Exhibit 10.3

 

AMENDED AND RESTATED SEVERANCE AGREEMENT FOR MICHIO SOGA

 

This AMENDED AND RESTATED SEVERANCE AGREEMENT (the “Agreement”) was originally
made and entered into as of the 16th day of June, 2005, and is amended and
restated in its entirety as follows as of the 3rd day of May, 2006 (the
“Effective Date”), by and between PHARMACOPEIA DRUG DISCOVERY, INC., a Delaware
corporation (hereinafter, the “Company”), and MICHIO SOGA, an individual
(hereinafter, “Employee”).

 

RECITALS

 

WHEREAS, Employee currently serves as Executive Vice President and Chief
Financial Officer of the Company;

 

WHEREAS, the Company and Employee desire to provide for the termination of
Employee’s employment with the Company, effective as of the close of business on
the Effective Date;

 

WHEREAS, the Company desires to provide certain benefits and payments to
Employee in connection with such termination of his employment with the Company;
and

 

WHEREAS, Employee desires to accept such benefits and payments on the terms and
subject to the conditions set forth in this Agreement;

 

NOW, THEREFORE, in consideration of their mutual promises and intending to be
legally bound, the parties agree as follows:

 

1.  TERMINATION AND EFFECT OF TERMINATION. EMPLOYEE’S EMPLOYMENT WITH THE
COMPANY IS AT WILL AND SHALL BE TERMINATED EFFECTIVE AS OF 5:00 P.M. EASTERN
TIME ON THE EFFECTIVE DATE. UPON SUCH TERMINATION OF EMPLOYEE’S EMPLOYMENT, THE
COMPANY SHALL HAVE NO LIABILITY TO EMPLOYEE FOR COMPENSATION OR BENEFITS EXCEPT
THAT COMPANY SHALL:

 

(i)  promptly after the Effective Date, pay Employee all compensation and
benefits accrued, but unpaid, up to the Effective Date;

 

(ii)  six (6) months following the Effective Date, pay Employee, in a lump sum,
One Hundred and Two Thousand and One Hundred Dollars ($102,100.00);

 

(iii)  maintain at the Company’s cost Employee’s group medical and dental
coverage until the earlier of (a) the end of a period of four (4) months
following the Effective Date, or (b) until such time as comparable medical and
dental coverage is obtained by Employee; and

 

(iv)  permit Employee to retain one (1) copy of Employee’s “Contacts” file
stored in the Company’s Microsoft Outlook network and one (1) copy of Employee’s
hard-copy rolodex.

 

2. STOCK OPTIONS. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE PHARMACOPEIA
DRUG DISCOVERY, INC. 2004 STOCK INCENTIVE PLAN OR THE INCENTIVE STOCK OPTION
AWARD NOTICE DATED JUNE 16, 2005 BETWEEN THE COMPANY AND EMPLOYEE (THE
“INCENTIVE STOCK OPTION AWARD NOTICE”) (A COPY OF WHICH IS ATTACHED HERETO AS
EXHIBIT A), EMPLOYEE AND THE COMPANY AGREE THAT:

 

(I)   44,028 SHARES (THE “VESTED SHARES”) OF COMMON STOCK OF THE COMPANY SUBJECT
TO THE OPTION (AS DEFINED IN THE INCENTIVE STOCK OPTION AWARD NOTICE) SHALL

 

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BE FULLY VESTED ON MAY 4, 2006, AND THE REMAINDER OF THE SHARES OF COMMON STOCK
OF THE COMPANY SUBJECT TO THE OPTION ARE HEREBY FORFEITED FOR NO ADDITIONAL
CONSIDERATION. THE COMPANY SHALL DESIGNATE 24,213 OF THE 44,028 VESTED SHARES AS
INCENTIVE STOCK OPTIONS UNDER SECTION 422 OF THE INTERNAL REVENUE CODE.

 

(II)   THE VESTED SHARES SHALL BE EXERCISABLE BY EMPLOYEE BEGINNING ON JULY 4,
2006 AND ENDING ON MAY 3, 2007, AFTER WHICH DATE ANY SUCH VESTED SHARES THAT
HAVE NOT BEEN EXERCISED SHALL NO LONGER BE EXERCISABLE BY EMPLOYEE; AND

 

(III)  ON MAY 3, 2007, THE INCENTIVE STOCK OPTION AWARD NOTICE AS MODIFIED
HEREIN, SHALL TERMINATE.

 

3. GENERAL RELEASE. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY,
NO PAYMENTS SHALL BE MADE OR BENEFITS PROVIDED BY THE COMPANY UNDER SECTIONS 1
OR 2 PRIOR TO THE EXECUTION BY EMPLOYEE OF A GENERAL RELEASE IN FAVOR OF THE
COMPANY AND ITS AFFILIATES, AND ITS AND THEIR RESPECTIVE OFFICERS, EMPLOYEES AND
DIRECTORS. A FORM OF GENERAL RELEASE IS ATTACHED HERETO AS EXHIBIT B.

