Exhibit 10.4


 


EMPLOYMENT AGREEMENT OF LESLIE
JOHNSTON BROWNE


 


This employment agreement (the “Agreement”) was
originally made and entered into as of the 14th day of July, 2004 and is
amended and restated as of the 27th day of February, 2006, by and between
Pharmacopeia Drug Discovery, Inc., (hereinafter the “Company”), and Leslie
Johnston Browne, Ph.D. (hereinafter “Dr. Browne”).


 


RECITALS


 


WHEREAS, the Company desires to employ Dr. Browne
to render services in the capacity of President and Chief Executive Officer of
Pharmacopeia Drug Discovery, Inc. (“President and Chief Executive Officer”)
on the terms set forth in this Agreement;


 


WHEREAS, Dr. Browne desires to render services
during the term of this Agreement in the capacity of President and Chief Executive
Officer on the terms 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.                                       Employment.


 


a.                                       The Company agrees to employ Dr. Browne
as President and Chief Executive Officer upon the terms and conditions set
forth in this Agreement.


 


b.                                      Dr. Browne’s duties, powers and
responsibilities as President and Chief Executive Officer shall be those which
are customary for such position, as may be determined from time to time by the
Board of Directors of the Company (the “Board”).  Dr. Browne agrees to perform and
discharge such duties well and faithfully and to be subject to the supervision
and direction of the Board.


 


c.                                       The position of President and Chief Executive
Officer is a full-time position.  Dr. Browne
agrees to devote his full time effort, attention, and energies to this
position.  Dr. Browne will not
render any professional services or engage in any activity which might be
competitive with, adverse to the best interest of, or create the appearance of
a conflict of interest with the Company. 
Prior to serving on any other board of directors, Dr. Browne shall
obtain the written permission of the Board, which shall not be unreasonably
withheld.  Dr. Browne agrees to
abide by the policies, and rules and regulations of the Company as they
may be amended from time to time.


 


2.                                       Term.


 


a.                                       The employment of Dr. Browne as
President and Chief Executive Officer under this Agreement is for an initial
term of one year beginning on Dr. Browne’s first date of employment by the
Company, August 9, 2004 (the “Start Date”).


 

















 


b.                                      Unless earlier terminated under the
provisions of this Agreement, this Agreement will renew automatically for
successive one year periods at the conclusion of the initial term and any
succeeding renewal terms (collectively, the “Term”), unless either party
notifies the other in writing, at least one year in advance, of its intention
not to renew the Agreement at the expiration of the initial or renewal term.


 


3.                                       Compensation.


 


a.                                       For his services under this Agreement as
President and Chief Executive Officer, Dr. Browne will be paid by the
Company an initial base salary of Three Hundred Fifty Thousand Dollars
($350,000) per year (“Base Salary”).  The
Base Salary will be paid in equal installments, less normally applicable
payroll deductions, in accordance with the Company’s regular payroll
schedule.  Dr. Browne’s compensation
will be reviewed on or before February 28 of each year to determine
whether his compensation level shall be adjusted in a manner commensurate with
his performance in the prior year of service.


 


b.                                      Dr. Browne shall be entitled to a
signing bonus of $100,000.  One half of
this bonus ($50,000), less normally applicable payroll deductions, shall be
paid as soon as practicable after the Start Date.  The remainder ($50,000), less normally
applicable payroll deductions, shall be paid six months after the Start Date.


 


c.                                       Beginning January 1, 2005, Dr. Browne
shall participate in the Company’s Bonus Program for Senior Management, which
shall provide an annual bonus target of fifty percent (50%) of Dr. Browne’s
Base Salary, as determined in accordance with the Company’s existing
compensation policy.  Such amounts
payable to Dr. Browne under the bonus program shall be referred to herein
as the “Incentive Bonus.”  Incentive
Bonuses will be paid on the March 1 following the completion of each
calendar year, provided Dr. Browne is employed or is receiving severance
payments on that date, or upon the expiration of the Term (as described in Section 4(g)).


