EFTA00293474.pdf

DRAFT ONLY - PENDING APPROVAL MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF SCHRODINGER, INC. DATE: February 7, 2014 TIME: 2 PM (Eastern Time) PLACE: Via Teleconference BOARD MEMBERS Charles Ardai PRESENT: Boris Nikolic Lou Salkind (by phone) Ramy Farid Richard Friesner BOARD MEMBERS None ABSENT: OTHERS PRESENT: Rodi Guidero (by phone) Gregg Griner (by phone) Murco Ringnalda Yvonne Tran Cony (by phone) 1. Call to Order. A meeting of the Board of Directors of Schrodinger, Inc. (the "Board"), a Delaware corporation, (the "Company" or "Schrodinger") was held at the above place and time. Mr. Ardai, presiding as Chairman of the meeting, conducted a roll call and confirmed that Mr. Nikolic, Mr. Farid, Mr. Salkind and Mr. Friesner were present, and, finding a quorum had been established, called to order the meeting. Each member of the Board confirmed that he could 1 EFTA00293474 clearly hear each other member of the Board. The meeting, having been duly noticed and convened, proceeded with its business. Ms. Tran acted as Secretary of the meeting. 2. Approval of Prior Meeting Minutes The Board reviewed the minutes of the meeting of the Board held on October 4, 2013 (the "Prior Meeting"). Upon motion duly made, seconded and approved, the Board unanimously approved the minutes of the Prior Meeting. 3. Approval and Ratification of Valuation Report; Stock Option Grants The Board next discussed a proposal to (i) approve and ratify Globalview's November 30, 2013 appraisal report of the Company's common stock and (ii) approve the grant of options to certain employees of the Company. Questions were asked and a full discussion followed. Upon motion duly made, seconded and approved, the Board unanimously adopted the following resolutions: WHEREAS, the Board deems it appropriate at this time to grant options under the Company's 2010 Stock Plan, as amended (the "Stock Plan"); WHEREAS, the Board intends that such options have an exercise price per share equal to the fair market value per share of the Company's Common Stock on this date; WHEREAS, the Board previously determined that a valuation firm independent of the Company should be retained to value the Company's Common Stock; WHEREAS, the Board has received and reviewed the written appraisal report of Globalview Advisors LLC (the "Valuation Firm"), dated as of November 30, 2013 attached hereto as Exhibit A, which report concludes that the Company's Common Stock had a fair market value of $0.21 per share as of November 30, 2013; and WHEREAS, the Board has determined that the Valuation Finn is independent of the Company. NOW, THEREFORE, BE IT RESOLVED, that the Board hereby determines, in reliance on the Valuation Firm's written report, that the current fair market value per share of the Company's Common Stock is $0.21; RESOLVED FURTHER, that each individual named in Table 1 attached hereto be, and such individual hereby is, granted an option under the Stock Plan to acquire up to the number of shares of the Company's Common Stock indicated next to such individual's name in Table 1. Each such option shall have an exercise price per share equal to $0.21. Each such option shall be a non-statutory stock option, as provided in Table 1. Each such option shall have a term of 10 years from this date, subject to earlier expiration upon the termination of the 2 EFTA00293475 optionee's service with the Company. Each such option shall be evidenced by one of the forms of Stock Option Agreement approved by the Board, except as otherwise provided in Table I; RESOLVED FURTHER, that the shares subject to each option hereby granted shall vest and become exercisable as follows, except as otherwise provided in Table I: one-quarter of such shares shall vest and become exercisable when the optionee completes 12 months of continuous service after the "vesting commencement date" (as specified for each optionee in Table 1), and an additional one-quarter of such shares shall vest and become exercisable when the optionee completes each 12 months of continuous service thereafter; RESOLVED FURTHER, that the shares purchased under each option hereby granted shall be subject to the Company's right of first refusal, exercisable in the event that the optionee proposes to sell or otherwise transfer such shares prior to the initial public offering of the Company's Common Stock. The terms pursuant to which such shares may be repurchased by the Company under such right of first refusal shall be substantially as set forth in applicable form of Stock Option Agreement; and FINALLY RESOLVED, that each officer of the Company be, and each such officer hereby is, authorized and directed to take all action and to prepare, execute and deliver all documents that such officer deems necessary or advisable to carry out the intent of these resolutions and evidence the stock option grants. TABLE I SCHRODINGER, INC. SCHEDULE OF OPTION GRANTS DATE OF GRANT: FEBRUARY 7, 2014 EXERCISE PRICE: $0.21 PER SHARE Non-Statutory Stock Options to Employees — First Time Grants Name of Optionee State of Residence 10% Holder (Yes/No) Number of Shares Vesting Schedule (Notes) Vesting Commencement Date Continuous Service Includes as a Director (Yes/No) Markus Connecticut No 50,000 1 October 1, 2013 Yes 3 EFTA00293476 Dahlgren Thomas Steinbrecher Germany No 30,000 1 October 1, 2013 Yes Jeffrey Sanders New Jersey No 30,000 1 October 2, 2013 Yes Roberto Francescangeli