Exhibit 10.2


 





 


                  ,
200      


 


[Name]


[Address]


 


Re:                               Incentive Stock Option Award Notice


 


Dear
[Name]:


 


Pursuant to the Pharmacopeia
Drug Discovery, Inc. 2004 Stock Incentive Plan (the “Plan”), the Plan’s
administrative committee (the “Committee”) hereby grants to you an incentive stock option (“Option”) to purchase [                   ]
shares of common stock, par value $0.01 (“Common Stock”), of Pharmacopeia Drug
Discovery, Inc. (the “Company”)  at
a price of $[           ]
(“Exercise Price”) per share, effective                      ,
200     (the “Grant Date”). 
However, to the extent the Option fails to satisfy any requirement of section 422(d) of
the Internal Revenue Code of 1986, the Option shall be treated as a
non-qualified stock option and shall be subject to the terms and conditions of
this Award Notice applicable to the contemporaneous grant of a non-qualified
stock option to you, if any.


 


The
Option is subject to the applicable terms and conditions of the Plan, which are
incorporated herein by reference, and in the event of any contradiction,
distinction or differences between this Award Notice and the terms of the Plan,
the terms of this Award Notice will control. 
All capitalized terms used herein, not otherwise defined herein, shall
have the meanings set forth in the Plan.


 


VESTING
AND EXERCISE PERIOD


 


Subject
to your continued employment with the Company and the other provisions of this
Award Notice, on the following dates, you will be entitled to exercise the
Option as follows:


 


One fourth of the shares of Common Stock subject to
the Option shall be vested and exercisable on the first anniversary of the
Grant Date;


 


An additional 1/48th of the shares
subject to the Option shall be vested and exercisable on the same day of the month
(or the last day of the month if there is no such date) as the Grant Date in
each of the next 36 months thereafter;


 


Shares that become exercisable will remain available
for purchase until the tenth anniversary of the Grant Date (the “Expiration
Date”).


 

















 


EFFECTS
OF TERMINATION ON VESTING AND EXERCISE


 


Retirement


 


The Option will continue to vest in accordance with
the schedule above until the date which is three years following the date
of your Retirement, provided that you do not violate any applicable
non-competition, non-disparagement, non-solicitation or confidentiality
requirement or similar restrictive covenant with the Company (collectively, the
“Restrictive Covenants”) during that three-year period.


 


If your employment is terminated due to your
Retirement, you will be permitted, prior to the Expiration Date, to the extent
the Option is exerciseable, to exercise the Option until the third anniversary
of your Retirement, provided you have not violated any applicable Restrictive
Covenants.  To the extent the Option is
exercised more than ninety days following your Retirement, the Option will be
treated as a non-qualified stock option and will no longer be entitled to
treatment as an incentive stock option subject to Section 422 of the
Code.  The Option shall immediately
terminate in full upon violation of any Restrictive Covenants and in any event
to the extent not exercised during the applicable period.


 


Death
or Disability


 


If your employment with the Company terminates prior
to the Expiration Date due to your death or Disability, the Option will vest
fully and will remain exercisable, as applicable, by you, your personal
representative or the persons who acquire the right to exercise the Option by
bequest or inheritance until, as applicable (i) the earlier of the end of
the twelve-month period immediately following your death or the Expiration Date
and (ii) the earlier of the end of the three-year period immediately
following your Disability or the Expiration Date.  To the extent the Option is exercised more
than ninety days following your death, the Option will be treated as a
non-qualified stock option and will no longer be entitled to treatment as an
incentive stock option subject to Section 422 of the Code.  This Option shall terminate in full to the
extent not exercised within such period.


 


Termination
for Cause


 


If your employment with the Company is terminated prior
to the Expiration Date for Cause (as defined in the Severance Agreement for [name]
dated as of              ,
200      (the “Severance Agreement”)), then the entire
unexercised portion of the Option shall terminate on such date.


 


Good
Reason or without Cause


 


If your employment with the Company terminates prior
to the Expiration Date for Good Reason (as defined in the Severance Agreement)
or without Cause (as defined in the Severance Agreement), vesting in the Option
will cease immediately. The Option, to the extent it is exercisable upon such a
termination of employment, will remain exercisable by you or your personal
representative, as applicable, until the Expiration Date.


