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Exhibit 10.16
EMPLOYMENT AGREEMENT
THIS IS AN AGREEMENT, made as of this 30th day of November 1995, by and
between Molecular Simulations Inc., a Delaware corporation (hereafter "MSI"),
and Xxxxx Xxxxxxxxx, presently residing at 00 Xxxxxxxxx Xxxx, Xxxxxxxx, XX 00000
(hereafter "Employee").
WITNESSETH:
WHEREAS, Employee has previously been employed by MSI in an important
capacity and MSI and Employee now wish to enter into an agreement of employment
that will constitute the sole and exclusive agreement relating to the employment
of Employee by MSI.
NOW, THEREFORE, in consideration of the foregoing premises, and the mutual
covenants, terms and conditions set forth herein, it is hereby agreed between
MSI and Employee as follows:
ARTICLE I. Employment
1.1 MSI shall employ Employee, and Employee shall continue to accept
employment with and work for MSI, in a full-time capacity commencing on the date
of this Agreement and continuing until Employee's employment with MSI is
terminated as provided herein (this period is sometimes referred to herein as
the "Term"). Such employment shall be in the capacity of Chief Operating Officer
of MSI. MSI shall assign to Employee, and Employee shall accept and diligently
perform to the reasonable satisfaction of MSI, those duties assigned to such
employee by MSI.
1.2 During the Term, Employee shall not, directly or indirectly, alone or
as a member of a partnership, or as an officer, director, employee, agent or
shareholder of any other person, firm or business organization, engage in any
other business activity or pursuit for compensation requiring Employee's
personal services during the period of Employee's employment hereunder without
the prior written consent of MSI acting through its Board of Directors; provided
however nothing in this Agreement shall preclude Employee from: (i) engaging in
religious, charitable, nonprofit or community activities; or (ii) serving on the
board of directors of any company, provided that such board membership is
approved by MSI's Board of Directors, such approval not to be unreasonably
withheld; or (iii) managing Employee's personal investments so long as
Employee's activities in any case do not interfere with the performance of
Employee's duties or responsibilities under this Agreement.
ARTICLE II. Compensation
2.1 Employee shall be compensated at an annual base salary of $162,500
during the Term of this Agreement. The MSI Board of Directors shall review and
may, at its sole discretion, increase this annual base salary from time to time
during the Term of this Agreement or any extension thereof to reflect salary
increases granted generally to other MSI Employees.
2.2 The Employee's base salary shall be paid periodically in the same
manner as it is paid to other executive employees of MSI, but in no event less
frequently than monthly. Base salary and other compensation shall be subject to
such withholdings as required by law or otherwise agreed to by Employee.
2.3 During the Term, in addition to all other amounts payable under Section 2,
the Employee shall be eligible to receive a target bonus of (i) $75,000 for the
period ending December 31, 1996 and (ii) $75,000 per annum for each successive
twelve month period thereafter ending December 31 ("Year End"), provided the
Employee continues to be employed by MSI on such Year End. The MSI Board of
Directors shall review and may, at its sole discretion, increase this annual
target bonus from time to time during the Term of this Agreement or any
extension thereof. Such bonus for 1996 shall be based on the achievement of the
revenue and income goals for MSI set forth on Exhibit A hereto, and such bonus
will be adjusted upwardly or downwardly based on performance against such goals
in the manner described in Exhibit A. For 1997 and beyond, such bonus shall be
based on the achievement of the revenue, income and/or other goals for MSI
established promptly and reasonably by the
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Compensation Committee of the Board of Directors of MSI. The amount of bonus
payments payable to the Employee under this Section 2.3 and the satisfaction of
the goals and objectives set forth in Exhibit A or any amendment thereto shall
be determined promptly and reasonably by MSI's Board of Directors or
Compensation Committee and, if earned, such bonus payments shall be paid within
120 days after each Year End. Such bonus payments shall be subject to all
applicable federal, state and local withholding, payroll and other taxes, as
required by law.
2.4 Employee shall be entitled to receive an incentive stock option to
purchase an additional two hundred seventy-one thousand nine hundred eighty
(271,980) shares of MSI's common stock (the "Additional Option") on the terms
and conditions described below. The shares subject to the Additional Option will
vest over a four year period (25% on August 15,1996 and an additional 25% on
each anniversary thereafter with all such shares vested as of August 15, 1999)
so long as Employee is an employee or consultant of MSI. In addition to the
standard term for exercise of options under MSI's stock option plan, if
Employee's employment with MSI is terminated without Cause (as defined in
Section 7.1 below), Employee will have three (3) years to exercise the portion
of the Additional Option which had vested at the time of such termination of
employment. Other terms and conditions of the Additional Option will be as
provided by MSI's Board of Directors pursuant to MSI's stock option plan.