 


d.                                      From time to time, Dr. Browne may be
granted the option to purchase Company stock under the terms of the Company’s
Stock Option Plan, or similar employee stock option plans in effect from time
to time.  Such stock option grants shall
be subject to the terms of the applicable stock option plan(s) then in effect.


 


e.                                       Dr. Browne shall be granted on the Start
Date three hundred thousand (300,000) options to purchase Company stock, priced
at the fair market value on the date of the grant.  The vesting schedule for these options
shall be as follows:  25% of these
options shall be vested after one year (from the date of the grant) and 1/48 of
the options shall vest on the first of each month thereafter.  These options are intended to be incentive
stock options as defined under section 422 of the Internal Revenue
Code of 1986 and any regulations promulgated thereunder.  However, to the extent the option grant fails
to satisfy any requirement of section 422(d) of the Code, the
affected options shall be treated as non-qualified stock options.


 

















 


4.                                       Termination; Resignation; Permanent
Disability; Death.   Dr. Browne’s employment as President
and Chief Executive Officer may be terminated at any time by action of the
Board for any reason.  In the event of
termination of his employment, the Company shall have no liability to Dr. Browne
as President and Chief Executive Officer for compensation or benefits except as
specified in this Section 4 or as required by the Company’s benefits
policy.


 


a.                                       Involuntary Termination Without Cause.  If Dr. Browne’s
employment as President and Chief Executive Officer is terminated involuntarily
by the Board, without “Cause” (as defined below), during the Term, the Company
shall:


 


(1)                                  Pay Dr. Browne all compensation and
benefits accrued, but unpaid, up to the date of his termination.  Dr. Browne’s Incentive Bonus for the
calendar year in which his employment is terminated shall be paid on a
pro rata basis, based on the actual percentage of target bonuses
determined by the Company’s Board of Directors for the year in which the
termination occurs.


 


(2)                                  Pay Dr. Browne in a lump sum two (2) times
an amount equal to his annual Base Salary in effect as of the date of
termination.  The Company will maintain Dr. Browne’s
group medical coverage for a period of twenty-four (24) months after such
termination.


 


(3)                                  Allow all vested options to be exercisable
pursuant to the terms of the stock option agreement(s) under which the options
were granted.


 


(4)                                  If the termination occurs in the first year
of the Term, twenty-five percent (25%) of the initial option grant will
immediately vest on the termination date.


 


b.                                      Termination by Dr. Browne for Good
Reason.  In the event Dr. Browne terminates this
Agreement with at least ninety (90) days’ written notice and for “Good Reason,”
as defined below, during the Term, he shall be entitled to receive the benefits
provided in Section 4(a) above. 
For purposes of this Section 4(b), “Good Reason” shall be provided
by the occurrence of any of the following events:  i) Dr. Browne’s removal as President and
Chief Executive Officer of the Company or any other material adverse
change by the Company in Dr. Browne’s duties, authority or
responsibilities as President and Chief Executive Officer of the Company; ii) a reduction of more than twenty
percent (20%) of Dr. Browne’s base salary, unless made with Dr. Browne’s
express written consent; iii) a material reduction in the kind or level of
employee benefits such that Dr. Browne’s overall benefits package is
significantly reduced, unless made with Dr.


 

















 


Browne’s express written consent; iv) if as a
result of a relocation of the Company to a facility more than fifty (50) miles
from the Company’s current location, Dr. Browne is required to relocate
his residence, unless made with Dr. Browne’s express written consent; v) a
material breach of this Agreement by the Company that has not been cured within
thirty (30) days after written notice thereof by Dr. Browne to the
Company; or vi) a change of
control (as defined in Section 4(c)) of the Company that materially
changes Dr. Browne’s duties, title or responsibility.


