Exhibit 10.27(a)
MOLECULAR SIMULATIONS INCORPORATED
AMENDMENT TO EMPLOYMENT AGREEMENT
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This is an Amendment (hereinafter "Amendment") to the Employment Agreement
("Employment Agreement") dated November 30, 1995 between Xxxxxxx X. Xxxxxx
("Employee"), an individual residing in San Diego, CA, and Molecular Simulations
Incorporated (the "Company"), a corporation organized and existing under the
laws of the State of Delaware, with its principal place of business at 0000
Xxxxxxxx Xxxx, Xxx Xxxxx, XX. This Amendment is made by and between Employee
and the Company as of the first day of October, 1997.
NOW, THEREFORE, the parties agree as follows:
1. 1997 Salary. The first sentence of Section 2.1 of the Employment
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Agreement, Agreement is hereby amended in its entirety to read as follows:
"Effective January 1, 1997, Employee shall be compensated at an annual base
salary of one hundred ninety-five thousand dollars ($195,000) during the
Term of this Agreement."
2. 1997 Bonus Target and Bonus Calculations. For purposes of Section 2.3
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of the Employment Agreement, Employee's target bonus for 1997 shall be one
hundred forty-six thousand dollars ($146,000). Such bonus for 1997 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
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on performance against such goals in the manner described in Exhibit A.
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3. Amendment to Severance Provisions. Clause (a) of Section 7.3 of the
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Employment Agreement is hereby amended in its entirety to read as follows:
"(a) Employee will be entitled to receive his 1997 base salary during each
of the two years following the effective date of his termination of
employment (the "Severance Period")."
4. Employee's Change of Address. For purposes of Section 8.3 of the
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Employment Agreement, Employee's current address is 00000 Xxxxxxxx Xxxxx, Xxx
Xxxxx, XX 00000.
5. General. Except as amended hereby, the Employment Agreement shall
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remain in full force and effect. This Amendment may be executed in
counterparts, each of which shall be deemed an original of this Amendment. This
Amendment shall be governed by the laws of California.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
become effective as of October 1, 1997.
MOLECULAR SIMULATIONS INC. /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
By: /s/ XXXXX XXXXXXXXX
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Name: Xxxxx Xxxxxxxxx
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Title: Chief Operating Officer
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Exhibit A - Calculation of Bonus
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EXHIBIT A - CALCULATION OF 1997 BONUS
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For purposes of calculating Employee's 1997 bonus, the Company's 1997 financial
goals are Sales Margin of $49,126,000 and Operating Profit of $7,928,000. For
this purpose, "Sales Margin" means revenue minus software royalties and costs of
third party hardware sold, and Operating Profit means gross profit of the
Company after deducting operating expenses but before calculating the effect of
interest (both income and expense), taxes, etc. Furthermore, in calculating the
Company's achievement of its Operating Profit goal for 1997, the following
expenses will be excluded from operating expenses: (a) legal, accounting,
printing and other fees and expenses incurred in connection with the Company's
initial public offering activities, and (b) any incremental bonus amounts earned
by the Company's management as a result of over-achievement (i.e., exceeding
100% achievement) of the Company's 1997 Sales Margin and Operating Profit goals.
Over or under-achievement of either the Sales Margin Target or the Operating
Profit Target increases or decreases the bonus earned relative to the target
bonus amount. Payment of the bonus amount will be calculated in the following
manner:
Measurement of Achievement of Sales Margin Target
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The bonus earned will be determined initially by the ratio of Actual Margin
performance to the Margin Target. No bonus is earned for Margin performance at
or below 75% of the 1997 Margin Target. If Actual Margin exceeds 75% but is
less than or equal to 100% of Target Margin, the bonus amount payable based on
performance against the Target Margin is determined by the following formula:
[(Actual Margin - 0.75 Target Margin) / Target Margin] x 4 x Target Bonus. This
bonus amount is subject to adjustment based on corporate performance against the
Operating Profit Target, as described below.
In addition, if Actual Margin exceeds 100% of the Target Margin, the bonus
amount calculated according to the previous paragraph is increased by the amount
resulting from the following formula: [(Actual Margin - Target Margin) /
Target Margin] x 8 x Target Bonus. This bonus amount is subject to adjustment
based on corporate performance against the Operating Profit Target, as described
below.
Measurement of Achievement of Operating Profit Target
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Over-achievement or under-achievement of the 1997 Operating Profit target
increases or decreases the earned bonus. If the Company's 1997 Actual Operating
Profit equals the 1997 Operating Profit Target, there is no adjustment to the
bonus amount calculated based on the Margin achieved. At 50% of the Operating
Profit Target, an amount equal to the full bonus target will be deducted from
any amount otherwise earned. If the 1997 Actual Operating Profit exceeds the
Operating Profit Target amount by 25%, an additional 50% of the bonus target
would be earned. The formula for calculating the Operating Profit based
component of the bonus is as follows: [(Actual Operating Profit - Target
Operating Profit) / (0.5 x Target Operating Profit)] x Target Bonus. This
amount (positive or negative) then gets added to the amount of target bonus
earned based on performance against Target Margin, and the resulting sum is the
earned bonus amount. In no event
may the earned bonus be less than zero.
EXAMPLES: In each of the examples shown below, the participant's target bonus
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is assumed to be $100,000. Target Margin is $49,126,000 and Target Operating
Profit is $7,928,000.
SCENARIO I: MARGIN AND OPERATING PROFIT AT PLAN
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Actual Margin = $49,126,000 Actual Operating Profit = $7,928,000
Margin Based Bonus Calculation:
[(49,126,000 - 36,844,500) / 49,126,000] x 4 x $100,000 = $100,000, plus
Profit Based Bonus Calculation:
[(7,928,000 - 7,928,000) / (0.5 x 7,928,000)] x $10,000 = $0
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Total Bonus Earned = $100,000
SCENARIO II: MARGIN AT $2MM ABOVE PLAN, OPERATING PROFIT AT $1MM ABOVE PLAN
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Actual Margin = $51,126,000 Actual Operating Profit = $8,928,000
Margin Based Bonus Calculation:
[(49,126,000 - 36,844,500) / 49,126,000] x 4 x $100,000 = $100,000, plus
[(51,126,000 - 49,126,000) / 49,126,000] x 8 x $100,000 = $32,570, plus
Profit Based Bonus Calculation:
[(8,928,000 - 7,928,000) / (0.5 x 7,928,000)] x $100,000 = $25,230
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Total Bonus Earned =$157,800
SCENARIO III: MARGIN AT $2MM BELOW PLAN, OPERATING PROFIT $1MM BELOW PLAN
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Actual Margin = $47,126,000 Actual Operating Profit = $6,928,000
Margin Based Bonus Calculation:
[(47,126,000 - 36,844,500) / 49,126,000] x 4 x $100,000 = $83,720, plus
Profit Based Bonus Calculation:
EXHIBIT A - CALCULATION OF BONUS
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[(6,928,000 - 7,928,000) / (0.5 x 7,928,000)] x $100,000 = $(25,230)
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Total Bonus Earned = $58,490