ARTICLE III. Executive Benefits
3.1 During the Term of this Agreement, Employee shall be entitled to
participate in MSI's group life insurance plans as they may be amended and in
force from time to time during the Term, and shall, with his or her dependents,
be entitled to health insurance coverage under MSI health insurance plans upon
the same basis as provided to other executive employees of MSI.
3.2 MSI shall provide to Employee vacation, insurances (other than as
provided for in Paragraph 3.1) and fringe benefits no less favorable to Employee
than MSI may from time to time make available to its employees generally on a
pro rata basis or on a basis proportional with Employee's annual salary
hereunder as it may be appropriate with respect to the particular plan.
3.3 Employee may incur reasonable business expenses in the course of
employment hereunder for which Employee shall be eligible for reimbursement or
advances for such expenses in accordance with MSI's policy for business travel
expenses for its executive employees generally.
3.4 Following Employee's relocation to MSI's new headquarters in San
Diego, California, Employee shall not be required without Employee's consent to
accept any: (a) further transfer to a place of business that is more than 35
miles from the headquarters location of MSI, except in connection with a
movement of MSI's principal place of business or headquarters to a location
within the City of San Diego or the County of San Diego, California, or (b) any
temporary assignment which would require Employee to be absent from Employee's
home for more than thirty (30) consecutive days, provided that no such temporary
assignment shall require Employee to be absent from Employee's home for more
than sixty (60) days in any one-year period, excluding normal business travel.
3.5 MSI shall reimburse the Employee for the reasonable relocation
expenses incurred directly by the Employee in connection with his or her
employment by MSI as follows: reasonable out-of-pocket expenses associated with
the Employee's relocation of his residence to a location within the San Diego,
California area, including costs of moving household furnishings, personal
effects, storage costs and insurance; closing costs and commissions to real
estate brokers associated with the sale of the Employee's residence (provided
such sale occurs during the Term but not more than two years from the date of
this Agreement); travel expenses associated with a reasonable number of "house
hunting" trips; up to $12,000 toward the costs of renting temporary housing in
San Diego (prior to the sale or rental of Employee's residence in Westford,
Massachusetts, MSI will reimburse Employee in full for temporary housing rental
and after the sale or rental of such residence will reimburse Employee the
excess of his monthly rental payment in the San Diego area over his former
monthly mortgage payment for his Massachusetts residence, subject in all cases
to the $12,000 maximum reimbursement); and closing costs associated with the
purchase of a residence in the San Diego area (provided such purchase occurs
during the Term but not more than two years from the date of this Agreement)
including title insurance,
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plot surveys, bank origination and application fees, legal fees, home inspection
fees, appraisal fees, and up to one and one-half points toward a mortgage. In
addition, MSI will reimburse Employee for any incremental income tax actually
owed by the Employee as a result of any reimbursement payments under this
Section 3.5, and such other expenses as MSI's Board of Directors approves in
advance. Employee agrees to claim all applicable tax deductions associated with
such expenses so as to minimize the incremental income tax to be reimbursed by
MSI.
The Employee hereby agrees that all such expenses to be reimbursed to
the Employee under this Section 3.5 by MSI shall be reasonable and that the
Employee shall use his best efforts to minimize the costs by obtaining, in each
instance, terms which are as favorable as those which the Employee would
negotiate if he were to pay for such expenses directly himself. Further, the
Employee agrees to provide suitable and accurate documentation evidencing such
costs incurred, and MSI shall provide reimbursement within a reasonable time
after the receipt of such documentation.
3.6 In addition to the amounts payable under Section 3.5 above, MSI
agrees to pay Employee a one time relocation bonus of $57,000 promptly after
execution of this Agreement. MSI will also reimburse Employee for any
incremental taxes on income actually owed by the Employee as a result of such
relocation bonus. If Employee voluntarily ceases his employment with MSI during
the one year period following his relocation to the San Diego area, Employee
agrees to repay such relocation bonus amount and the relocation expense
reimbursements described in Section 3.5 to MSI within ten (10) days after his
termination of employment. Employee agrees that MSI may deduct and offset all or
part of such amount from any amounts otherwise owed by MSI to Employee at the
time of termination of employment, including salary, severance pay, commissions,
bonuses and expense reimbursements.
