-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IOcOHHD2Z5QIsqwdCl20OCsEuo5srkHl6EBl863ulq0Zh/Mt3q4jfFp52/EQgLf/ 3jaHEUgrnn70P0KZ8UJ64Q== 0000884939-96-000013.txt : 19960809 0000884939-96-000013.hdr.sgml : 19960809 ACCESSION NUMBER: 0000884939-96-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960808 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNAPTIC PHARMACEUTICAL CORP CENTRAL INDEX KEY: 0000884939 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 222859704 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27324 FILM NUMBER: 96606056 BUSINESS ADDRESS: STREET 1: 215 COLLEGE RD CITY: PARAMUS STATE: NJ ZIP: 07652 BUSINESS PHONE: 2012611331 10-Q 1 FILING 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 EX-3.1(A) 2 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 EX-3.1(B) 3 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 EX-3.1(C) 4 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 EX-3.2 5 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. EX-10.31 6 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 [***] [*** CONFIDENTIAL TREATMENT REQUESTED] 2 [***] 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 [*** CONFIDENTIAL TREATMENT REQUESTED] 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. [*** CONFIDENTIAL TREATMENT REQUESTED] 4 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 [*** CONFIDENTIAL TREATMENT REQUESTED] 5 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 [*** CONFIDENTIAL TREATMENT REQUESTED] 6 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 [***] [*** CONFIDENTIAL TREATMENT REQUESTED] 7 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 [*** CONFIDENTIAL TREATMENT REQUESTED] 8 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 [*** CONFIDENTIAL TREATMENT REQUESTED] 9 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 [*** CONFIDENTIAL TREATMENT REQUESTED] 13 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 EX-10.32 7 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 EX-10.33 8 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: -------------------------------------------------- EX-11 9 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) ===== ===== ===== ===== EX-27 10
5 6-MOS DEC-31-1996 JUN-30-1996 4,239,800 31,838,470 0 0 0 17,007,391 4,893,783 (2,557,958) 41,494,713 2,097,716 0 0 0 76,064 39,275,755 41,494,713 0 3,562,170 0 0 0 0 11,702 (2,159,351) 0 (2,159,351) 0 0 0 (2,159,351) (.29) 0
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