Document:

Exhibit 10.34

 

EMPLOYMENT AGREEMENT

 

This
EMPLOYMENT AGREEMENT (the “Agreement”)
is made and entered into as of the 21st day of May, 2006 (the “Effective
Date”), by and between Accelrys, Inc.,
a Delaware corporation (hereinafter, the “Company”), and Mark Emkjer, an individual (hereinafter, “Executive”).

 

RECITALS

 

WHEREAS, Executive has been employed
by Company since 2002, pursuant and in accordance with the terms of an
employment agreement, dated December 3, 2002 (“2002 Agreement”).

 

WHEREAS, the Company and Executive desire to continue the
employment relationship on the terms set forth herein.

 

NOW, THEREFORE, in consideration of their
mutual promises and intending to be legally bound, the parties agree as
follows:

 

1.   EMPLOYMENT.

 

(a)  Title and
Location. The
Company shall continue to employ Executive as its President and Chief Executive
Officer upon the terms and conditions set forth in this Agreement, and
Executive hereby accepts such employment. Executive will be based in San Diego,
California.

 

(b)  Duties and Responsibilities. Executive’s duties, powers and
responsibilities in such capacity shall be those which are customary for such
position, as may be determined from time to time and assigned by the Company’s
Board of Directors. Executive agrees to perform and discharge such duties well
and faithfully and to be subject to the supervision and direction of Executive’s
supervisor.

 

(c)  No Conflicts.
Executive’s position
under this Agreement is a full-time position. Executive agrees to devote
Executive’s full business time, effort, attention and energies to this position.
Executive will not render any professional services or engage in any activity
that might be competitive with, adverse to the best interest of, or create the
appearance of a conflict of interest with, the Company. Executive agrees to
abide by the policies, rules and regulations of the Company as they may be
amended from time to time.

 

(d)  No Other Agreement. Executive represents and warrants the
Executive is not bound by any employment, consulting, noncompetition,
confidentiality, finders, marketing or other agreement or arrangement that
would, or might reasonably be expected to, prohibit or restrict Executive in
any manner from performing Executive’s duties and obligations hereunder.

 

2.   TERM. The term of this Agreement shall commence on
the Effective Date and shall continue thereafter until the effective date of
termination set forth in Section 13, below (“Term”).

 

3.   COMPENSATION.
As compensation for
Executive’s services under this Agreement:

 

(a)  Base Salary.
The Company will pay
Executive a base salary of four hundred thousand dollars ($400,000) per year (“Base
Salary”), to be paid semi-monthly in equal installments, less normally
applicable payroll deductions. Executive’s Base Salary will be subject to
annual review and adjustment by the Board or a duly appointed committee
thereof, in either case in its sole discretion.

 

 

(b)  Incentive Bonus. Executive shall be eligible to participate in
the Company’s management incentive plan, as may be implemented and modified by
the Company at its sole discretion. The Company and Executive agree that
Executive’s initial bonus target percentage will be eighty-five percent (85%)
of Executive’s Base Salary. Such amounts, payable to Executive under this plan
or any other bonus program, shall be referred to herein as the “Incentive
Bonus.”  The Incentive Bonus for any year
will be paid after the conclusion of the applicable fiscal year, based upon the
Board of Directors’ determination as to the amount of such bonus earned
pursuant to the terms of the management incentive plan, provided Executive is
employed by the Company or its successor on that date.

 

(c)  Vacation and Other
Benefits. Executive
shall be entitled to the benefit of paid vacation, holidays, group medical,
accident and long-term disability insurance and other fringe benefits and tax
qualified retirement plans as the Company shall make available from time to
time to its other similarly situated senior executives. The Company may change
or amend its benefits as it deems appropriate from time to time.

 

4.   TERMINATION
AND EFFECT OF TERMINATION. Executive’s employment hereunder is AT
WILL and may be terminated at any time by the Company for any reason.
In the event of termination of Executive’s employment, the Company shall have
no liability to Executive for compensation or benefits, except as specified in
this Section 4 or as required by the Company’s benefits policy.

 

(a)  Termination by the Company for Cause. Executive’s employment may be terminated by
the Company for Cause at any time upon delivery of written notice to Executive.
Upon such a termination, the Company shall have no obligation to Executive
other than the payment of all accrued, but unpaid, Base Salary and any unpaid
expenses or expense reimbursements prior to the effective date of such
termination. For purposes of this Agreement, “Cause” means the occurrence of
any one or more of the following events or conditions:

 

(i)  any material failure on the
part of Executive (other than by reason of disability as provided in Section
4(e) below) to faithfully and professionally carry out Executive’s duties or to
comply with any other material provision of this Agreement, which failure
continues for ten (10) days after written notice detailing such failure is
delivered by the Company; provided, that the Company shall not be required to
provide such notice in the event that such failure (A) is not susceptible
to remedy or (B) relates to the same type of acts or omissions as to which notice
has been given on a prior occasion;

 

(ii)  Executive’s dishonesty
(which shall include without limitation any misuse or misappropriation of the
Company’s assets), or other willful misconduct, if such dishonesty or other
willful misconduct is intended to or likely to materially injure the business
of the Company;

 

(iii)  Executive’s conviction of
any felony or of any other crime involving moral turpitude, whether or not
relating to Executive’s employment;

 

(iv)  Executive’s insobriety or
use of drugs, chemicals or controlled substances either (A) in the course of
performing Executive’s duties and responsibilities under this Agreement, or (B)
otherwise affecting the ability of Executive to perform the same;

 

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(v)  Executive’s failure to comply with a lawful
written direction of the Company or the Board of Directors; or

 

(vi)  Any wanton or willful
dereliction of duties by Executive.