3.7 In the event Employee's employment with MSI is terminated without
Cause (as defined in Section 7.1 below) within one year after his relocation to
the San Diego area, MSI agrees to reimburse Employee for reasonable moving and
transportation expenses associated with Employee's relocation to Massachusetts,
including costs of moving household furnishings and personal effects, storage
costs and insurance.
ARTICLE IV. Invention Disclosure, Patent Assignment and Copyright
4.1 Employee shall promptly disclose to MSI all inventions conceived or
developed by Employee solely or jointly with another during the Term of this
Agreement and for six months thereafter, which are related to the MSI Business,
as described below, on such forms as MSI may require from time to time. Such
disclosure shall be kept confidential by MSI during MSI's review and thereafter
if MSI determines that the invention is not the property of MSI. Employee hereby
assigns to MSI all right, title and interest in and to any such inventions
relating to the MSI Business (including any actually or demonstratively
anticipated research and development of MSI) which are conceived or made by
Employee solely or jointly with any other person, during the course of
employment with MSI. For purposes of this Agreement, the MSI Business includes
the development, distribution, licensing or sale of algorithms, computer-based
techniques or software for modeling (including graphical display), analysis or
storage of chemical or biological structures, properties, processes or related
information, and any other business in which MSI engages or plans to engage (as
evidenced in business plans or other written materials) during the Term.
4.2 All rights in development (including without limitation software,
source codes, object codes, subroutines, file formats, user interfaces,
algorithms, molecular structures and compositions, business methods and trade
secrets), reports, records and other documents prepared by Employee during the
Term and which relate to the MSI Business or are within the scope of employment
hereunder shall vest exclusively with MSI, and Employee upon MSI's request will
execute any assignments necessary to protect MSI's (or its assignees) interests
in such intellectual property rights and documents and shall assist MSI (or its
assignees) in securing patent protection, if available, or Federal copyright
registration for any inventions included in such property rights or documents.
Employee has not developed or conceived of any invention related to the MSI
Business as of the date of this Agreement that is not owned by MSI.
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4.3 Employee hereby acknowledges that this provision constitutes
written notification that this Agreement does not require any assignment of any
inventions or rights or interests therein which fully qualify as an invention
under Section 2870(b) of the California Labor Code. Sections 2870, 2871 and 2872
of the California Labor Code are attached as Exhibit B.
ARTICLE V. Non-Solicitation
5.1 Employee shall not, during the Term and for a period of one year
thereafter, engage in any activity which is intended directly or indirectly to
solicit, encourage, induce or attract to the employ of Employee or any other
business any person who is then an employee of or consultant (other than
consultants providing general services, such as accountants, which are not
directly related to the development, production or marketing of MSI products or
technologies) to MSI or offer any employment, consulting or ownership interest
to any person who is an employee of or consultant to MSI.
ARTICLE VI. Confidentiality
6.1 Employee will during the course of employment be privy to
information belonging to MSI which information is valuable to MSI and which
information MSI holds in confidence. Employee undertakes with respect to
information Employee understands, or reasonably should believe to be
confidential to MSI, or as to which Employee has been specifically advised by
MSI that it regards to be confidential, not to disclose to third parties or use
such information during the Term and after the expiration or termination of this
Agreement for any reason, except in connection with the performance of duties as
an Employee of MSI pursuant to this Agreement. At the expiration of this
Agreement or termination of employment hereunder, Employee will, at MSI's
request, return to MSI all written confidential information (including that
contained on any computer media) received from MSI and destroy any
transcriptions or copies Employee may have of such information, unless an
alternative method of disposition is approved by MSI in writing. Employee's
obligations under this Article VI shall be in addition to any other
confidentiality or nondisclosure obligations of Employee to MSI at law or under
any other agreement. Employee's obligations under this Article VI shall not
extend to information which (i) was or is publicly available, (ii) became
available to Employee from a third party which was not, to Employee's knowledge,
bound by any obligation of confidentiality to MSI or (iii) was independently
developed by Employee without violating Employee's obligations hereunder.