New York No 25,000 1 October 7, 2013 Yes Lidia Cristian New Jersey No 50,000 1 October 8, 2013 Yes Jacob Gavartin United Kingdom No 30,000 1 October 14, 2013 Yes Joseph Goose New York No 30,000 1 October 15, 2013 Yes Yes Johannes Maier New Jersey No 50,000 1 October 15, 2013 Cortney Robin New York No 10,000 1, 2 October 15, 2013 Yes Melissa Landon Massachusetts No 35,000 1 October 21, 2013 Yes Sarah Boyce New York No 50,000 1 November 5, 2013 Yes John Chodera (Consultant) New York No 30,000 1 November 5, 2013 Yes Solomon Reisberg Oregon No 15,000 1 November II, 2013 Yes Leif Jacobson New York No 30,000 1 November 12, Yes 4 EFTA00293477 2013 Nathaniel Oliver John Malcolm United Kingdom No 10,000 1 December 9, 2013 Yes Peter De Riemer Connecticut No 15,000 1 December 10, 2013 Yes Gabriel Marques New Jersey No 30,000 1 December 16, 2013 Yes Franziska Donath Germany No 15,000 I January 1, 2014 Yes Volodymyr Babin Oregon No 30,000 30,000 1 January 2, 2014 Yes Daniel Sindhikara New York No 1 January 2, 2014 Yes Michael Toni New York No 10,000 1 January 2, 2014 Yes Joshua Kwan New York No 20,000 1 January 7, 2014 Yes Thomas Holder New York No 30,000 1 January 9, 2014 Yes Notes: I. As provided in the resolutions. 2. Not a first time grant. 4. Correction of Stock Option Grant 5 EFTA00293478 Ms. Tran then described a scrivener's error in the resolutions adopted by the Board at the Prior Meeting relating to stock options granted to Hugo Ayala, an employee of the Company. Upon motion duly made, seconded and approved, the Board unanimously adopted the following resolutions: WHEREAS, the Board intended to grant an option to purchase 150,000 shares of its Common Stock to Hugo Ayala (the "Option"); WHEREAS, the Board resolutions dated October 4, 2013 (the "October 4, 2013 Resolutions"), where the Option was granted, recorded, due to a scrivener's error, the Option's number of shares as "150,00"; WHEREAS, the Board believes that it is in the Company's best interests to correct the October 4, 2013 Resolutions and ratify the correct number of shares. NOW, THEREFORE, BE IT RESOLVED, that the Board hereby ratifies the granting of the Option under all other terms as recorded in the October 4, 2013 Resolutions including at an exercise price per share of $0.16 per sham, which was the fair market value of the Common Stock as determined by the Board on October 4, 2013. 5. Nimbus Bridge Financing Next, Ms. Tran and Mr. Griner updated the Board on the bridge financing obtained by Nimbus Discovery, LLC ("Nimbus") in mid-January 2014. Ms. Tran informed the Board that (i) the bridge investors' equity would sit on top of Nimbus' existing investors' equity such that the bridge investors would be paid out in the event of a distribution of proceeds by Nimbus and that (ii) them was no other significant impact on Schr6dinger. Questions were asked and a full discussion followed. 6. Software License Agreement - Shaw Research. LLC Next, Ms. Tran updated the Board on licensing negotiations between the Company and M. Shaw Research, LLC ("DESRES"), a company owned entirely by David Shaw. The Company and DESRES were engaging in negotiations to enter into an Amended and Restated Software License Agreement whereby Schrodinger would be granted rights to distribute DESRES's molecular dynamics simulation software known as Desmond integrated with certain of the Company's proprietary software. Questions were asked and a full discussion followed. Ms. Tran informed the Board that consent from Cascade Investment, L.L.C. would be required pursuant to the Company's Certificate of Incorporation. 7. Funding Richard Friesner's lab at Columbia University Next, Mr. Friesner summarized his discussions with Columbia University (the "University") regarding the Company's proposal to fund, at approximately $160,000 per year for 6 EFTA00293479 two (2) years, the placement of two to three students and/or post-doctorates in his laboratory. Mr. Friesner informed the Board that Columbia University would likely recommend that this funding be structured as a "gift" with certain conditions. The Board agreed to defer a vote until such time when a formal written proposal is provided by the University. 8. Financials Mr. Ringnalda summarized the Company's financials for FY 2013 (and compared them to financials from FY 2012 and projections for FY 2014 and FY 2015). Questions were asked and a full discussion followed. Mr. Friesner summarized his conversation with Bill Gates in December 2013 on a possible future financing by Mr. Gates. Mr. Guidero stated he would consult with Mr. Gates regarding the potential financing. The Board agreed to address the issue of whether additional funding would be necessary at its next Board meeting. 9. Business Update The Board then heard presentations on certain areas of the Company's business. Mr. presented a summary of discussions regarding the expansion of the Company's DDAG collaboration with Nimbus and other DDAG matters. Mr. Farid presented an overview of the Company's growth opportunities and hiring plan for FY 2014. 10. Adjournment There being no further business to come before the Board, upon motion duly made, seconded, and unanimously carried, the meeting was adjourned. Yvonne Tran Secretary of the Meeting 7 EFTA00293480 EXHIBIT A Globalview November 30, 2013 Valuation Report EFTA00293481 EXHIBIT B (DESRES License and Software Development Agreement) EFTA00293482 EXHIBIT C 10 EFTA00293483