 

The existence of any of the foregoing events or
conditions shall be determined by the Company in the exercise of its reasonable
judgment.

 

(b)  Involuntary Termination by the Company
without Cause or Resignation by Executive with Good Reason. The Company may involuntarily terminate
Executive’s employment under this Agreement at any time during the Term without
Cause upon delivery of written notice to Executive, and Executive may resign at
any time during the Term with Good Reason (as defined in Section 4(c), below). Except
as provided by Section 4(g) hereof concerning termination in connection with a
Change of Control (as defined in such Section 4(g)), if, during the Term,
Executive’s employment is terminated involuntarily by the Company without Cause
pursuant to this Section 4(b) or Executive resigns for Good Reason pursuant to Section
4(c) during the Term, the Company shall:

 

(i)  pay Executive all compensation and benefits
accrued, but unpaid, up to the effective date of termination; and

 

(ii)  provided that, and for so long as, Executive
complies with Executive’s obligations set forth in Section 7, below, continue
to pay Executive each month (in accordance with the Company’s regular payroll
practices) an amount equal to one twelfth (1/12) Executive’s annual Base Salary
in effect as of the effective date of termination, for a period of twenty four
(24) months after the effective date of termination;

 

(iii) pay Executive a
pro-rata lump sum amount, prorated for the number of full months during the
applicable fiscal year during which Executive had been employed by the Company
prior to his termination, of the bonus that would have been payable to
Executive had he remained employed throughout the year. Such bonus will be
based upon the percentage achievement against objectives as determined by the
Company’s board of directors at the conclusion of the applicable fiscal year to
have been earned pursuant to the terms of the Company’s management incentive
plan; and

 

(iv)
provided that, and for so long as, Executive complies with his obligations set
forth in Section 7, below, pay Executive, each month for a period of twenty
four (24) months, in accordance with the Company’s regular payroll practices,
one twelfth (1/12) of an amount obtained by multiplying Executive’s target
bonus percentage in effect as of the effective date of termination (expressed
as a decimal) times Executive’s annual Base Salary in effect as of such date of
termination;

 

(v)  Reimburse or otherwise pay Executive’s
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) payments for
medical and dental insurance under the Company’s applicable plans for the
lesser of (x) twenty four months from the effective date of termination or (y)
the date upon which Executive becomes eligible for medical coverage from a new
employer. Executive shall notify the Company no later than 15 days after
becoming eligible for such coverage.

 

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(c)  Termination
by Executive for Good Reason. Executive may terminate his employment under this Agreement during the
Term for Good Reason upon the provision of advance written notice to the
Company specifying in reasonable detail the events or conditions upon which
Executive is basing such termination. The Company will be given the
opportunity, but shall have no obligation, to “cure” such events or conditions
within thirty (30) days after the provision by Executive of such notice. Subject
to the provisions of Section 4(g) hereof (concerning termination in connection
with a Change of Control), if the Company elects in a written notice to
Executive not to cure such events or conditions or otherwise fails to so cure
such events or conditions within such thirty (30) day period, Executive may
terminate Executive’s employment with the Company for Good Reason effective at
the end of such 30 day notice period.

 

For purposes of this
Agreement, “Good Reason” means any one or more of the following events or
conditions:

 

(i)  the Company’s breach of any of the material
terms of this Agreement;

 

(ii)  the Company’s relocating its office at which
Executive is principally employed on the Effective Date of this Agreement, to a
location which is more than fifty (50) miles from both Executive’s residence
and the offices of the Company at which Executive is principally employed on
the date of execution of this Agreement, and requiring Executive to commute to
such location without Executive’s written consent;

 

(iii)  a material diminution in Executive’s title,
duties or responsibilities or conditions of his employment from those in effect
on the date of execution of this Agreement; or

 

(iv)  a reduction of more than
10% in Executive’s annual Base Salary then-in-effect without Executive’s
consent (other than such a reduction applicable generally to other senior
executives of the Company)

 

Solely for purposes of Section 4(g) below, “Good Reason” also means a
reduction in the Executive’s target bonus

 

(d)  Termination by
Executive without Good Reason (Voluntary Resignation). Executive may voluntarily resign his position
and terminate his employment under this Agreement without Good Reason at any
time. Upon such a termination, the Company shall have no obligation to pay
compensation and provide benefits to Executive other than the payment of all
accrued, but unpaid, Base Salary and any other unpaid expenses or expense
reimbursements prior to the effective date of such termination.

 

(e)  Disability. If Executive
becomes disabled for more than one hundred eighty (180) days in any twelve (12)
month period, the Company shall have the right to terminate Executive’s
employment upon written notice to Executive. Executive shall be deemed disabled
for purposes of this Agreement either (i) if Executive is deemed disabled for
purposes of any long-term disability insurance policy paid for by the Company
and at the time in effect, or (ii) if in the exercise of the Company’s
reasonable judgment, due to accident, mental or physical illness, Executive
cannot perform Executive’s duties. In the event that during the Term, the
Company shall terminate Executive due to disability, as described above, Executive
shall be entitled to receive the benefits set forth in Section 4(b) (i.e., as
if Executive were terminated by the Company without Cause).