 


c.                                       Termination Without Cause in Connection with
Change of Control.  In the event that Dr. Browne’s
employment as President and Chief Executive Officer is terminated involuntarily
by the Board without Cause in connection with a “change of control” (as defined
below) of the Company: i) Dr. Browne shall be entitled to receive the
benefits provided in Section 4(a) above; ii) all stock options
granted to Dr. Browne that are then unvested shall immediately vest; and
iii) Dr. Browne shall receive pro rata Incentive Bonuses for the period
during which he is receiving payments under Section 4(a)(2), equal to the
average Incentive Bonus he received in each of the three years immediately
prior to the termination or, if less than three years’ of bonus history is
available, his target bonus for the year in which the termination occurs.


 


For purposes of this
Agreement, a “change of control” means that any of the following events has
occurred:


 


(i)                                     Any
person (as such term is used in Section 13(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”)), other than the Company, any
employee benefit plan of the Company or any entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan,
together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2
under the Exchange Act) becomes the beneficial owner or owners (as defined in Rule 13d-3
and 13d-5 promulgated under the Exchange Act), directly or indirectly (the “Control
Group”), of more than 50% of the outstanding equity securities of the Company,
or otherwise becomes entitled, directly or indirectly, to vote more than 50% of
the voting power entitled to be cast at elections for directors (“Voting Power”)
of the Company;


 


(ii)                                  A
consolidation or merger (in one transaction or a series of related
transactions) of the Company pursuant to which the holders of the Company’s equity
securities immediately prior to such transaction or series of related
transactions would not be the holders, directly or indirectly, immediately
after such transaction or series of related transactions of more than 50% of
the Voting Power of the entity surviving such transaction or series of related
transactions; or


 


(iii)                               The
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company.


 


d.                                      Termination for Cause.  If Dr. Browne’s
employment is terminated as President and Chief Executive Officer for “Cause”
as defined below during the Term, the Company shall pay Dr. Browne all
accrued, but unpaid, compensation and benefits which are then due and owing as
of the date of his termination.  He shall
not be entitled to receive a pro rata Incentive Bonus for the calendar year in
which the termination occurs, or any of the amounts specified in Section 4(a).  The Company shall have the right to setoff
any amounts due to Dr. Browne by any amounts owed by Dr.


 

















 


Browne to the Company at the time Dr. Browne’s
employment terminates and he hereby authorizes the Company to make this setoff.


 


Dr. Browne’s employment may be terminated for “Cause”
at any time upon delivery of written notice to Dr. Browne.  “Cause” means the occurrence of any of the
following events:  i) any gross failure
on the part of Dr. Browne (other than by reason of disability as provided
in Section 4(f)) to faithfully and professionally carry out his duties or
to comply with any other material provision of this Agreement, which failure
continues after written notice thereof by the Board, provided that the Board
shall not be required to provide such notice in the event that such failure (A) is
not susceptible to remedy or (B) relates to the same type of acts or
omissions as to which such notice has been given on a prior occasion; ii) Dr. Browne’s
material dishonesty (which shall include without limitation any misuse or
misappropriation of the Company’s assets), or other willful misconduct which is
intended to injure or which injures or is likely to injure the business of
the Company; iii) Dr. Browne’s conviction for any felony or for any
other crime involving moral turpitude, whether or not relating to his employment;
iv) Dr. Browne’s insobriety or use of drugs, chemicals or controlled
substances either (A) in the course of performing his duties and
responsibilities under this Agreement, or (B) otherwise affecting the
ability of Dr. Browne to perform the same; v) Dr. Browne’s
failure to comply with a lawful, written direction of the Board, which is
consistent with Dr. Browne’s duties and responsibilities as President and
Chief Executive Officer with the Company; or vi) any wanton and willful
dereliction of duties by Dr. Browne. 
The existence of any of the foregoing events or conditions shall be
determined by the Board in the exercise of its reasonable judgment.


 


e.                                       Voluntary Resignation.  In
the event that Dr. Browne shall voluntarily resign as President and Chief Executive
Officer:


 


(1)                                  Dr. Browne shall provide the Company’s
Board of Directors with ninety (90) days’ advance written notice of his
intention to resign voluntarily.


 


(2)                                  Following the effective date of his
resignation, the Company shall be relieved of all other obligations to pay
compensation to Dr. Browne, except that the Company shall immediately pay Dr. Browne
all accrued, but unpaid, Base Salary and any other unpaid expenses or expense
reimbursement.