 


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Resignation
or Other Reasons


 


If your employment with the Company is terminated
for any reason other than for Retirement, death, Disability, Cause, Good Reason
or in connection with a Change In Control prior to the Expiration Date, vesting
in the Option will cease immediately. 
The Option, to the extent it is exerciseable upon such a termination of
employment, will remain exerciseable by you or your personal representative, as
applicable, until the later of the end of the ninety-day period immediately
following such a termination of employment or the Expiration Date.  The Option shall terminate in full to the
extent not exercised within such period.


 


CHANGE
IN CONTROL


 


Notwithstanding
anything in this Award Notice or the Plan to the contrary, but subject to the
immediately following paragraph, upon a Change In Control, any unvested portion
of the Option shall immediately vest; provided, however, that in the event the
Option is assumed by a successor corporation upon a Change In Control, the
Option shall be substituted with an option involving the common stock of the
successor corporation with equivalent value and with the terms and conditions
of the substituted option being no less favorable than the Option.  All such substituted option awards shall vest
in full if your employment with the Company is terminated for any reason other
than Cause or your voluntary termination within eighteen (18) months of the
Change In Control.


 


Notwithstanding anything in this Award Notice or the
Plan to the contrary (including the immediately preceding paragraph), in the
event your employment with the Company is terminated by the Company
involuntarily without Cause or you terminate your employment with the Company
for Good Reason, in either case at any time during the period commencing two (2) months
before and ending twelve (12) months after the occurrence of a Change In
Control, any unvested portion of the Option shall immediately vest on the date
of such termination of your employment, the expiration date of the exercise
period for the Option shall be the earlier of (i) one (1) year
following the date of termination or (ii) the Expiration Date, and the
Company shall take all actions necessary or advisable to give effect to this Section of
the Award Notice.


 


EXERCISING
OPTIONS


 


Upon exercise of any portion of the Option and
before delivery of the shares of Common Stock, full payment for shares of
Common Stock purchased upon the exercise shall be paid within three days of the
date of exercise and shall be made in cash, or, with the consent of the
Committee, (a) in whole or in part in shares of Common Stock that have
been held by you for at least six months and have an aggregate Fair Market
Value equal to the aggregate Exercise Price, or (b) in cash received from
a broker-dealer whom you have authorized to sell all or a portion of the Common
Stock covered by the Option.


 


The
Option shall be exercised by you by giving written notice of exercise to the
Company at the Company’s office in Princeton, New Jersey, Attention: Vice
President, Finance.  Such notice of
exercise must include a statement of the number of shares underlying the Option
exercise and a statement of preference as to the manner in which payment to the
Company shall be made, as


 


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described
above.  Such notice shall be deemed to
have been given when hand-delivered, telecopied or mailed, first class postage
prepaid, and shall be irrevocable once given.


 


As
promptly as is reasonably practicable after the exercise of the Option and the
satisfaction of any applicable taxes, as determined by the Company, a
certificate for the shares of Common Stock issuable on the exercise of the Option
shall be delivered to you or your personal representative, heir or legatee.


 


The
Option may not be transferred, assigned or pledged by you otherwise than as
permitted by the Plan, by will or the laws of descent and distribution or be
exercised other than by you or, in the case of your death, by your personal
representative, heir or legatee.


 


If
you dispose of any shares of Common Stock acquired upon the exercise of the
Option within two years from the Grant Date or one year after such shares were
acquired pursuant to an exercise of the Option, you agree to notify the Company
in writing of such disposition.  Any
notice required hereunder must be given within 30 days of such disposition.


 


GOVERNING
TERMS


 


The
terms of this Award Notice, and any sale, purchase or exercise of any shares
subject to the Option granted by this Award Notice shall be governed by the
terms of the Pharmacopeia Drug Discovery, Inc. Insider Trading Policy (the
“Policy”) previously provided or enclosed with this Award Notice, and incorporated
by reference herein.  By executing this
Award Notice, you acknowledge having received and carefully read the Policy,
and you agree to be bound by the terms of the Policy, as interpreted and
amended from time to time by the Company.


 


Nothing
in this Award Notice shall confer on you the right to continue in the
employment or service of the Company or interfere in any way with the right of
the Company to terminate your employment or service at any time.


 


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You
should sign and return a copy of this Award Notice to the Vice President,
Finance of the Company.


 


	
  Very truly yours,

  
	
   

  
	
   

  
	
   

  	
   

  
	
  [Name]

  
	
  [Title]

  
	
   

  
	
  Enclosure

  
	
   

  
	
   

  
	
  Acknowledged and Accepted:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Name:

  
	
  Title:

  



 


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