ARTICLE VII. Termination and Termination of Responsibilities
7.1 Employee shall be subject to termination of Employee's employment
by MSI only for Cause as defined below, or disability which prevents Employee
from working for longer than three (3) months or as expressly provided in
Section 7.3 below. Notwithstanding any dispute over whether a termination was
properly for Cause, MSI may bar Employee from access to MSI's offices,
facilities and business records after giving Employee notice of termination for
Cause provided that in the event of a dispute concerning MSI's finding of Cause
which is the subject matter of a proceeding under Section 8.7, Employee and
Employee's legal representative shall have access to business records relevant
to such findings of Cause to the extent provided in Section 8.7. "Cause" shall
mean: (i) Employee's Material Breach of this Agreement (as defined below) which
continues uncured for more than thirty (30) days after notice by MSI, (ii)
unexcused absence for more than two consecutive weeks (other than for reasons
relating to Employee's illness or vacation), (iii) Employee's dishonesty or
willful misconduct with respect to MSI, (iv) Employee's drug or alcohol abuse
for which treatment is refused (unless, within 30 days of MSI's notice to obtain
treatment, Employee produces a doctor's letter that Employee is not abusing
drugs or alcohol), or (v) conviction of Employee for a felony. For purposes of
clause (i) above, a "Material Breach of this Agreement" shall mean Employee's
breach of Articles 1.2, IV, V or VI above, or Employee's failure to follow the
lawful directions of MSI's Board of Directors.
7.2 Except as may be otherwise provided in applicable MSI benefit
plans, MSI shall not be liable to Employee for any salary or benefits
continuation beyond the date of Employee's death (except as expressly provided
herein), termination for disability (except as expressly provided herein),
voluntary termination of employment with MSI or upon MSI's rightful termination
of Employee for Cause, except as may be required by law.
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7.3 Employee's employment may be terminated by MSI without Cause or
Employee's consent for any reason or no reason by furnishing Employee with
written notice ("Notice") of the fact setting forth the effective date that
Employee's employment is to be terminated and provided that in such event:
(a) Employee will be entitled to receive his 1996 base salary
during the one year period following the effective date of his
termination of employment (the "Severance Period").
(b) Employee shall be allowed to continue participation in MSI
health and life insurance plans until the earlier of the end
of the first eighteen months of the Severance Period or until
Employee is covered by a successor employer's comparable
benefit plans. If MSI's insurers do not permit such continued
participation, then MSI shall reimburse Employee for the costs
of procuring comparable health and life insurance (if Employee
is eligible for such coverage) during the Severance Period, up
to two times the annual amount that MSI paid for such
insurance on Employee during the year prior to termination of
employment.
(c) The Company shall continue to pay all costs related to the
Employee's continued family medical coverage under the
Consolidated Budget Reconciliation Act of 1985 (COBRA) until
the earlier of the end of the first eighteen months of the
Severance Period or until such costs are covered by a
successor employer. The "Qualifying Event" for purposes of
COBRA shall be Employee's effective date of termination of
employment.
If Employee's employment is terminated under this Section 7.3, MSI will use its
best efforts to provide Employee with the opportunity to resign immediately
before the effective date of the Notice described in the first paragraph of this
Section 7.3, but Employee's resignation under those circumstances will have the
same effect under this Agreement as if Employee's employment were
terminated under this Section 7.3; provided any such resignation must be in
writing and acknowledge (which acknowledgment may be in a separate writing) that
this Section 7.3 is applicable in accordance with its terms. If Employee's
employment is terminated under this Section 7.3, MSI may bar Employee from
access to MSI's offices, facilities and business records.