 


f.                                         Disability.  If Dr. Browne becomes
disabled for more than one hundred eighty (180) days in any twelve (12) month
period, the Company shall have the right to terminate his employment without
further liability upon written notice to Dr. Browne.  Dr. Browne shall be deemed disabled for
purposes of this Agreement either i) if he is deemed disabled for purposes of
any long-term disability insurance policy paid for by the Company and at the
time in effect, or ii) if a physician satisfactory to the Company and Dr. Browne
determines that due to accident, mental or physical illness, or any other
reason, he cannot perform his duties as President and Chief Executive
Officer.  In the


 

















 


event the Company shall terminate Dr. Browne
due to disability, as described above, Dr. Browne shall be entitled to
receive the benefits set forth in Section 4(a), reduced by the amount of
any disability plan or insurance benefit paid to him.


 


g.                                      Non-renewal.  Following the expiration of
the Term by reason of timely notice of non-renewal by the Company in accordance
with Section 2(b), Dr. Browne shall be entitled to receive the
benefits set forth in Section 4(a) above, except that the severance
described in Section 4(a)(2) shall be for a period of twelve (12)
months following the expiration of the Term. 
Upon the expiration of the Term by reason of timely notice of
non-renewal by Dr. Browne, Dr. Browne will remain eligible to receive
a pro rata Incentive bonus for the year in which the Term expires.  In the event the Term expires by reason of
timely notice of non-renewal, the twenty-four (24) month time period set forth
in Section 12 of this Agreement shall be reduced to twelve (12) months
following the expiration of the Term.


 


h.                                      Death.  In the event of the death of Dr. Browne,
this Agreement shall automatically terminate and any obligation to continue to
pay compensation and benefits shall cease as of the date of his death.


 


i.                                          No Mitigation.  Dr. Browne
has no duty to mitigate any payment obligations of the Company under this Section 4.


 


j.                                          Certain Additional Payments.  If
any of the benefits or payments under this Agreement, or under any other
agreement with or plan of the Company (in the aggregate, the “Total Payments”),
will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of
the Internal Revenue Code, the Company shall pay Dr. Browne in cash an
additional amount (the “Gross-Up Payment”) such that the net amount retained by
Dr. Browne after deduction of any Excise Tax upon the Total Payments and
any federal, state and local income tax and Excise Tax upon the Gross-Up
Payment provided for by this Section 4(g) shall be equal to the Total
Payments.  Such payments shall be made by
the Company to Dr. Browne as soon as practical following a determination
that any of the Total Payments will be subject to the Excise Tax, but in no
event beyond thirty (30) days from such date.


 


All determinations required to be made under this Section 4(j),
including whether any of the Total Payments will be subject to the Excise Tax
and the amounts of such Excise Tax, shall be made by a nationally recognized
accounting firm (the “Accounting Firm”) mutually acceptable to the
parties.  The Accounting Firm shall
provide detailed supporting calculations both to the Company and to Dr. Browne
within 10 days after a request for such determinations are made by Dr. Browne
or the Company.  Any such determination
by the Accounting Firm shall be binding upon the Company and Dr. Browne.  For purposes of determining the amount of the
Gross-Up Payment, Dr. Browne shall be deemed to pay Federal, state and
local income taxes at the highest marginal rates applicable to Dr. Browne
as of the date of the determination.


 

















 


5.                                       Board Membership.  As
President and Chief Executive Officer, Dr. Browne shall at all times be
nominated by the Board to serve on the Company’s Board of Directors, subject to
election by the stockholders.


 


6.                                       Vacation and Holiday.  Dr. Browne
shall be entitled to four weeks’ vacation each year and to those holidays
observed by the Company.  As an essential
employee of the Company, Dr. Browne shall schedule his vacation and
holiday observances so as not to unreasonably interfere with the performance of
his duties as President and Chief Executive Officer.