 

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(f)  Death. In the event of the death of Executive, this
Agreement shall automatically terminate and any obligation to continue to pay
compensation and benefits shall cease as of the date of death, except for the
payment of all accrued, but unpaid, Base Salary and any other unpaid expenses
or expense reimbursement prior to the date of death.

 

(g)  Change of
Control Termination Without Cause or Resignation for Good Reason.

 

(i)  Benefits. Subject
to Section 4(i) below, in
the event Executive’s employment under this Agreement is terminated by the
Company involuntarily without Cause at any time during the period commencing
two (2) months before and ending eighteen (18) months after the occurrence of a
Change of Control during the Term, or Executive terminates employment with the
Company for Good Reason at any time during the period commencing two (2) months
before and ending eighteen (18) months after the occurrence of a Change of
Control during the Term, the Company shall, in lieu of providing Executive with
any amounts or benefits otherwise payable under this Agreement:

 

(A)  pay Executive all compensation and benefits
accrued, but unpaid, up to the effective date of termination; and

 

(B)  provided that, and for so long as, Executive
complies with his obligations set forth in Section 7, below, pay Executive each
month, in accordance with the Company’s regular payroll practices an amount
equal to two twelfths (2/12) Executive’s annual Base Salary in effect as of the
effective date of termination; for a period of twelve months after the
effective date of termination; and

 

(C)
pay Executive a pro-rata lump sum amount, prorated for the number of full
months during the applicable fiscal year during which Executive had been
employed by the Company prior to his termination, of the bonus that would have
been payable to Executive had he remained employed throughout the year. Such
bonus will be based upon the percentage achievement against objectives as
determined by the Company’s board of directors at the conclusion of the
applicable fiscal year to have been earned pursuant to the terms of the Company’s
management incentive plan; and

 

(D) provided that, and for
so long as, Executive complies with his obligations set forth in Section 7,
below, pay Executive, each month for a period of twelve (12) months, in
accordance with the Company’s regular payroll practices, two twelfths (2/12) of
an amount obtained by multiplying Executive’s target bonus percentage in effect
as of the effective date of termination (expressed as a decimal) times
Executive’s annual Base Salary in effect as of such date of termination.

 

(E)  Reimburse or otherwise pay Executive’s COBRA
payments for medical and dental insurance under the Company’s applicable plans
for the lesser of (x) twenty four months from the effective date of termination
or (y) the date upon which Executive becomes eligible for medical coverage from
a new employer. Executive shall notify the Company no later than 15 days after
becoming eligible for such coverage.

 

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Anything contained in this Section 4(g)(i) to the contrary
notwithstanding, Executive shall not be entitled to any of the benefits set
forth in this Section 4(g)(i) if Executive resigns and terminates such
employment voluntarily (other than for Good Reason) or is terminated by the
Company (including without limitation any Acquiring Company) for Cause.

 

For purposes of Sections 4(g)(i) and (ii) hereof, the term the “Company”
shall include any Acquiring Company (as defined below) and all obligations of
the Company under such Section shall be assumed by any Acquiring Company.

 

(ii)  Stock
Options. Subject
to Section 4(i) below, in the event Executive’s employment under this Agreement
is terminated by the Company involuntarily without Cause at any time during the
period commencing two (2) months before and ending eighteen (18) months after
the occurrence of a Change of Control or Executive terminates his employment
with the Company for Good Reason at any time during the period commencing two
(2) months before and ending eighteen (18) months after the occurrence of a
Change of Control:

 

(A)
notwithstanding anything to the contrary contained in any stock option or other
equity award plan of the Company (“Equity Incentive Plan”), any and all stock
options (“Stock Options”), stock appreciation rights (“SARs”), restricted stock
units or restricted stock (collectively “Equity Rights”) which were granted by
the Company to Executive prior to the Term or during the Term shall immediately
accelerate and become vested and exercisable upon the date of termination of
Executive’s employment. SARs or Stock Options granted after execution of this
Agreement may be exercised during the earlier of (1) one (1) year following the
date of termination or (2) the expiration of the term of the SAR or Stock
Option, and the Company shall take all actions necessary or advisable to give
effect to this Section 4(g)(ii)(A); and

 

(B) all Equity Rights held by Executive which
were granted to Executive prior to the execution of this Agreement, including
those which have been accelerated as set forth in section 4(g)(ii)(A), above,
shall be exercisable pursuant to the terms of the agreement(s) under which they
were granted, subject to and including, without limitation,  the post termination exercise provisions set
forth in sections 4(g)(ii) of the 2002 Agreement (“Post Termination Exercise
Provisions”) which terms continue to govern. Provided that any Stock Option
granted to Executive prior to the Term which on any date during the Term has both i) a shorter exercise period than set
forth in Section 4(g)(ii)(A), above, in the event of a Change of Control
termination or resignation for Good Reason as set forth herein, and ii) an exercise price higher than the
closing price of Accelrys common stock, as listed in the NASDAQ National Market
at any time after execution of this Agreement, shall be automatically deemed to
be modified on such date so that the Stock Option may be exercised during the
later of (1) December 31st of the year in which such option would
have otherwise expired pursuant to the exercise terms of the applicable
agreement, or 2) two and one half months following the date in which such
option would have otherwise expired pursuant to the exercise terms of the
applicable agreement, but in no event later than the date of the expiration of
the term of the Stock Option,

 

6

 

and
the Company shall take all actions necessary or advisable to give effect to
this Section 4(g)(ii)(B).