7.4 If the Employee's employment with MSI is terminated because of a
consolidation, merger, reorganization, or sale of all, or substantially all, of
the assets or capital stock of MSI or other business combination in which MSI is
not the surviving entity (a "Change of Control") at any time within a period
commencing two months before and ending twelve months after a Change of Control,
and the Employee is not offered employment by the acquiring corporation in a
comparable position relating to a comparably sized business unit, at a
comparable target compensation (defined for this purpose as then current annual
salary plus then current target annual bonus available to be earned by Employee)
with comparable severance benefits as described in Section 7.3 above, in the
Employee's location at that time or other location acceptable to Employee, or if
Employee's employment is terminated without Cause (as defined in Section 7.3
hereof) at any time within a period commencing two months before and ending
twelve months after a Change of Control, then MSI or the acquiring corporation,
as the case may be, shall be obligated to: (a) pay the severance amount and
provide the Employee with medical and health insurance benefits as set forth in
Section 7.3, and (b) accelerate the vesting of Employee's Additional Options
such that 50% of the then unvested shares of all options for the purchase of MSI
common stock held by Employee become vested. If the Employee is offered
employment by the acquiring corporation in a comparable position relating to a
comparably sized business unit, and at a comparable target compensation with
comparable severance benefits as described in Section 7.3 above, in the
Employee's location at that time or other location acceptable to Employee,
neither MSI nor the acquiring corporation shall be obligated to provide the
severance payments or medical and health insurance benefits as described in
Section 7.3 of this Agreement or to accelerate the vesting of Employee's
unvested options (except as may otherwise be provided under MSI's stock option
plans). Anything contained in this Section 7.4 to the contrary notwithstanding,
the Employee shall not
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be entitled to any severance or other termination benefit if the Employee has
either (i) terminated such employment voluntarily, or (ii) has been terminated
by MSI or any acquiring corporation "for Cause" pursuant to Section 7.1.
7.5 If the Employee's target compensation (defined for this purpose as
annual salary plus target annual bonus available to be earned by Employee) for
any year during the Term is less than ninety percent (90%) of the Employee's
target compensation for 1996 , except in connection with a reduction in
compensation applicable to MSI employees generally, then the Employee shall have
the right to declare such reduction in target compensation as a constructive
termination of his employment without Cause under Section 7.3. In such event
Employee shall be entitled, within thirty (30) days after the effective date of
such reduction in target compensation, to provide MSI with written notice of
such constructive termination of employment, in which case Employee's employment
with MSI shall cease and MSI shall be obligated to pay the severance amount and
provide the insurance benefits set forth in Section 7.3.
ARTICLE VIII. Miscellaneous
8.1 This agreement shall be governed by and subject to the internal
laws of the State of California.
8.2 The failure of MSI or Employee to insist in any one or more
instances upon performance of any terms, covenants and conditions of this
Agreement, shall not be construed as a waiver or relinquishing of any rights
granted hereunder or of the future performance of any such terms, covenants or
conditions.
8.3 All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
mailed, registered or certified mail, postage prepaid;
If to MSI: Molecular Simulations Inc.
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000-0000
If to Employee: Xxxxx Xxxxxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
or at such other address or addresses as any such party may have furnished to
the other party in writing.
8.4 This Agreement is for personal services and is therefore not
assignable by Employee but is assignable by MSI only to a successor of
substantially the entire business of MSI.
8.5 This Agreement, including the Exhibits attached hereto and the
documents referred to herein, shall constitute the entire agreement between the
parties hereto with respect to the subject matter hereof (except as otherwise
expressly provided herein) and expressly supersedes all oral or written promises
relating to the subject matter hereof. This Agreement may not be changed,
modified or any right under it waived in any manner except by written instrument
signed by both parties expressing the plan and intention to modify this
Agreement. No principle of construction or interpretation shall be applied to
construe this Agreement or any part of it against the party which drafted the
Agreement.
8.6 Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective in a jurisdiction where such enforcement is
sought but only to the extent of such prohibition on unenforceability without
invalidity of the remaining provisions hereof and without affecting the validity
or enforceability of such provision in any other jurisdiction.