 

4. TAXES AND INSURANCE COVERAGE. Any taxes payable as a result of any payments
made or benefits provided under this Agreement shall be the responsibility
solely of Employee. The Company may withhold tax on any payments or benefits
provided to Employee as required by law or regulation. The Company represents
and warrants that (i) during the term of Employee’s employment with the Company,
Employee was covered by a policy of insurance for directors’ and officers’
liability and (ii) after the Effective Date, such policy shall apply to Employee
with respect to claims concerning conduct not excluded by the policy that
occurred during such term of employment.

 

5. NON-COMPETITION; NON-SOLICITATION ; NON-DISPARAGEMENT.

 

(A)  RESTRICTIONS. (I) EMPLOYEE SHALL NOT, FOR A PERIOD OF TWELVE (12) MONTHS
AFTER THE EFFECTIVE DATE, DIRECTLY OR INDIRECTLY:

 

(A) BE EMPLOYED BY, ENGAGED IN OR PARTICIPATE IN THE OWNERSHIP, MANAGEMENT,
OPERATION OR CONTROL OF, OR ACT IN ANY ADVISORY OR OTHER CAPACITY (INCLUDING AS
AN INDIVIDUAL, PRINCIPAL, AGENT EMPLOYEE, CONSULTANT OR OTHERWISE) FOR, ANY
COMPETING ENTITY WHICH CONDUCTS ITS BUSINESS WITHIN THE TERRITORY (AS THE TERMS
COMPETING ENTITY AND TERRITORY ARE HEREINAFTER DEFINED); PROVIDED, HOWEVER, THAT
NOTWITHSTANDING ANY OF THE FOREGOING, EMPLOYEE MAY MAKE SOLELY PASSIVE
INVESTMENTS IN ANY COMPETING ENTITY THE COMMON STOCK OF WHICH IS “PUBLICLY HELD”
AND OF WHICH EMPLOYEE SHALL NOT OWN OR CONTROL, DIRECTLY OR INDIRECTLY, IN THE
AGGREGATE SECURITIES WHICH CONSTITUTE 5% OR MORE OF THE VOTING POWER OF SUCH
COMPETING ENTITY;

 

(B) CAUSE OR SEEK TO CAUSE ANY PERSON OR ENTITY TO REFRAIN FROM DEALING OR DOING
BUSINESS WITH THE COMPANY OR ASSIST ANY PERSON OR ENTITY IN DOING SO; OR

 

(C) SOLICIT FOR EMPLOYMENT, OR ADVISE OR RECOMMEND TO ANY OTHER PERSON OR ENTITY
THAT HE, SHE OR IT EMPLOY OR SOLICIT FOR EMPLOYMENT OR RETENTION AS AN EMPLOYEE
OR CONSULTANT, ANY PERSON WHO IS AN EMPLOYEE OF, OR EXCLUSIVE CONSULTANT TO, THE
COMPANY.

 

(II)  AFTER THE EFFECTIVE DATE, (A) EMPLOYEE SHALL NOT DISPARAGE THE COMPANY OR
ITS DIRECTORS, OFFICERS, EMPLOYEES OR AFFILIATES, AND (B) THE COMPANY SHALL NOT
DISPARAGE EMPLOYEE AND SHALL DIRECT VIDA COMMUNICATIONS INC., THE INVESTOR
RELATIONS FIRM RETAINED BY THE COMPANY,

 

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NOT TO DISPARAGE EMPLOYEE. THE OBLIGATIONS OF THIS SUBPARAGRAPH SHALL NOT APPLY
TO EMPLOYEE’S COMMUNICATIONS DIRECTLY WITH OFFICERS AND/OR DIRECTORS OF THE
COMPANY.

 

(b)  Effect on the Company’s Obligations. The Company’s obligation to make
payments and provide the other benefits pursuant to Sections 1 and 2 above shall
terminate in the event that, and at such time as, Employee is in breach of
Employee’s obligations set forth in Section 5(a)(i)(A)-(C) above.

 

(c)  Definitions. For purposes of this Section 5:

 

(i) “Competing Entity” means any entity that is listed on Exhibit C attached
hereto.

 

(ii) “Territory” means North America, Europe and Japan.

 

Notwithstanding anything in the above to the contrary, Employee may engage in
the activities set forth in Section 5(a) hereof with the prior written consent
of the Company, which consent shall not be unreasonably withheld. Further, in
determining whether a specific activity by Employee for a Competing Entity shall
be permitted, the Company will consider, among other things, the nature and
scope of (A) the duties to be performed by Employee and (B) the business
activities of the Competing Entity at the time of Employee’s proposed engagement
by such entity.