 

Anything contained in this
Section 4(g)(ii) to the contrary notwithstanding, Executive shall not be
entitled to any of the benefits set forth in this Section 4(g)(ii) if Executive
resigns and terminates such employment voluntarily (other than for Good Reason)
or is terminated by the Company (including without limitation any Acquiring
Company) for Cause.

 

(iii)  Definition of “Change of Control.”  For
purposes of this Agreement, a “Change of Control” of the Company shall mean the
occurrence of any of the following events or circumstances:

 

(A)
any “person” (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), including a “group”
within the meaning of such Section 13(d) but excluding the Company and any of
its subsidiaries and any employee benefit plan sponsored or maintained by the
Company or any subsidiary thereof (a “Person”), shall become the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or more
of the combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of directors (“Company Voting
Securities”); or

 

(B)
the consummation of a merger or consolidation of the Company, or the acceptance
by the stockholders of the Company of shares in a share exchange, where the
Persons who were the beneficial owners of Company Voting Securities,
outstanding immediately prior to such merger, consolidation or share exchange,
do not beneficially own, directly or indirectly, immediately after such merger,
consolidation or share exchange, securities representing more than fifty
percent (50%) of the combined voting power of the then outstanding Company
Voting Securities or voting securities of the Acquiring Company in such merger,
consolidation or share exchange, in substantially the same proportions as their
ownership of the Company Voting Securities immediately prior to such merger,
consolidation or share exchange; or

 

(C) a sale, exchange or
other disposition or transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company;
provided, that a Change of Control shall not be deemed to have occurred where
(x) the Company sells, exchanges or otherwise disposes or transfers all or
substantially all of its assets to another corporation which is beneficially
owned, directly or indirectly, immediately following such transaction by the
holders of Company Voting Securities in substantially the same proportions as their
ownership of the Company Voting Securities immediately prior to such
transaction and (y) such corporation expressly assumes this Agreement; or

 

(D) such time as the
Continuing Directors (as defined below) do not constitute at least a majority
of the Board of Directors of the Company (or, if applicable, of a

 

7

 

successor
to the Company), where the term “Continuing Director” means at any date a
member of the Board who was (x) a member of the Board on the date of this
Agreement or (y) nominated or elected subsequent to such date by at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election (it being understood that no
individual whose initial assumption of office occurred as a result of an actual
or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board shall be a Continuing Director).

 

(iv)  Definition of “Acquiring
Company.”  For purposes of Section 4 of this Agreement,
an “Acquiring Company” shall mean the resulting or surviving corporation, or
the company issuing cash or securities (or its ultimate parent company), in a
merger, consolidation or share exchange involving the Company, or the successor
corporation to the Company (whether in any such transaction or otherwise).

 

(h)  Section 409A. Any cash severance to be paid pursuant to Sections
4(b), (c), or (g), or any portion thereof, as well as any payments due under
section 4(i) hereof, will not be paid during the six-month period following
Executive’s termination of employment, unless the Company reasonably determines
that paying such amounts immediately following Executive’s termination of
employment would not result in the imposition of any tax under Section 409A of
the Code (“Section 409A”), in which case such amounts shall be paid in
accordance with normal payroll practices. If any amount of cash severance is
not paid to Executive as a result of the previous sentence, on the first day
following such six-month period, the Company will pay Executive a lump-sum
amount equal to the cumulative amounts that would have otherwise been paid to
Executive during such six-month period pursuant to Sections 4(b), (c), (g) or
(i), but were not paid. Thereafter, Executive will receive his remaining cash
severance payments pursuant to Sections 4(b) and (c) or (g) in accordance with
the Company’s normal payroll practices.

 

(i)  Golden
Parachute Tax Provisions. In the event it is determined that any payments by the Company to or
for the benefit of Executive under this Agreement or otherwise pursuant to
which Executive is entitled to receive payments or benefits (such payments and
benefits collectively, the “Payments”) shall be subject to an excise tax by
reason of the operation of Section 4999 of the Internal Revenue Code of 1986,
as amended (the “Code”), relating to parachute payments, or any interest or
penalties are incurred by Executive with respect to such excise tax (such
excise tax together with any such interest and penalties collectively, the “Excise Tax”),
then Executive shall receive (i) a payment from the Company sufficient to pay
the Excise Tax, and (ii) an additional payment from the Company sufficient to
pay such Excise Tax and federal and state income taxes arising from the
payments made by the Company to Executive pursuant to this sentence (such
additional payments collectively, the “Reimbursement Payments”). For purposes
of determining the amount of the Reimbursement Payments, Executive shall be
deemed to (i) pay federal income taxes at the highest marginal rates of
federal income taxation for the calendar year in which the Reimbursement
Payments are to be made and (ii) pay applicable state and local income
taxes at the highest marginal rate of taxation for the calendar year in which
the Reimbursement Payments are to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes.