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8.7 Any dispute with respect to any aspect hereof which cannot be
settled by the parties shall be settled by arbitration in the City of San Diego
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof. Except as specifically provided herein, the arbitration
shall proceed in accordance with the laws of the State of California. The party
requesting arbitration shall give a written demand for arbitration to the other
party by registered or certified mail. The demand shall set forth a statement of
the nature of the dispute, the amount involved and the remedies sought. No later
than twenty (20) calendar days after the demand for arbitration is served, the
parties shall jointly select and appoint a retired judge of the San Diego
Superior Court to act as the arbitrator. In the event the parties do not agree
on the selection of an arbitrator, the party seeking arbitration shall apply to
the San Diego County Superior Court for the appointment of a retired judge of
that court to serve as arbitrator. As rules for the arbitration the arbitrator
shall apply the provisions of Sections 1282 through 1284.2 of the California
Code of Civil Procedure, and the parties may pursue discovery in accordance with
California Code of Civil Procedure Section 1283.05 which shall however be
limited to no more than two depositions taken by each party and the production
of only those documents directly relevant to the dispute. No later than (10)
calendar days after the arbitrator is appointed, the arbitrator shall schedule
the arbitration for a hearing to commence on a mutually convenient date. The
hearing shall commence no later than one hundred twenty (120) calendar days
after the arbitrator is appointed and shall continue from day to day until
completed. All discovery shall be completed no later than the commencement of
the arbitration hearing or one hundred twenty (120) calendar days after the date
that a proper demand for arbitration is served, whichever occurs earlier unless
upon a showing of good cause the arbitrator extends or shortens that period. The
arbitrator shall issue his or her award in writing no later than twenty (20)
calendar days after the conclusion of the hearing. The arbitration award shall
be final and binding regardless of whether one of the parties fails or refuses
to participate in the arbitration. The arbitrator is empowered to hear all
disputes between the parties concerning the subject matter hereof, and the
arbitrator may award monetary damages, specific performance, injunctive relief,
rescission and restitution. The arbitrator shall have no authority to award
exemplary or punitive damages under any circumstance. Either party may request
that the arbitrator submit written findings of fact and conclusions of law. The
prevailing party in any arbitration under this Section 8.7 shall be entitled to
be paid by the other party all of the prevailing party's costs and expenses,
including reasonable attorneys' fees, incurred in connection with the
arbitration.
8.8 This Agreement shall become effective upon its execution by both
parties.
IN WITNESS WHEREOF, MSI has executed this Agreement by its duly
authorized officer and has caused its corporate seal to be affixed, and Employee
has individually executed this Agreement intending to be legally bound, as of
the date hereof.
MOLECULAR SIMULATIONS INC. "Employee": XXXXX XXXXXXXXX
Signature: /s/ Xxxxxxx X. Xxxxxx Signature: /s/ Xxxxx Xxxxxxxxx
------------------------ ------------------------
Printed Name: Xxxxxxx X. Xxxxxx
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Title: CEO
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EXHIBIT A
MSI'S 1996 REVENUE AND INCOME GOALS
AND
METHODOLOGY FOR CALCULATING BONUS PAYMENTS
For purposes of 1996 bonus calculations, the financial goals of MSI are set
forth below in terms of Margin and Operating Profit. Margin is Revenue less Cost
of Sales and Operating Profit is Gross Profit of MSI after deducting operating
expenses but before the calculating the effect of interest (both income and
expense), taxes, etc. The goals for 1996 are Margin of $41,261,000 and Operating
Profit of $5,050,000.
The bonus is calculated based on the following formula, examples of which are
included on the attached page. No bonus is payable if Margin is less than 75% of
Target Margin, or $30,946,000. If Margin for 1996 exceeds the 75% threshold
($30,946,000), the incremental Margin above the 75% threshold (up to the 100%
threshold - $41,261,000) is multiplied by the Margin factor set forth opposite
the 75% threshold. If Margin does not reach the 100% threshold ($41,261,000),
this product is the bonus amount payable based on performance against the Margin
goal. This bonus amount is subject to downward adjustment for failure to achieve
the Operating Profit goal as described below.
In addition, if Margin for 1996 exceeds the 100% threshold ($41,261,000), the
incremental Margin above the 100% threshold is multiplied by the Margin factor
set forth opposite the 100% threshold, and this product is added to the product
calculated for Margin between 75% and 100% of the Margin goal. In that event,
the sum of these two products is the bonus amount payable based on performance
against the Margin goal. However, this bonus amount is also subject to downward
adjustment for failure to achieve the Operating Profit goal as described below.
If Operating Profit equals or exceeds the Target Operating Profit, there is no
adjustment to the bonus amount calculated based on the Margin achieved and
factors applied. However, if Operating Profit is below the Target Operating
Profit, then the bonus amount calculated based on Margin is reduced by the
product of: (a) the Operating Profit shortfall multiplied by (b) the factor set
forth opposite the Operating Profit goal; provided, however, that, the bonus
amount may not be less than zero.
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EXHIBIT B
CALIFORNIA LABOR CODE PROVISIONS
Section 2870. Employment Agreements; Assignment of Rights.
(a) Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's equipment,
supplies, facilities, or trade secret information except for those inventions
that either:
(1) relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer; or
(2) result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against public policy of this
state and is unenforceable.
Section 2871. Conditions of Employment or Continued Employment; Disclosure of
Inventions.
