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Exhibit 10.6
MOLECULAR SIMULATIONS INCORPORATED
INCENTIVE STOCK OPTION AGREEMENT
Molecular Simulations Incorporated, a Delaware corporation (the
"Company"), hereby grants as of the _______ day of ________, ____________ to
_______________ (the "Employee"), an option to purchase a maximum of [NUMBER NOT
EXCEEDING AVAILABLE SHARE LIMIT] 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Option shall be rescinded.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 INCENTIVE STOCK OPTION; OTHER OPTIONS. This option is
intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). This option is in
addition to any other options heretofore or hereafter granted to the Employee 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 EMPLOYMENT CONTINUES. If the Employee has
continued to be employed by the Company or any Related Corporation on the
following dates, subject to the provisions of Paragraph 8(A) of the Plan, the
Employee 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
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Two years but less than - an additional
three years from the date hereof [NUMBER] shares
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 (subject to Sections 4 or 5 hereof if
the Employee ceases to be employed by the Company and all Related Corporations)
may be exercised on or before the date which is [NUMBER NOT EXCEEDING TEN] years
from the date this Option is granted.
4. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OTHER THAN FOR CAUSE: If the Employee ceases
to be employed by the Company and all Related Corporations, other than by reason
of death or disability 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 employment ceases, and this Option shall
terminate (and may no longer be exercised) after the passage of three months
from the Employee's last day of employment, but in no event later than the
scheduled expiration date. In such a case, the Employee's only rights hereunder
shall be those which are properly exercised before the termination of this
Option.
(b) TERMINATION FOR CAUSE: If the employment of the Employee
is terminated for Cause (as defined in Section 4(c)), this Option shall
terminate upon the Employee'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
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Employee, after notice thereof, to render services to the Company or Related
Corporation in accordance with the terms or requirements of his or her
employment; (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 breach a contract with the Company or
Related Corporation.
5. DEATH; DISABILITY.
(a) DEATH: If the Employee dies while in the employ of the
Company or any Related Corporation, this Option may be exercised, to the extent
otherwise exercisable on the date of his or her death, by the Employee'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 Employee ceases to be employed by the
Company and all Related Corporations 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 of the termination of his or her employment, 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 the 18 month
or 12 month period provided in paragraph (a) or (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.
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 Employee 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
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remain subject to this Option and shall be available for later purchase by the
Employee in accordance with the terms hereof.
[NOTE THAT A SUBSEQUENT CHANGE IN THE PERMITTED PAYMENT METHODS SUBSEQUENT TO
THE DATE OF GRANT WILL BE TREATED AS A MODIFICATION OF THE ISO RESULTING IN A
RE-GRANT!]
7. PAYMENT OF PRICE.
(a) 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) at the option of the Employee, by any combination of
the foregoing.
(b) LIMITATIONS ON PAYMENT BY DELIVERY OF COMMON STOCK: If the
Employee delivers Common Stock held by the Employee ("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
Employee 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 Employee 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 Employee 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 Employee 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 Employee's
[THREE]-year personal recourse promissory note bearing interest payable not
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less than annually at the applicable Federal rate, as defined in Section 1274(d)
of the Code.
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(initials)
8. RESTRICTIONS ON RESALE. 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
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 its principal executive office, 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 Employee
and if the Employee shall so request in the notice exercising this Option, shall
be registered in the name of the Employee 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 Employee, 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. During the
Employee's lifetime only the Employee can exercise this Option.
11. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of
this Option imposes no obligation on the Employee to exercise it.
12. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither the Plan, this
Agreement, nor the grant of this Option imposes any obligation on the Company or
any Related Corporation to continue the Employee in employment.
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13. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Employee shall
have no rights as a stockholder with respect to the Option Shares until such
time as the Employee has exercised this Option by delivering a notice of
exercise and has paid in full the purchase price for the shares 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.
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. EARLY DISPOSITION. The Employee agrees to notify the Company
in writing immediately after the Employee transfers any Option Shares, if such
transfer occurs on or before the later of (a) the date two years after the date
of this Agreement or (b) the date one year after the date the Employee acquired
such Option Shares. The Employee also agrees to provide the Company with any
information concerning any such transfer required by the Company for tax
purposes.
16. 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 Employee hereby agrees that the Company or any
Related Corporation may withhold from the Employee'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 Employee on exercise of this Option. The
Employee further agrees that, if the Company or any Related Corporation does not
withhold an amount from the Employee's wages or other remuneration sufficient to
satisfy the withholding obligation of the Company or Related Corporation, the
Employee will make reimbursement on demand, in cash, for the amount
underwithheld.
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17. LOCK-UP AGREEMENT. The Employee 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 19 shall have perpetual duration.
[NOTE: SECTION 18 MAY BE OMITTED.]
18. 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.
19. PROVISION OF DOCUMENTATION TO EMPLOYEE. By signing this
Agreement the Employee acknowledges receipt of a copy of this Agreement and a
copy of the Plan.
20. 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.
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(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.
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IN WITNESS WHEREOF, the Company and the Employee have caused this
instrument to be executed as of the date first above written.
Molecular Simulations Incorporated
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____________________________
By:________________________
Print Name of Employee [NAME OF OFFICER]
____________________________
___________________________
Street Address Title
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City State Zip Code