approval is otherwise required by applicable legal requirements, and
(c) the Plan shall not be amended more than once every six months to the extent
such limitation is required by Rule 16b-3(c)(2)(ii) (or any successor provision)
under the Exchange Act as then in effect.
15. Government Regulations. This Plan, and the granting and exercise of
Options hereunder, and the obligation of the Company to sell and deliver shares
of Common Stock under such Options, shall be subject to all applicable laws,
rules and regulations, and to such approvals on the part of any governmental
agencies or national securities exchanges or transaction reporting systems as
may be required.
16. Governing Law. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Delaware.
17. Effective Date of Plan. This Plan shall be effective as of June 4, 1996
(the "Effective Date"). Notwithstanding the foregoing, the adoption of this
Plan is expressly conditioned upon the approval by the holders of a majority of
shares of Common Stock present, or represented, and entitled to vote at a
meeting of the Company's stockholders held on or before December 31, 1996. If
the stockholders of the Company should fail so to approve this Plan prior to
such date, this Plan shall terminate and cease to be of any further force or
effect and all grants of options hereunder shall be null and void.
18. Miscellaneous. The granting of any Option shall not impose upon the
Company, the Board of Directors of the Company or any other directors of the
Company any obligation to nominate any Optionee for election as a director and
the right of the stockholders of the Company to remove any person as a director
of the Company shall not be diminished or affected by reason of the fact that an
Option has been granted to such person.
EXHIBIT A
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Option Agreement"), entered into as of
June 4, 1996, between Synaptic Pharmaceutical Corporation, a Delaware
corporation (the "Company"), and __________________ (the "Optionee"),
W I T N E S S E T H:
WHEREAS, the Company has adopted the 1996 Nonemployee Director Stock
Option Plan (the "Plan") effective as of the Effective Date (as defined in the
Plan) in order to provide an incentive to retain and attract persons of
training, experience and ability to serve as independent directors of the
Company, to encourage a sense of proprietorship of such persons and to stimulate
the active interest of such persons in the development and financial success of
the Company;
WHEREAS, the Plan provides that each director of the Company who is not an
employee of the Company or any Subsidiary (as defined in the Plan) of the
Company (any such director being hereinafter referred to as a "Nonemployee
Director") shall be granted a certain number of Options (as defined in the Plan)
to purchase shares of the Common Stock, par value $____ per share ("Common
Stock"), of the Company upon the occurrence of specified events; and
WHEREAS, the Optionee is a Nonemployee Director;
NOW, THEREFORE, in consideration of the premises, the terms and conditions
set forth herein, the mutual benefits to be gained by the performance thereof
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Subject to the terms and conditions set forth herein, the Company
hereby grants to the Optionee an Option to purchase from the Company 2,500
shares of Common Stock. Such shares of Common Stock are hereinafter referred to
as the "Option Shares."
2. The Option granted pursuant to this Agreement may be exercised by the
Optionee at any time during the ten-year period beginning on the date of this
Option Agreement ("Option Period"), subject to the limitation that said Option
shall be exercisable as of any date of determination only as to that number of
Option Shares which is equal to the product of (i) the total number of Option
Shares and (ii) 1/24th multiplied by the number of full calendar months (not to
exceed 24) which shall have elapsed during the period commencing on the date
hereof and ending on such date of determination (it being understood that the
right to purchase Option Shares shall be cumulative, so that the Optionee may
purchase on or after any such date and during the remainder of the Option Period
those quantities of Option Shares which the Optionee was entitled to purchase
but did not purchase during any preceding period or periods). Notwithstanding
anything to the contrary contained herein, the Option herein granted shall
terminate and be of no further force or effect upon the expiration of the Option
Period.
3. The Option granted pursuant to this Agreement may be exercised by the
Optionee by giving written notice to the Secretary of the Company setting forth
the number of Option Shares with respect to which the Option is to be exercised,
which notice shall be accompanied by payment of the full amount of the exercise
price for such and any appropriate withholding taxes. In addition, such notice
shall specify the address to which the certificate or certificates for such
shares are to be mailed. All payments by the Optionee hereunder shall be made
in cash or by means of tendering theretofore owned Common Stock which has been
held by the Optionee for more than six months, valued at Fair Market Value on
date of exercise, or any combination thereof. As promptly as practicable
following the receipt of such written notification and payment, the Company
shall deliver to the Optionee certificates for the number of Option Shares with
respect to which such Option has been exercised.