 

8

 

Notwithstanding the
foregoing, if it shall be determined that Executive is entitled to
Reimbursement Payments under the preceding paragraph, but that the Payments
would not be subject to the Excise Tax if the Payments were reduced by an
amount that is less than 10% of the portion of the Payments that would be
treated as parachute payments under Section 280G of the Code, then the
amounts payable to Executive under this Agreement shall be reduced (but not
below zero) to the maximum amount that could be paid to Executive without
giving rise to the Excise Tax (the “Safe
Harbor Cap”), and no Reimbursement Payments shall be made to Executive. The
reduction of the amounts payable hereunder, if applicable, shall be made by
reducing first the payments under Section 4(g)(i)(D), unless an
alternative method of reduction is elected by Executive. For purposes of
reducing the Payments to the Safe Harbor Cap, only amounts payable under this
Agreement (and no other Payments) shall be reduced. If the reduction of the
amounts payable hereunder would not result in a reduction of the Payments to
the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced
pursuant to this provision.

 

Unless
the Company and Executive otherwise agree in writing, the determination of
Executive’s Excise Tax liability and the amount required to be paid under this
paragraph shall be made in writing by the Company’s accountants or attorneys
(the “Advisors”). In the event that the Excise Tax incurred by Executive is
determined by the Internal Revenue Service to be greater or lesser than the
amount so determined by the Advisors, the Company and Executive agree to
promptly make such payment, including interest and any tax penalties, to the
other party as the Advisors reasonably determine is appropriate to ensure that
the net economic effect to Executive under this paragraph, on an after-tax
basis, is as if the Excise Tax did not apply to Executive. For purposes of
making the calculations required by this paragraph, the Advisors may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on interpretations of the Code for which there is a “substantial authority”
tax reporting position. The Company and Executive shall furnish to the Advisors
such information and documents as the Advisors may reasonably request in order
to make a determination under this Section. The Company shall bear all costs
the Advisors may reasonably incur in connection with any calculations
contemplated by this paragraph.

 

(j)  Liquidated
Damages/Release. Executive
acknowledges that, upon executing a release as set forth below, any payments
and benefits resulting from a termination of Executive’s employment under
Section 4(b), (c) or (g) of this Agreement which are not required by law are in
satisfaction of any and all claims that Executive may have against the Company
or any Acquiring Company (other than benefits under the Company’s benefit plans
that by their terms survive termination of employment, benefits under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and rights
to indemnification under certain indemnification arrangements for officers of
the Company), and represent liquidated damages (and not a penalty). The Company
will require that Executive execute and not revoke a separation agreement and a
release of all claims in favor of the Company in a form reasonably satisfactory
to the Company prior to, and as a condition to, receipt of such payments and
benefits.

 

5.  TAXES. Except as set forth in Section 4(i) above,
Executive will be responsible for the payment of any tax liability incurred as
a result of this Agreement. The Company may withhold tax on any payments or
benefits provided to Executive as required by law or regulation. The
Executive is solely responsible and liable for the satisfaction of all taxes
and penalties that may arise under Section 409A of the Code, and the Company
shall not have any obligation to indemnify or otherwise hold Executive harmless
from any or all of such taxes. The
Company shall have the sole discretion to interpret the requirements of the
Code, including Section 409A, for purposes of this provision, but shall only
act in accordance with written advice from its Advisors.

 

9

 

Nevertheless, if the
Company or Executive determine that delaying severance payments will avoid
subjecting Executive to Section 409(A) taxes and penalties, the Company shall
modify the payment terms of this Agreement to the limited extent, and for the
minimum deferral period, that the Company reasonably determines is necessary to
avoid subjecting Executive to Section 409A penalties.

 

6.  CONFIDENTIAL INFORMATION. Except as reasonably necessary to perform
Executive’s duties hereunder, Executive agrees not to reveal to any other
person or entity or use for Executive’s own benefit any confidential
information of or about the Company or its operations, both during and after
Executive’s employment under this Agreement, including without limitation
marketing plans, financial information, key personnel, Executives’
capabilities, salaries and benefits, customer lists, pricing and cost
structures, operation methods and any other information not available to the
public, without the Company’s prior written consent. These obligations are in
addition to any similar obligations set forth in the Company’s Invention and
Non-Disclosure Agreement.

 

7.  NON-COMPETITION;
NON-SOLICITATION; NON-DISPARAGEMENT.

 

(a)  Restrictions. For so long as Executive is receiving
benefits pursuant to section 4, above, Executive shall not, directly or
indirectly:

 

(i) be employed by, engaged
in or participate in the ownership, management, operation or control of, or act
in any advisory or other capacity (including as an individual, principal, agent
Executive, consultant or otherwise) for, any Competing Entity which conducts
its business within the Territory (as the terms Competing Entity and Territory
are hereinafter defined); provided, however, that notwithstanding any of the
foregoing, Executive may make solely passive investments in any Competing
Entity the common stock of which is “publicly held” and of which Executive
shall not own or control, directly or indirectly, in the aggregate securities
which constitute 5% or more of the voting power of such Competing Entity;

 

(ii) solicit or divert any business or any customer or known
prospective customer from the Company or assist any person or entity in doing
so or attempting to do so;

 

(iii) cause or seek to cause
any person or entity to refrain from dealing or doing business with the Company
or assist any person or entity in doing so; or

 

(iv) solicit for employment, or advise or recommend to any other person
or entity that he, she or it employ or solicit for employment or retention as
an Executive or consultant, any person who is an Executive of, or exclusive
consultant to, the Company (provided that this prohibition shall not apply in
the event of a Change of Control Termination or Resignation, as set forth in
Section 4(g), above).

