1
EXHIBIT 10.7
MOLECULAR SIMULATIONS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT
Molecular Simulations Incorporated, a Delaware corporation (the "Company"),
hereby grants as of the _____ day of _______, ___________ to __________________
(the "Optionee"), an option to purchase a maximum of [NUMBER] shares (the
"Option Shares") of its Common Stock, $.001 par value ("Common Stock"), at the
price of $[PRICE] per share, on the following terms and conditions:
1. GRANT UNDER MOLECULAR SIMULATIONS INCORPORATED 1996 STOCK PLAN. This
option is granted pursuant to and is governed by the Company's 1996 Stock Plan
(the "Plan") and, unless the context otherwise requires, terms used herein shall
have the same meaning as in the Plan. Determinations made in connection with
this Option pursuant to the Plan shall be governed by the Plan as it exists on
this date. If the approval of stockholders and a "Qualification by Permit" under
Section 25113(b)(1) of the California Corporate Securities Law of 1968, as
amended are not both obtained prior to February 21, 1997, this Option shall be
rescinded.
2. GRANT AS NON-QUALIFIED OPTION; OTHER OPTIONS. This option shall be
treated for federal income tax purposes as a Non-Qualified Option (rather than
an incentive stock option). This option is in addition to any other options
heretofore or hereafter granted to the Optionee by the Company or any Related
Corporation (as defined in the Plan), but a duplicate original of this
instrument shall not effect the grant of another option.
3. VESTING OF OPTION IF BUSINESS RELATIONSHIP CONTINUES. If the Optionee
has continued to serve the Company or any Related Corporation in the capacity of
an employee, officer, director or consultant (such service is described herein
as maintaining or being involved in a "Business Relationship with the Company")
on the following dates, subject to the provisions of Paragraph 8(A) of the Plan,
the Optionee may exercise this Option for the number of shares of Common Stock
set opposite the applicable date:
Less than one year from - [NUMBER] shares
the date hereof
One year but less than - an additional
two years from the date hereof [NUMBER] shares
Two years but less than - an additional
three years from the date hereof [NUMBER] shares
2
Three years but less than - an additional
four years from the date hereof [NUMBER] shares
Four years or more - an additional
from the date hereof [NUMBER] shares
Notwithstanding the foregoing, in accordance with and subject to the provisions
of Paragraph 8(D) of the Plan, the Committee may, in its discretion, accelerate
the date that any installment of this Option becomes exercisable. In addition,
the provisions of Paragraph 8(D) of the Plan providing for automatic
acceleration of exercisability upon the occurrence of certain enumerated events
shall apply to this Option. And, according to the terms of the Plan, no
acceleration of exercisability of this Option shall occur to the extent that
with respect to any "disqualified individual," there would result a
non-deductible "excess parachute payment" under the provisions of Section 280G
of the Code.
The foregoing rights are cumulative and and (subject to Sections 4 or 5
hereof if the Optionee ceases to have a Business Relationship with the Company
or any Related Corporations) may be exercised up to and including the date which
is [NUMBER NOT EXCEEDING TEN] years from the date this Option is granted.
4. TERMINATION OF BUSINESS RELATIONSHIP.
(a) TERMINATION OTHER THAN FOR CAUSE: If the Optionee's Business
Relationship with the Company and all Related Corporations is terminated, other
than by reason of death, disability or dissolution as defined in Section 5 or
termination for Cause as defined in Section 4(c), no further installments of
this Option shall become exercisable after the date on which such Business
Relationship ceases, and this Option shall terminate (and may no longer be
exercised) after the passage of three (3) months from the date the Business
Relationship ceases, but in no event later than the scheduled expiration date.
In such a case, the Optionee's only rights hereunder shall be those which are
properly exercised before the termination of this Option.
(b) TERMINATION FOR CAUSE: If the Optionee's Business Relationship with
the Company is terminated for Cause (as defined in Section 4(c)), this Option
shall terminate upon the Optionee's receipt of written notice of such
termination and shall thereafter not be exercisable to any extent whatsoever.
(c) DEFINITION OF CAUSE: "Cause" shall mean conduct involving one or
more of the following: (i) the substantial and continuing failure of the
Optionee, after notice thereof, to render services to the Company or Related
Corporation in accordance with the terms or requirements of the Optionee's
3
Business Relationship with the Company; (ii) disloyalty, gross negligence,
willful misconduct, dishonesty or breach of fiduciary duty to the Company or
Related Corporation; (iii) the commission of an act of embezzlement or fraud;
(iv) deliberate disregard of the rules or policies of the Company or Related
Corporation which results in direct or indirect loss, damage or injury to the
Company or Related Corporation; (v) the unauthorized disclosure of any trade
secret or confidential information of the Company or Related Corporation; or
(vi) the commission of an act which constitutes unfair competition with the
Company or Related Corporation or which induces any customer or supplier to
break a contract with the Company or Related Corporation.