4. In the event that the Optionee ceases to serve as a Nonemployee
Director during the Option Period for any reason other than death or disability,
the Option granted pursuant to this Agreement shall terminate except to the
extent that it is exercisable on the date he ceases to serve in such capacity.
To the extent that such Option is exercisable on the date that the Optionee
ceases to serve as a Nonemployee Director for any reason other than death or
disability, such Option may be exercised by the Optionee during the three-month
period beginning on such date but shall terminate at the end of such period.
5. In the event that the Optionee ceases to serve as a Nonemployee
Director during the Option Period by reason of death or disability at a time
when the Option granted pursuant hereto is still in force and unexpired, such
unmatured Option shall be accelerated. Such acceleration shall be effective as
of the date of death or disability of the Nonemployee Director, and each Option
so accelerated may be exercised by the person or persons to whom the Optionee's
rights shall pass pursuant to Paragraph 9(b) of the Plan during the 12-month
period beginning on such date but shall terminate at the end of such period.
6. The Option granted pursuant hereto shall not be assignable or
otherwise transferable by the Optionee otherwise than in accordance with
Paragraph 10 of the Plan. No assignment of the Option herein granted shall be
effective to bind the Company unless the Company shall have been furnished with
written notice thereof and a copy of such documents and evidence as the Company
may deem necessary to establish the validity of the assignment and the
acceptance by the assignee or assignees of the terms and conditions hereof.
7. The Optionee shall have no rights as a stockholder of the Company with
respect to the Option Shares unless and until certificates evidencing such
Option Shares shall have been issued by the Company to the Optionee. Until such
time, the Optionee shall not be entitled to dividends or distributions in
respect of any Option Shares or to vote such shares on any matter submitted to
the shareholders of the Company. In addition, except as to such adjustments
that from time to time be made by the Board of Directors in accordance with
Paragraph 11(b) of the Plan, no adjustment shall be made or required to be made
in respect of dividends (ordinary or extraordinary, whether in cash, securities
or any other property) or distributions paid or made by the Company or any other
rights granted in respect of any Option Shares for which the record date for
such payment, distribution or grant is prior to the date upon which certificates
evidencing such Option Shares shall have been issued by the Company.
8. The Company may make such provisions as it may deem appropriate for
the withholding of any taxes that it determines is required in connection with
the Option granted pursuant hereto, including, without limitation, requiring a
cash payment from the Optionee or withholding Option Shares otherwise
deliverable upon the exercise of an Option, in either case to the extent
necessary to cover such withholding.
9. Upon the acquisition of any Option Shares pursuant to the exercise of
the Option granted pursuant hereto, the Optionee may be required to enter into
such written representations, warranties and agreements as the Company may
reasonably request in order to comply with applicable securities laws or with
this Option Agreement. In addition, the certificates representing any Option
Shares purchased upon the exercise of the Option will be stamped or otherwise
imprinted with a legend in such form as the Company may require with respect to
any applicable restrictions on sale or transfer, and the stock transfer records
of the Company will reflect stop-transfer instructions, as appropriate, with
respect to such shares.
10. Unless otherwise provided herein, any notice or other communication
hereunder shall be in writing and shall be given by registered or certified
mail. All notices of the exercise by the Optionee of the Option granted
pursuant hereto shall be directed to Synaptic Pharmaceutical Corporation,
Attention: Secretary, at the Company's current address. Any notice given by the
Company to the Optionee directed to him at his address on file with the Company
shall be effective to bind any other person who shall acquire rights hereunder.
The Company shall be under no obligation whatsoever to advise or notify the
Optionee of the existence, maturity or termination of any rights hereunder and
the Optionee shall be deemed to have familiarized himself with all matters
contained herein and in the Plan which may affect any of the Optionee's rights
or privileges hereunder.
11. Whenever the term "Optionee" is used herein under circumstances
applicable to any other person or persons to whom this award may be assigned in
accordance with the provisions of Paragraph 6, the term "Optionee" shall be
deemed to include such person or persons. References to the masculine gender
herein also include the feminine gender for all purposes.
12. Notwithstanding anything to the contrary contained herein, the
Optionee agrees that he will not exercise the Option granted pursuant hereto,
and that the Company will not be obligated to issue any Option Shares pursuant
to this Option Agreement, if the exercise of the Option or the issuance of such
shares would constitute a violation by the Optionee or by the Company of any
provision of any law or regulation of any governmental authority or any national
securities exchange or transaction quotation system.