 

(v) make any derogatory or
disparaging statement regarding the Company, its affiliates, directors, or its
employees.

 

In the event Executive
violates any of the foregoing restrictions, all payments or benefits being
provided pursuant to Sections 4(b) and (c) shall immediately cease.

 

10

 

(b)  Definitions.
For purposes of this Section 7:

 

(i) “Competing Entity” means
any entity which is presently or hereafter engaged in any business of the type
or character engaged in by the Company or any of its subsidiaries including,
without limitation, (A) the business of developing, marketing or selling
software programs which use molecular simulation or analysis to predict
chemical or biological activities; (B) the business of developing, marketing or
selling software programs that store, manage or analyze chemical or biological
information or (C) any business which is otherwise competitive with a business
conducted by the Company or any of its subsidiaries; and

 

(ii)
“Territory” means North America, Europe and Japan.

 

Notwithstanding anything in
the above to the contrary, Executive may engage in the activities set forth in
Section 7(a) hereof with the prior written consent of the Company, which
consent shall not be unreasonably withheld. Further, in determining whether a
specific activity by Executive for a Competing Entity shall be permitted, the
Company will consider, among other things, the nature and scope of (A) the
duties to be performed by Executive and (B) the business activities of the
Competing Entity at the time of Executive’s proposed engagement by such entity.

 

(c)  Acknowledgement.
Executive
acknowledges and agrees that the covenants set forth in this Section are
reasonable and necessary in all respects for the protection of the Company’s
legitimate business interests (including without limitation the Company’s
confidential, proprietary information and trade secrets and client good-will,
which represents a significant portion of the Company’s net worth and in which
the Company has a property interest). Executive acknowledges and agrees that,
in the event that Executive breaches any of the covenants set forth in this
Section, the Company shall be irreparably harmed and shall not have an adequate
remedy at law; and, therefore, in the event of such a breach, the Company shall
be entitled to injunctive relief, in addition to (and not exclusive of) any
other remedies (including monetary damages) to which the Company may be
entitled under law. If any covenant set forth in this Section 7 is deemed
invalid or unenforceable for any reason, it is the parties’ intention that such
covenants be equitably reformed or modified to the extent necessary (and only
to such extent to) render it valid and enforceable in all respects. In the
event that the time period and geographic scope referenced above is deemed
unreasonable, overbroad, or otherwise invalid, it is the parties’ intention
that the enforcing court shall reduce or modify the time period and/or
geographic scope to the extent necessary (and only to such extent necessary) to
render such covenants reasonable, valid and enforceable in all respects.

 

8.  ARBITRATION.

 

(a)  General. In consideration of Executive’s service to the Company, its promise to
arbitrate all employment related disputes and Executive’s receipt of the
compensation, pay raises and other benefits paid to Executive by the Company,
at present and in the future, Executive agrees that any and all controversies,
claims, or disputes with anyone (including the Company and any employee,
officer, director, shareholder or benefit plan of the Company in their capacity
as such or otherwise) arising out of, relating to, or resulting from Executive’s
service to the Company under this Agreement or otherwise or the termination of
Executive’s service with the Company, including any breach of this Agreement,
will be subject to binding arbitration under the Arbitration Rules set forth in
California Code of Civil Procedure

 

11

 

Section 1280 through 1294.2,
including Section 1283.05 (the “Rules”)
and pursuant to California law. Disputes which Executive agrees to arbitrate,
and thereby agrees to waive any right to a trial by jury, include any statutory
claims under state or federal law, including, but not limited to, claims under
Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act
of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers
Benefit Protection Act, the California Fair Employment and Housing Act, the
California Labor Code, claims of harassment, discrimination or wrongful
termination and any statutory claims. Executive further understands that this
Agreement to arbitrate also applies to any disputes that the Company may have
with Executive.

 

(b)  Procedure. Executive agrees that any arbitration will
be administered by the American Arbitration Association (“AAA”) and that a neutral arbitrator
will be selected in a manner consistent with its National Rules for the
Resolution of Employment Disputes. The arbitration proceedings will allow for
discovery according to the rules set forth in the National Rules for the Resolution of Employment Disputes or California
Code of Civil Procedure. Executive agrees that the arbitrator will
have the power to decide any motions brought by any party to the arbitration,
including motions for summary judgment and/or adjudication and motions to
dismiss and demurrers, prior to any arbitration hearing. Executive agrees that
the arbitrator will issue a written decision on the merits. Executive also
agrees that the arbitrator will have the power to award any remedies, including
attorneys’ fees and costs, available under applicable law. Executive
understands the Company will pay for any administrative or hearing fees charged
by the arbitrator or AAA except that Executive will pay the first $125.00 of
any filing fees associated with any arbitration Executive initiates. Executive
agrees that the arbitrator will administer and conduct any arbitration in a
manner consistent with the Rules and that to the extent that the AAA’s National
Rules for the Resolution of Employment Disputes conflict with the Rules, the
Rules will take precedence.