5. DEATH; DISABILITY; DISSOLUTION.
(a) DEATH: If the Optionee is a natural person who dies while involved
in a Business Relationship with the Company, this Option may be exercised, to
the extent otherwise exercisable on the date of his or her death, by the
Optionee's estate, personal representative or beneficiary to whom this Option
has been assigned pursuant to Section 10, at any time within eighteen (18)
months after the date of death, but not later than the scheduled expiration
date.
(b) DISABILITY: If the Optionee is a natural person whose Business
Relationship with the Company is terminated by reason of his or her disability
(as defined in the Plan), this Option may be exercised, to the extent otherwise
exercisable on the date the Business Relationship was terminated, at any time
within twelve (12) months after such termination, but not later than the
scheduled expiration date.
(c) EFFECT OF TERMINATION: At the expiration of such 18 month or 12
month period provided in paragraphs (a) and (b), respectively, of this Section 5
or the scheduled expiration date, whichever is the earlier, this Option shall
terminate (and shall no longer be exercisable) and the only rights hereunder
shall be those as to which the option was properly exercised before such
termination.
(d) DISSOLUTION: If the Optionee is a corporation, partnership, trust
or other entity that is dissolved, is liquidated, becomes insolvent or enters
into a merger or acquisition with respect to which the Optionee is not the
surviving entity, at a time when the Optionee is involved in a Business
Relationship with the Company, this Option shall immediately terminate as of the
date of such event (and shall thereafter not be exercisable to any extent
whatsoever), and the only rights hereunder shall be those as to which this
Option was properly exercised before such dissolution or other event.
4
6. PARTIAL EXERCISE. This option may be exercised in part at any time and
from time to time within the above limits, except that this Option may not be
exercised for a fraction of a share unless such exercise is with respect to the
final installment of stock subject to this Option and cash in lieu of a
fractional share must be paid, in accordance with Paragraph 13(G) of the Plan,
to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this Option cannot be
exercised because of the limitation contained in the preceding sentence shall
remain subject to this Option and shall be available for later purchase by the
Optionee in accordance with the terms hereof.
5
7. PAYMENT OF PRICE.
(a) FORM OF PAYMENT: The option price shall be paid in the following
manner:
(i) in cash or by check;
(ii) subject to paragraph 7(b) below, by delivery of shares of the
Company's Common Stock having a fair market value (as
determined by the Committee) equal as of the date of exercise
to the option price;
(iii) by delivery of an assignment satisfactory in form and
substance to the Company of a sufficient amount of the
proceeds from the sale of the Option Shares and an
instruction to the broker or selling agent to pay that
amount to the Company; or
(iv) by any combination of the foregoing.
(b) LIMITATIONS ON PAYMENT BY DELIVERY OF COMMON STOCK: If the
Optionee delivers Common Stock held by the Optionee ("Old Stock") to the Company
in full or partial payment of the option price, and the Old Stock so delivered
is subject to restrictions or limitations imposed by agreement between the
Optionee and the Company, an equivalent number of Option Shares shall be subject
to all restrictions and limitations applicable to the Old Stock to the extent
that the Optionee paid for the Option Shares by delivery of Old Stock, in
addition to any restrictions or limitations imposed by this Agreement.
Notwithstanding the foregoing, the Optionee may not pay any part of the exercise
price hereof by transferring Common Stock to the Company unless such Common
Stock has been owned by the Optionee free of any substantial risk of forfeiture
for at least six months.
(c) PERMITTED PAYMENT BY RECOURSE NOTE: In addition, if this paragraph
is initialed below by the person signing this Agreement on behalf of the
Company, the option price may be paid by delivery of the Optionee's [THREE]-year
personal recourse promissory note bearing interest payable not less than
annually at the applicable Federal rate, as defined in Section 1274(d) of the
Code.
----------
(initials)
8. RESTRICTIONS ON TRANSFER. Option Shares will be of an illiquid nature
and will be deemed to be "restricted securities" for purposes of the Securities
Act of 1933, as amended. Accordingly, such shares must be sold in
6
compliance with the registration requirements of such Act or an exemption
therefrom.
9. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Agreement, this Option may be exercised by written notice to the Company,
at the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to exercise
this Option and the number of Option Shares for which it is being exercised and
shall be signed by the person or persons so exercising this Option. Such notice
shall be accompanied by payment of the full purchase price of such shares, and
the Company shall deliver a certificate or certificates representing such shares
as soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so
exercising this Option (or, if this Option shall be exercised by the Optionee
and if the Optionee shall so request in the notice exercising this Option, shall
be registered in the name of the Optionee and another person jointly, with right
of survivorship). In the event this Option shall be exercised, pursuant to
Section 5 hereof, by any person or persons other than the Optionee, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise this Option.
