Exhibit 10.6

 

April 29, 2004

 

Joseph A. Mollica, Ph.D.
Pharmacopeia, Inc.
3000 Eastpark Boulevard
Cranbury, NJ  08512

 

Re:                               Terms of Employment with Pharmacopeia Drug
Discovery, Inc. (“PDD”)

 

Dear Joe:

 

This letter sets forth the terms on which you will be employed with PDD
immediately upon the completion by Pharmacopeia, Inc. of the distribution of all
of the issued and outstanding shares of common stock of its wholly owned
subsidiary, PDD, to the holders of Pharmacopeia’s common stock (the “Spin
Transaction”).  It is anticipated by the parties hereto that the Spin
Transaction will be completed on or about April 30, 2004.  Please read this
letter carefully and return a signed copy within seven days.  By signing this
letter agreement, you agree to the following:

 

1.                                       Upon the date of the completion of the
Spin Transaction (the “Effective Date”), you will be employed as interim Chief
Executive Officer (“CEO”) of PDD.  Your employment in that position is intended
to be temporary and will continue only until 30 days after another individual
retained by PDD has commenced serving as its CEO.  Your compensation for your
services in this position shall be at an annualized rate of Five Hundred Thirty
Thousand Dollars ($530,000.00), paid in equal installments, less normally
applicable payroll deductions, in accordance with PDD’s regular payroll
schedule.  As interim CEO, you will not receive health insurance or other fringe
benefits from PDD.  In the event that your successor as CEO is not retained
within four (4) months following the Effective Date, the Compensation Committee
of the Board of Directors of PDD shall consider, and discuss with you in good
faith, appropriate adjustments to your compensation package, including salary
review,  bonus opportunity and participation in PDD’s equity-based executive
incentive compensation programs.

 

2.                                       Upon the Effective Date, you shall
serve as a member of the Board of Directors of PDD and as the Non-Executive
Chairman of the Board of Directors.  Your term as Non-Executive Chairman of the
Board of Directors (“Chairman”) shall terminate upon the date of the first
annual meeting of the shareholders of PDD which is tentatively scheduled for
May, 2005.  At the conclusion of your initial term, you will be eligible for
renomination as Chairman.  During your service as Chairman, you shall receive an
annual retainer of One Hundred Thousand Dollars ($100,000.00) payable in four
(4) equal quarterly installments.  You shall also be granted (i) as of the
Effective Date, options to purchase 12,000 shares of PDD’s common stock, and
(ii) during your service as Chairman, options to purchase an additional 6,000
shares of PDD’s common stock on each anniversary of the Effective Date.  Your
stock option grants will

 

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otherwise be on the same terms generally applicable to other directors of PDD. 
This retainer (and the stock options that are granted to you) shall constitute
your full compensation as Chairman.  For any period during which you serve as a
member of the Board of Directors of PDD after your term as Chairman ends, you
shall be entitled to receive the same compensation as is generally applicable to
other directors of PDD.

 

3.                                       You will be eligible to participate in
PDD’s deferred compensation plan with respect to the compensation provided to
you under this letter.

 

4.                                       Your employment as interim CEO shall be
at-will, and either you or PDD may discontinue the relationship at any time, for
any reason or no reason.

 

5.                                       During your tenure as Chairman, in the
event you do not already have them, you shall be provided with a home telephone,
cellular telephone, computer and fax machine (and reimbursement of reasonable,
properly documented related expenses), as well as secretarial support through
PDD’s headquarters in South Brunswick, New Jersey, sufficient to assist you in
performing your duties as Chairman (collectively, the “Support Services”). 
These Support Services shall continue to be made available to you for a
six-month period following the end of your tenure as Chairman.

 

6.                                       This agreement (a) sets forth the
entire agreement and understanding between PDD and you, (b) shall supersede all
prior agreements, documents or discussions with respect to the matters herein
covered, but shall not affect the terms of the Disengagement Agreement dated as
of March 31, 2004 by and between you and Pharmacopeia, Inc., (c) may be amended,
modified or waived only by an instrument in writing signed by the parties
hereto, (d) is not assignable or transferable by you, and (e) shall be governed
by the substantive laws of the State of New Jersey.

 

7.                                       Any and all disputes between you and
PDD arising under or relating to this letter agreement or any other dispute
arising between you and PDD, including claims arising under any employment
discrimination laws, shall be adjudicated and resolved exclusively through
binding arbitration before the American Arbitration Association pursuant to the
American Arbitration Association’s then-in-effect National Rules for the
Resolution of Employment Disputes (hereafter “Rules”).  The initiation and
conduct of any arbitration hereunder shall be in accordance with the Rules and
each side shall bear its own costs and counsel fees in such arbitration.  Any
arbitration hereunder shall be conducted in Princeton, New Jersey, and any
arbitration award shall be final and binding on both you and PDD.  The
arbitrator shall have no authority to depart from, modify, or add to the written
terms of this letter agreement.  The arbitration provisions of this paragraph
shall be interpreted according to, and governed by, the Federal Arbitration Act,
9 U.S.C. § 1 et seq., and any action pursuant to such Act to enforce any rights
hereunder shall be brought exclusively in the United States District Court for
the District of  New Jersey.  All parties described in this paragraph consent to
the jurisdiction of (and the laying of venue in) such court.

 

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Please acknowledge your acceptance of the terms and conditions of this letter
agreement by signing both originals in the space provided below and returning
one of the originals to PDD.

 

 

 

Sincerely,

 

 

 

By:

/s/ James J. Marino

 

 

Pharmacopeia Drug  Discovery, Inc.

 

 

The undersigned, intending to be legally
bound hereby, has, this 30th day of April,
2004, agreed to and accepted the foregoing
terms and conditions:

 

 

/s/ Joseph A. Mollica, Ph.D.

 

Joseph A. Mollica, Ph.D.

 

 

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