 

(c)  Remedy. Except as provided by the Rules,
arbitration will be the sole, exclusive and final remedy for any dispute between
Executive and the Company. Accordingly, except as provided for by the Rules,
neither Executive nor the Company will be permitted to pursue court action
regarding claims that are subject to arbitration. Notwithstanding, the
arbitrator will not have the authority to disregard or refuse to enforce any
lawful Company policy, and the arbitrator will not order or require the Company
to adopt a policy not otherwise required by law which the Company has not
adopted.

 

(d)  Availability of Injunctive Relief. In addition to the right under the Rules to
petition the court for provisional relief, Executive agrees that any party may
also petition the court for injunctive relief where either party alleges or
claims a violation of this Agreement or the Confidentiality Agreement or any
other agreement regarding trade secrets, confidential information,
nonsolicitation or Labor Code §2870. In the event either party seeks injunctive
relief, the prevailing party will be entitled to recover reasonable costs and
attorneys’ fees.

 

(e)  Administrative Relief. Executive understands that this Agreement
does not prohibit Executive from pursuing an administrative claim with a local,
state or federal administrative body such as the Department of Fair Employment
and Housing, the Equal Employment Opportunity Commission or the workers’
compensation board. This Agreement does, however, preclude Executive from
pursuing court action regarding any such claim.

 

(f)  Voluntary Nature of
Agreement.
Executive acknowledges and agrees that Executive is executing this Agreement
voluntarily and without any duress or undue influence by the Company or anyone
else. Executive further acknowledges and agrees that Executive has carefully
read this Agreement and that Executive has asked any questions needed for
Executive to understand the terms, consequences

 

12

 

and binding effect of this
Agreement and fully understand it, including that Executive is waiving
Executive’s right to a jury trial. Finally, Executive agrees that Executive has
been provided an opportunity to seek the advice of an attorney of Executive’s
choice before signing this Agreement.

 

9.  WAIVER. The waiver by the Company of any breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by Executive of any provision of this Agreement.

 

10.  SEVERABILITY. The parties have carefully reviewed the
provisions of this Agreement and agree that they are fair and equitable. However,
in light of the possibility of differing interpretations of law and changes of
circumstances, the parties agree that in the event that any section, paragraph
or term of this Agreement shall be determined to be invalid or unenforceable by
any competent authority or tribunal for any reason, the remainder of this
Agreement shall be unaffected thereby and shall remain in full force and effect.
Moreover, if any of the provisions of this Agreement is determined by a court
of competent jurisdiction to be excessively broad as to duration, activity,
geographic application or subject, it shall be construed by limiting or
reducing it to the extent legally permitted so as to be enforceable to the
extent compatible with then applicable law.

 

11.  SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of the successors and assigns of the Company and the heirs, executors
or personal representatives of Executive. This Agreement may not be assigned by
Executive. This Agreement may be assigned to any successor in interest to the
Company (including by way of merger, consolidation or reorganization, or by way
of any assignment of all or substantially all of the Company’s assets, business
or properties), and Executive hereby consents to such assignment.

 

12.  ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including the recitals (which
are a part hereof), together with the applicable bylaws and policies of the
Company, constitutes the entire Agreement between the parties hereto and there
are no other understandings, agreements or representations, expressed or
implied, with the exception of the Post Termination Exercise Provisions of the
2002 Agreement. This Agreement supersedes any and all prior or contemporaneous
agreements, oral or written, concerning Executive’s employment and compensation,
except for any invention assignment and confidentiality terms of any agreement
signed by Executive, provided that the provisions of this Agreement relating to
acceleration and time to exercise vested Stock Options in the event of a Change
of Control are in addition to, not in lieu of, any such similar provisions set
forth in any Equity Incentive Plan or other document, including the Post
Termination Exercise Provisions of the 2002 Agreement. This Agreement may be
amended only in writing signed by Executive and a member of the Company’s Board
of Directors.

 

13  TERMINATION; SURVIVAL. The
Company may terminate this Agreement upon written notice delivered to Executive.
Such notice may be delivered to Executive at any time commencing twelve months after
the Effective Date, which termination shall be effective twenty-four months
after delivery of such notice to Executive. Sections 5 (five) through 14
(fourteen), inclusive shall survive the termination of this Agreement. The
obligations of Section 4 (four) shall survive only with regards to termination
of employment occurring prior to the effective date of termination of this
Agreement or with regards to a Change of Control occurring prior to the
effective date of termination of this Agreement. In all other respects the
parties’

 

13

 

obligations set
forth in Section 4 (four), above, shall terminate upon termination of this
Agreement.

 

14.  GOVERNING LAW.
This Agreement shall
be governed by and construed in accordance with the laws (other than conflicts
of laws principles) of the State of California applicable to contracts executed
in and to be performed entirely within such State by residents of such state.

 

	
  Dated as of

  	
   May 21,
  2006

  	
  .

  	
   

  
	
   

  
	
   

  	
  ACCELRYS, INC.