10. OPTION NOT TRANSFERABLE. This option is not transferable or assignable
except by will or by the laws of descent and distribution. Except as set forth
in the preceding sentence, during the Optionee's lifetime, only the Optionee can
exercise this Option.
11. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of this
Option imposes no obligation on the Optionee to exercise it.
12. NO OBLIGATION TO CONTINUE BUSINESS RELATIONSHIP. Neither the Plan, this
Agreement, nor the grant of this Option imposes any obligation on the Company or
any Related Corporation to continue to maintain a Business Relationship with the
Optionee.
13. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Optionee shall have no
rights as a stockholder with respect to the Option Shares until such time as the
Optionee has exercised this Option by delivering a notice of exercise and has
paid in full the purchase price for the number of shares for which this Option
is to be so exercised in accordance with Section 9. Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to such date of exercise.
7
14. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains provisions
covering the treatment of options in a number of contingencies such as stock
splits and mergers. Provisions in the Plan for adjustment with respect to stock
subject to options and the related provisions with respect to successors to the
business of the Company are hereby made applicable hereunder and are
incorporated herein by reference.
15. WITHHOLDING TAXES. If the Company or any Related Corporation in its
discretion determines that it is obligated to withhold any tax in connection
with the exercise of this Option, or in connection with the transfer of, or the
lapse of restrictions on, any Common Stock or other property acquired pursuant
to this Option, the Optionee hereby agrees that the Company or any Related
Corporation may withhold from the Optionee's wages or other remuneration the
appropriate amount of tax. At the discretion of the Company or Related
Corporation, the amount required to be withheld may be withheld in cash from
such wages or other remuneration or in kind from the Common Stock or other
property otherwise deliverable to the Optionee on exercise of this Option. The
Optionee further agrees that, if the Company or Related Corporation does not
withhold an amount from the Optionee's wages or other remuneration sufficient to
satisfy the withholding obligation of the Company or Related Corporation, the
Optionee will make reimbursement on demand, in cash, for the amount
underwithheld.
16. LOCK-UP AGREEMENT. The Optionee agrees that in connection with an
underwritten public offering of Common Stock, upon the request of the Company or
the principal underwriter managing such public offering, this Option and the
Option Shares may not be sold, offered for sale or otherwise disposed of without
the prior written consent of the Company or such underwriter, as the case may
be, for at least 270 days after the effectiveness of the Registration Statement
filed in connection with such offering, or such longer period of time as the
Board of Directors may determine if all of the Company's directors and officers
agree to be similarly bound. The lock-up agreement established pursuant to this
paragraph 18 shall have perpetual duration.
[NOTE: SECTION 17 MAY BE OMITTED.]
17. ARBITRATION. Any dispute, controversy, or claim arising out of, in
connection with, or relating to the performance of this Agreement or its
termination shall be settled by arbitration in the State of [_______], pursuant
to the rules then obtaining of the American Arbitration Association. Any award
shall be final, binding and conclusive upon the parties and a judgment rendered
thereon may be entered in any court having jurisdiction thereof.
8
18. PROVISION OF DOCUMENTATION TO OPTIONEE. By signing this Agreement the
Optionee acknowledges receipt of a copy of this Agreement and a copy of the
Plan.
19. MISCELLANEOUS.
(a) NOTICES: All notices hereunder shall be in writing and shall be
deemed given when sent by certified or registered mail, postage prepaid, return
receipt requested, to the address set forth below. The addresses for such
notices may be changed from time to time by written notice given in the manner
provided for herein.
(b) ENTIRE AGREEMENT; MODIFICATION: This Agreement constitutes the
entire agreement between the parties relative to the subject matter hereof, and
supersedes all proposals, written or oral, and all other communications between
the parties relating to the subject matter of this Agreement. This Agreement may
be modified, amended or rescinded only by a written agreement executed by both
parties.
(c) SEVERABILITY: The invalidity, illegality or unenforceability of any
provision of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision.
(d) SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, subject to the limitations set forth in Section 10 hereof.
(e) GOVERNING LAW: This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Delaware, without giving effect to
the principles of the conflicts of laws thereof. The preceding choice of law
provision shall apply to all claims, under any theory whatsoever, arising out of
the relationship of the parties contemplated herein.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
instrument to be executed as of the date first above written.