No employer shall require a provision made void and unenforceable by Section
2870 as a condition of employment or continued employment. Nothing in this
article shall be construed to forbid or restrict the right of an employer to
provide in contracts of employment for disclosure, provided that any such
disclosures be received in confidence, of all of the employee's inventions made
solely or jointly with others during the term of his or her employment, a review
process by the employer to determine such issues as may arise, and for full
title to certain patents and inventions to be in the United States, as required
by contracts between the employer and the United States or any of its agencies.
Section 2872. Notice to Employee; Burden of Proof.
If an employment agreement entered into after January 1, 1980 contains a
provision requiring the employee to assign or offer to assign any of his or her
rights in any invention to his or her employer, the employer must also, at the
time the agreement is made, provide a written notification to the employee that
the agreement does not apply to an invention which qualifies fully under the
provisions of Section 2870. In any suit or action arising thereunder, the burden
of proof shall be on the employee claiming the benefits of its provisions.
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MOLECULAR SIMULATIONS INC.
1996 SR MGT INCENTIVE PLAN - XXXXX XXXXXXXXX
BASED ON THE FOLLOWING ANNUAL TARGETS:
MARGIN = $41,261
OP PROFIT = $5,050
TARGET INCENTIVE LEVEL
$75K
----------------------
MARGIN FACTOR
Applies above: 20,631
30,946 0.007271
41,261 0.016129
OP PROFIT FACTOR
Factor applies below: 5,050 0.018750
-------------------------------------
INCENTIVE SCENARIOS:
-------------------------------------
SCENARIO 1: AT PLAN
Margin Incentive at: 41,261 75
Op Profit Incentive at: 5,050 0
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SCENARIO 2: 90% MARGIN, $1M BELOW OP PROFIT
Margin Incentive at: 37,135 45
Op Profit Incentive at: 4,050 (19)
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SCENARIO 3: AT PLAN MARGIN, $2M BELOW OP PROFIT
Margin Incentive at: 41,261 75
Op Profit Incentive at: 3,050 (38)
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38
SCENARIO 4: $2M ABOVE MARGIN, $1M ABOVE OP PROFIT
Margin Incentive at: 43,261 107
Op Profit Incentive at: 6,050
-----
107
SCENARIO 5: $4M ABOVE MARGIN, $2M ABOVE OP PROFIT
Margin Incentive at: 45,261 140
Op Profit Incentive at: 7,050
-----
140
SCENARIO 6: $5M ABOVE MARGIN, $2.5M ABOVE OP PROFIT
Margin Incentive at: 46,261 156
Op Profit Incentive at: 7,550
-----
156
11
1996 INCENTIVE COMP. PLAN SUMMARY (ZARRABIAN): TARGET INCENTIVE: $75,000
PROFIT (NBIT) INCENTIVE
-----------------------------------------------------------------------------------------------------------------------------------
NBIT % of Target Relative Com- Commission Rate Commission Cumulative
Variance Incentive Earned mission Rate Formula NBIT ACTUAL Rate Earnings Earnings
-----------------------------------------------------------------------------------------------------------------------------------
($2,000,000) -50.0% 1.00 (0.5*Target Incntv/$2,000,000) $3,050,000 -0.018750 ($37,500) ($37,500)
$0 0.0% 1.00 (0.5*Target Incntv/$2,000,000) $5,050,000 -0.018750 $0 $0
-----------------------------------------------------------------------------------------------------------------------------------
==========
$2M INCENTIVE $37,500
==========
TARGET Op Income $5,050,000
==========
MARGIN INCENTIVE
---------------------------------------------------------------------------------------------------
Actual Margin % of Target Relative Com- Commission Rate
as % of Annual Target Incentive Earned mission Rate Formula
0 - 50% 0% 0.00
50 - 75% 0% 0.00
75 - 100% 100% 4.00 (1)/(0.25)*(Target Incntv/Target Margin)
100% + 8.87 2.2 times previous rate
---------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Commission Cumulative
ACTUAL MARGIN Rate Earnings Earnings
-------------------------------------------------------------------------------------
$0 - $20,630,500 $ 0 $ 0
(less than)20,630,500 - 30,946,750 0.000000 $ 0 $0
(less than)30,945,750 - 41,261,000 0.007271 $75,000 $75,000
(less than)41,261,000 0.016129
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===========
TARGET INCENTIVE $75,000
===========
===========
TARGET MARGIN $41,261,000
===========