  
	
   

  	
   

  
	
   

  
	
   

  	
  By:

  	
    /s/ Ricardo
  Levy

  	
   

  
	
   

  	
   

  	
  Ricardo Levy

  
	
   

  	
   

  	
  Chairman of the
  Human Resources Committee of the

  
	
   

  	
   

  	
  Board of
  Directors

  
	
   

  	
   

  
	
   

  	
   

  	
    /s/ Mark
  Emkjer

  	
   

  

 

14Exhibit 10.35

 

 

FY07 Management Incentive Plan

 

The Management Incentive Plan (the “Plan”) applies to
Employees of Accelrys for achievement of Objectives as defined in this plan. The
plan is designed to support both the growth and profitability of the organization.

 

Term

 

This plan is effective for the one-year period ending March 31, 2007.

 

Eligibility

 

To be eligible for participation in the Plan, Participants must be
regular employees of one of the following group companies (“Group Company”) through
the year end in which the incentive is earned: Accelrys Inc., Accelrys Ltd, Accelrys
SARL, Accelrys India PVT, Accelrys KK, or SciTegic Inc.

 

Participants include the following levels of employees, CEO, Vice
President, Director and Members of the Product Marketing and Marketing Programs
Management organization.

 

Eligible participants must not already be participating in an
alternative commission or incentive plan and must be employed with one of Accelrys’
Group Companies prior to the commencement of Q4 and through the end of the
relevant fiscal year in order to receive a payment under the plan for FY07.

 

Plan
Structure

 

Each Plan Participant is eligible to earn a target incentive equal to a
percentage of base salary.

 

Earnings against the target incentive are based upon the successful
achievement of the FY07 Orders Bookings Target, Revenue Target, Operating
Profit Margin Target (EBIT), and Individual Goals as may be appropriate in
accordance with the following:

 

Vice President-level Participants: 100% of plan achievement is tied to the three
financial metrics of the plan (Orders Bookings Target, Revenue Target,
Operating Profit Margin Target (EBIT)) as outlined in the sample matrix below.

 

Director-level  and All
Additional Plan Participants: 50% of plan achievement is tied to
the three main financial metrics of the plan (Orders Bookings Target, Revenue Target, Operating Profit Margin Target
(EBIT)) and 50% tied to
the participant’s achievement against his/her individual MBOs, as determined by the Plan Participant’s
supervisor at his/her sole discretion.

 

1

 

The plan provides eligible participants with the
opportunity to earn from 0% to 200% of target incentive against the component
tied to the three financial metrics, and from 0 to 100% of target incentive
against the component tied to achievement against individual MBOs.

 

Incentives shall be earned for the applicable
fiscal year and shall be paid in the quarter that follows the year in which the
incentives are earned.

 

Payments under this plan are contingent upon
signature on the Acknowledgement (provided at the end of this plan) signifying
acceptance of the plan terms. To be eligible for an award pursuant to this
plan, a Plan Participant must remain employed continuously in good standing
with the Company during fiscal year 2007, provided that a Plan Participant who
commences employment after the Plan becomes effective shall be eligible for a
pro-rata award, if such employee has been continuously employed in good standing
after commencing employment with a Group Company.

 

General
Provisions

 

A Plan Participant shall not assign nor give
any part of an incentive to any agent, customer or representative of the
customer, or any other person, as an inducement in obtaining an order. Unless
expressly approved in advance by the CEO of the Company, a Plan Participant
shall not accept any compensation from third parties related to sales of third
party products or services made by the Company.

 

This Plan does not constitute a contract of
employment for a definite term with any employee and confers no employment
rights. Except to the extent provided by applicable law or individual written
employment agreements, either the Company or the Plan Participant may terminate
employment at any time, and for any reason whatsoever, with or without cause,
and with or without advance notice. In the event that any Plan Participant
compensated in accordance with this plan owes any sum of money to the Company,
including without limitation draw payments, charge backs, and travel advances,
the Company shall have the right at any time to offset such obligations against
the employee’s base salary, commissions, or bonuses.

 

The Company reserves the right without
advance notice to:

 

1. Accept,
reject, or cancel any order;

 

2. Make any adjustments or revisions
to incentive rates, quotas, salaries, or any other matters pertaining to this
Plan; and

 

3. Resolve, in its sole and absolute
discretion, any matters of interpretation under the Plan and matters not covered
by the provisions of the Plan.

 

4. Modify or terminate this Plan at
any time.

 

The contents of this Plan are Company
Proprietary and Confidential, and are not to be disclosed by any Plan
Participant to any person who is not an employee of the Company. Any legal
action brought concerning this Plan shall be brought only in the state or
federal courts located in San Diego, California in the case of all United
States employees, or in the country in which the Plan Participant is employed
if the Plan Participant is employed outside the United States. Both parties
submit to venue and jurisdiction in these courts. This Plan contains the entire
agreement of the parties with respect to the matters addressed herein, and
supersedes all other representations, statements and understandings concerning
this subject matter.

 

2

 

Acknowledgement

 

I hereby acknowledge that I have received, read, and accepted the FY06
Management Incentive Plan and agree to be bound by its terms.

 

	
  Signature:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DATE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  	
   

  	
   

  

 

3

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