Molecular Simulations Incorporated
____________________________ 0000 Xxxxxxxx Xxxx
XXXXXXXX Xxx Xxxxx, XX 00000
____________________________ By:_______________________________
Print Name of Optionee [NAME OF OFFICER]
9
____________________________ __________________________________
Street Address Title
____________________________
City State Zip Code
10
MOLECULAR SIMULATIONS INCORPORATED
NON-QUALIFIED STOCK OPTION
__________, Optionee
Molecular Simulations Incorporated (formerly Polygen Corporation) (the
"Company"), pursuant to its 1986 Supplemental Stock Option Plan (the "Plan"),
has this day granted to you, the optionee named above, an option to purchase
shares of the common stock of the Company ("Common Stock"). This option is not
intended to qualify as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
_______ (______). Subject to the limitations contained herein, this option shall
be exercisable with respect to each installment shown below on or after the date
of vesting applicable to such installment, as follows:
Number of Shares Date of Earliest Exercise
(Installment) (Vesting)
________ [Month] [Day], 19__
________ [Month] [Day], 19__
________ [Month] [Day], 19__
________ [Month] [Day], 19__
2. (a) The exercise price of this option is $____ per share, being not
less than the fair market value of the Common Stock on the date of grant of this
option.
(b) Payment of the exercise price per share is due in full in cash upon
exercise of all or any part of each installment which has become exercisable by
you.
3. The minimum number of shares with respect to which this option may be
exercised at any one time is one hundred (100).
4. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this option are
then registered under the Securities Act of 1933, as amended (the "Act"), or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Act.
1
11
5. The term of this option commences on the date hereof and, unless sooner
terminated as set forth below or in the Plan, terminates on [Month] [Day],
[Year]. This option shall terminate prior to the expiration of its term as
follows: ________ after you cease to be a director, consultant or other service
provider of the Company or an Affiliate of the Company (as defined in the Plan)
for any reason or for no reason. However, this option may be exercised following
cessation of your services as a director, consultant or other service provider
of the Company only as to that number of shares as to which it was exercisable
on the date of such cessation under the provisions of paragraph 1 of this
option.
6. Because this option does not qualify as an incentive stock option under
the federal tax laws, the optionee may recognize compensation income in
connection with the acquisition of one or more optioned shares hereunder. The
optionee must make appropriate arrangements for the satisfaction of all federal,
state or local income tax withholding requirements and federal social security
employee tax requirements applicable to such compensation income.
7. This option may be exercised, to the extent specified above, by
delivering a notice of exercise in substantially the form attached hereto,
together with the exercise price, to the Secretary of the Company or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to subparagraph 5 (f) of the Plan.
8. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
9. In the event of: (1) a dissolution or liquidation of the Company; (2) a
merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, then the exercisability of this option shall be
automatically accelerated so that such option shall, during the five (5)
business day period immediately prior to the specified effective date for such
dissolution, liquidation, merger, consolidation, reverse merger or other capital
reorganization, become fully exercisable with respect to the total number of
shares of stock purchasable under such option and may be exercised for all or
any portion of such shares. However, this option shall not be so accelerated if
and to the extent such option is, in connection with such dissolution,
liquidation, merger, consolidation, reverse merger or other capital
reorganization, either to be assumed by the successor corporation or parent
thereof or to be replaced with the comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof or comparable cash
incentives. The determination of such comparability shall be made by the Board
or the Committee and its determination shall be final, binding and conclusive.
Upon the consummation of such dissolution, liquidation, merger, consolidation,
reverse merger or other capital reorganization, this option under the Plan
shall, to the extent not
2
12
previously exercised or assumed by the successor corporation or its parent
company, terminate and cease to be outstanding.
10. Nothing in this option shall be deemed to create in any way whatsoever
any obligation on your part to continue in the service of the Company, or of the
Company to continue any service relationship with you.
11. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
12. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 5 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated: ___________ Very truly yours,
MOLECULAR SIMULATIONS INCORPORATED
By__________________________________
Duly authorized on behalf of the
Board of Directors
The undersigned acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan.
__________________________________
[Name]
Address: _____________________
_____________________
Attachments: 1986 Supplemental Stock Option Plan
Form of Notice of Exercise
3
13
NOTICE OF EXERCISE
Molecular Simulations Incorporated Date of
0000 Xxxxxxxx Xxxx Exercise: ________________
Xxx Xxxxx, XX 00000
Re: Non-Qualified Stock Option Grant
Gentlemen:
This constitutes notice under my stock option that I elect to
purchase the number of shares for the price set forth below.
Stock option dated: __________________________
Number of shares as
to which option is
exercised: __________________________
Total exercise price: $__________________________
Cash payment delivered
herewith: $__________________________
I agree to provide such additional documents as Molecular
Simulations Incorporated may require pursuant to the terms of its Supplemental
Stock Option Plan.
Very truly yours,
__________________________
4