 

(d)  Acknowledgement. Employee acknowledges and agrees that the covenants set
forth in this Section (as modified by Exhibit C hereto) are reasonable and
necessary in all respects for the protection of the Company’s legitimate
business interests (including without limitation the Company’s confidential,
proprietary information and trade secrets and client good-will, which represents
a significant portion of the Company’s net worth and in which the Company has a
property interest). Employee acknowledges and agrees that, in the event that
Employee breaches any of the covenants set forth in this Section, the Company
shall be irreparably harmed and shall not have an adequate remedy at law; and,
therefore, in the event of such a breach, the Company shall be entitled to
injunctive relief, in addition to (and not exclusive of) any other remedies
(including monetary damages) to which the Company may be entitled under law. If
any covenant set forth in this Section 5 is deemed invalid or unenforceable for
any reason, it is the parties’ intention that such covenants be equitably
reformed or modified to the extent necessary (and only to such extent) to render
it valid and enforceable in all respects. In the event that the time period and
geographic scope referenced above is deemed unreasonable, overbroad, or
otherwise invalid, it is the parties’ intention that the enforcing court shall
reduce or modify the time period and/or geographic scope to the extent necessary
(and only to such extent necessary) to render such covenants reasonable, valid
and enforceable in all respects.

 

6. ARBITRATION. Any and all disputes between the parties (except actions to
enforce the provisions of Section 5 of this Agreement) arising under or relating
to this Agreement or any other dispute arising between the parties, including
claims arising under any employment discrimination laws, may 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 (hereinafter, “Rules”).
The initiation and conduct of any arbitration hereunder shall be in accordance
with the Rules and, unless expressly required by law, each side shall bear its
own costs and counsel fees in such arbitration. Any arbitration hereunder shall
be conducted in Princeton, New Jersey or at such other location as mutually
agreed by the parties. Any arbitration award shall be final and binding on the
parties. The arbitrator shall have no authority to depart from, modify, or add
to

 

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the written terms of this Agreement. The arbitration provisions of this Section
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 any United States District Court in
the State of New Jersey. The parties consent to the jurisdiction of (and the
laying of venue in) any such court.

 

7. NOTICES. FOR THE PURPOSES OF THIS AGREEMENT, NOTICES, DEMANDS AND ALL OTHER
COMMUNICATIONS PROVIDED FOR IN THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE
DEEMED TO HAVE BEEN DULY GIVEN WHEN DELIVERED OR (UNLESS OTHERWISE SPECIFIED)
MAILED BY UNITED STATES CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
POSTAGE PREPAID, ADDRESSED AS FOLLOWS:

 

(a)                                  If to the Company, to:

 

Pharmacopeia Drug Discovery, Inc.

3000 Eastpark Blvd.

Cranbury, NJ  08512

Attn.:                 General Counsel

 

(b)                                 If to Employee, to:

 

Michio Soga

 

or to such other address as a party hereto shall designate to the other party by
like notice, provided that notice of a change of address shall be effective only
upon receipt thereof.

 

8. WAIVER. THE WAIVER BY THE COMPANY OR EMPLOYEE OF ANY BREACH OF ANY PROVISION
OF THIS AGREEMENT SHALL NOT OPERATE OR BE CONSTRUED AS A WAIVER OF ANY
SUBSEQUENT BREACH BY EMPLOYEE OR THE COMPANY, AS APPLICABLE OF ANY PROVISION OF
THIS AGREEMENT.

 

9. SEVERABILITY. THE PARTIES HAVE CAREFULLY REVIEWED THE PROVISIONS OF THIS
AGREEMENT AND AGREE THAT THEY ARE FAIR AND EQUITABLE. HOWEVER, IN LIGHT OF THE
POSSIBILITY OF DIFFERING INTERPRETATIONS OF LAW AND CHANGES OF CIRCUMSTANCES,
THE PARTIES AGREE THAT IN THE EVENT THAT ANY SECTION, PARAGRAPH OR TERM OF THIS
AGREEMENT SHALL BE DETERMINED TO BE INVALID OR UNENFORCEABLE BY ANY COMPETENT
AUTHORITY OR TRIBUNAL FOR ANY REASON, THE REMAINDER OF THIS AGREEMENT SHALL BE
UNAFFECTED THEREBY AND SHALL REMAIN IN FULL FORCE AND EFFECT. MOREOVER, IF ANY
OF THE PROVISIONS OF THIS AGREEMENT IS DETERMINED BY A COURT OF COMPETENT
JURISDICTION TO BE EXCESSIVELY BROAD AS TO DURATION, ACTIVITY, GEOGRAPHIC
APPLICATION OR SUBJECT, IT SHALL BE CONSTRUED BY LIMITING OR REDUCING IT TO THE
EXTENT LEGALLY PERMITTED SO AS TO BE ENFORCEABLE TO THE EXTENT COMPATIBLE WITH
THEN APPLICABLE LAW.