13. The Option granted pursuant hereto shall be fully and immediately
exercisable upon a Change in Control (as hereinafter defined) of the Company.
For purposes of this Option Agreement, a "Change in Control" of the Company
shall be deemed to have occurred if (and only if) any of the following events
shall have occurred: (a) there shall have occurred an event required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or
not the Company is then subject to such reporting requirement; (b) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) shall
have become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding voting
securities without prior approval of at least two-thirds of the members of the
Board of Directors in office immediately prior to such person's attaining such
percentage interest; (c) the Company is a party to a merger, consolidation, sale
of assets or other reorganization, or a proxy contest, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter or (d) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (including for
this purpose any new director whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board of
Directors.
14. This Option Agreement is subject to the Plan, a copy of which has
been furnished to the Optionee and for which the Optionee acknowledges receipt.
The terms and provisions of the Plan (including any subsequent amendments
thereto) are incorporated by reference herein. In the event of a conflict
between any term or provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan shall govern and prevail.
IN WITNESS WHEREOF, this Option Agreement has been executed as of the date
first above written.
SYNAPTIC PHARMACEUTICAL CORPORATION
By:
-----------------------------------------------
Kathleen P. Mullinix
Chairman, President and Chief Executive Officer
OPTIONEE:
--------------------------------------------------
EXHIBIT 11
SYNAPTIC PHARMACEUTICAL CORPORATION
Computation of Primary Net Loss Per Share
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
--------- --------- --------- ---------
Weighted average
common shares outstanding 7,575,452 392,902 7,534,736 388,670
Shares sold and shares
underlying options granted
within 12 months of initial
registration statement
filing, considered
outstanding for periods
prior to the initial public
offering, based on the
treasury stock method and
the initial public offering
price -- 34,665 -- 34,665
---------- --------- --------- ---------
7,575,452 427,567 7,534,736 423,335
========== ========= ========= =========
Net loss ($1,055,677)($1,125,342) ($2,159,351)($2,238,666)
========== ========== ========== ==========
Net loss per share $(0.14) ($2.63) ($0.29) ($5.29)
==== ===== ===== =====
EXHIBIT 11
SYNAPTIC PHARMACEUTICAL CORPORATION
Computation of Fully Diluted Net Loss Per Share
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
--------- --------- --------- --------
Weighted average
common shares outstanding 7,575,452 392,902 7,534,736 388,670
Shares underlying common
stock options outstanding
considered exercised,
based on the treasury
stock method 310,066 228,896 308,414 224,069
Shares underlying 1990
Warrants outstanding
considered exercised,
based on the treasury
stock method -- -- -- 192
Shares underlying 1993
Warrants outstanding
considered exercised,
based on the treasury
stock method 52,024 -- 55,145 --
Shares sold and shares
underlying options granted
within 12 months of initial
registration statement filing,
considered outstanding for
periods prior to the initial
public offering, based on the
treasury stock method and the
initial public offering price -- 34,665 -- 34,665
Weighted average convertible
preferred stock
outstanding, as if converted:
Series 1 -- 1,260,245 -- 1,260,245
Series 2 -- 1,207,848 -- 1,207,848
Series 3 -- 1,924,574 -- 1,924,574
Series 4 -- 535,715 -- 535,715
--------- --------- -------- ---------
Shares used in computation of
net loss per share 7,937,542 5,584,845 7,898,295 5,575,978
========= ========= ========= =========
Net loss ($1,055,677) ($1,125,342) ($2,159,351) ($2,238,666)
========== ========== ========== ==========
Net loss per share ($0.13) ($0.20) ($0.27) ($0.40)
===== ===== ===== =====
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,239,800
<SECURITIES> 31,838,470
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,007,391
<PP&E> 4,893,783
<DEPRECIATION> (2,557,958)
<TOTAL-ASSETS> 41,494,713
<CURRENT-LIABILITIES> 2,097,716
<BONDS> 0
0
0
<COMMON> 76,064
<OTHER-SE> 39,275,755
<TOTAL-LIABILITY-AND-EQUITY> 41,494,713
<SALES> 0
<TOTAL-REVENUES> 3,562,170
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,702
<INCOME-PRETAX> (2,159,351)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,159,351)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,159,351)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> 0
</TABLE>