 

10. SUCCESSORS AND ASSIGNS. THIS AGREEMENT SHALL BIND AND INURE TO THE BENEFIT
OF THE SUCCESSORS AND ASSIGNS OF THE COMPANY AND THE HEIRS, EXECUTORS OR
PERSONAL REPRESENTATIVES OF EMPLOYEE. THIS AGREEMENT MAY NOT OTHERWISE BE
ASSIGNED BY EMPLOYEE. THIS AGREEMENT MAY BE ASSIGNED TO ANY SUCCESSOR IN
INTEREST TO THE COMPANY (INCLUDING BY WAY OF MERGER, CONSOLIDATION OR
REORGANIZATION, OR BY WAY OF ANY ASSIGNMENT OF ALL OR SUBSTANTIALLY ALL OF THE
COMPANY’S ASSETS, BUSINESS OR PROPERTIES), AND EMPLOYEE HEREBY CONSENTS TO SUCH
ASSIGNMENT.

 

11. ENTIRE AGREEMENT; AMENDMENTS. THIS AGREEMENT, THE INDEMNITY AGREEMENT DATED
AS OF JUNE 16, 2005 BETWEEN THE COMPANY AND EMPLOYEE, THE INCENTIVE STOCK OPTION
AWARD NOTICE (AS MODIFIED HEREBY), AND THE EMPLOYMENT, CONFIDENTIAL INFORMATION
AND INVENTION ASSIGNMENT AGREEMENT DATED AS OF JUNE 16, 2005 BETWEEN THE COMPANY
AND

 

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EMPLOYEE, CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO AND THERE
ARE NO OTHER UNDERSTANDINGS, AGREEMENTS OR REPRESENTATIONS, EXPRESSED OR
IMPLIED. THIS AGREEMENT SUPERSEDES ANY AND ALL OTHER PRIOR OR CONTEMPORANEOUS
AGREEMENTS, ORAL OR WRITTEN, CONCERNING EMPLOYEE’S EMPLOYMENT, DUTIES AND
COMPENSATION. THIS AGREEMENT MAY BE AMENDED ONLY IN WRITING SIGNED BY EMPLOYEE
AND THE CHIEF EXECUTIVE OFFICER OR GENERAL COUNSEL OF THE COMPANY.   

 

12. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

 

13. GOVERNING LAW; FORUM SELECTION. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS (OTHER THAN CONFLICTS OF LAWS PRINCIPLES)
OF THE STATE OF NEW JERSEY APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE. THE PARTIES CONSENT TO JURISDICTION AND
LAYING OF VENUE IN THE STATE AND FEDERAL COURTS OF NEW JERSEY FOR PURPOSES OF
RESOLVING DISPUTES UNDER THIS AGREEMENT

 

14. PUBLICITY; SECURITIES LAW FILINGS. EMPLOYEE ACKNOWLEDGES AND AGREES THAT THE
COMPANY INTENDS TO FILE WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION A
REPORT ON FORM 8-K (THE “8-K”) (I) DISCLOSING THE TERMINATION OF EMPLOYEE’S
EMPLOYMENT WITH THE COMPANY, (II) ATTACHING THIS AGREEMENT AND THE OPTION
AGREEMENT AS EXHIBITS THERETO AND (III) ATTACHING ANY PRESS RELEASE THE COMPANY
ISSUES IN CONNECTION WITH THE TERMINATION OF EMPLOYEE’S EMPLOYMENT WITH THE
COMPANY AS AN EXHIBIT THERETO. THE COMPANY AGREES TO PROVIDE A DRAFT OF THE 8-K
AND ANY PRESS RELEASE TO EMPLOYEE FOR COMMENT NO LATER THAN ONE (1) BUSINESS DAY
PRIOR TO SUCH FILING OR RELEASE, AND TO REASONABLY CONSIDER ANY COMMENTS
EMPLOYEE MAY HAVE TO THE CONTENT THEREOF. THE FORM OF THE PARAGRAPHS CONCERNING
EMPLOYEE TO BE INCLUDED IN SUCH 8-K AND THE FORM OF SUCH PRESS RELEASE ARE
ATTACHED TO THIS AGREEMENT AS EXHIBIT D.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
effective Date.

 

 

PHARMACOPEIA DRUG DISCOVERY, INC.

 

 

 

 

 

By:

/s/ Stephen C. Costalas

 

 

 

 

 

 

Stephen C. Costalas

 

 

Executive Vice President, General Counsel

 

 

and Secretary

 

 

 

 

EMPLOYEE

 

 

 

 

 

 

 

By:

/s/ Michio Soga

 

 

 

 

 

 

Michio Soga

 

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