 


7.                                       Health Insurance; Life Insurance; Other
Fringe Benefits. Dr. Browne
shall be entitled to the benefit of such group medical, accident and long-term
disability insurance as the Company shall make available from time to time to
its executive employees.


 


8.                                       Relocation and Temporary Housing.  The
Company will pay for the reasonable, properly documented costs of relocating Dr. Browne’s
household goods to the Princeton, New Jersey area from San Francisco,
California, in accordance with Company policy. 
The Company will also provide Dr. Browne with a payment of $4,000
per month for nine months, to be used for temporary housing in the Princeton,
New Jersey area.  It is anticipated that Dr. Browne
will obtain permanent housing in the Princeton, New Jersey area prior to one
year after the Start Date.


 


In addition, the Company
will pay for up to nine (9) trips between the Princeton, NJ area and San
Francisco, CA for Dr. and/or Mrs. Browne, in connection with
house-hunting or the sale or rental of their San Francisco residence.


 


The Company will also
reimburse closing costs associated with the purchase of a residence in the
Princeton, New Jersey area along with associated reasonable and customary
expenses.  To the extent that the
relocation cost and closing cost reimbursements are taxable to Dr. Browne,
the Company will gross-up the payment such that the net amount received by Dr. Browne
equals the amount of the reimbursable expenses.


 


Upon the signing of a
contract to purchase, lease or rent a residence in Princeton, New Jersey, the
Company will pay Dr. Browne a relocation bonus of one hundred thousand
dollars ($100,000), which Dr. Browne agrees to return to the Company in
the event the closing on such residence is not consummated.  In the event Dr. Browne sells his
California residence within twelve (12) months of the Start Date, he will
receive an additional payment of fifty thousand dollars ($50,000) upon
verification of the closing of that sale.


 


Should Dr. Browne
voluntarily terminate his employment with the Company prior to one (1) year
from the date of this Agreement, Dr. Browne will repay to the Company one
half of all monies paid to him or on his behalf in association with his
relocation and temporary housing, not to exceed the net amount received by him
after taxes.  The Company may collect any
such mandatory repayments, in full or in part, by


 

















 


deducting them from amounts otherwise due Dr. Browne
from the Company, and Dr. Browne hereby authorizes such deduction.


 


9.                                       Professional Expenses.  Dr. Browne
will be reimbursed in accordance with the Company’s policy and procedure for
the reasonable costs of properly documented professional and business related
travel expenses required in the course of his employment.  The Company
will also pay for appropriate professional dues and memberships, which must be
approved in advance by the Board.


 


10.                                 Legal Fees.  Dr. Browne shall be
entitled to reimbursement by the Company for any legal fees he may incur in
connection with the negotiation and execution of this Agreement, in an amount
not to exceed $10,000.


 


11.                                 Confidential Information. 
Except as reasonably necessary to perform his duties as President and
Chief Executive Officer, Dr. Browne agrees not to reveal to any other
person or entity or use for his own benefit any confidential information of or
about Company or its operations, both during and after his employment under
this Agreement, including without limitation marketing plans, financial
information, key personnel, employees’ salaries and benefits, customer lists,
pricing and cost structures, operation methods and any other information not
available to the public, without the Company’s prior written consent.


 


12.                                 Non-Competition.  Dr. Browne
shall not, during the course of his employment with the Company or for a period
of twenty-four (24) months thereafter, 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 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 the foregoing, Dr. Browne may make
solely passive investments in any Competing Entity the common stock of which is
“publicly held” and of which Dr. Browne shall not own or control, directly
or indirectly, in the aggregate securities which constitute 5% or more of the
voting rights or equity ownership thereof.


 


b.                                      solicit or divert any business or any
customer from the Company or assist any person, firm or corporation in doing so
or attempting to do so;


 


c.                                       cause or seek to cause any person, firm or
corporation to refrain from dealing or doing business with the Company or
assist any person, firm or corporation in doing so; or


 


d.                                      solicit for employment, or advise or
recommend to any other person that they 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.


 


The Company’s obligation to make payments pursuant
to Section 4 above shall terminate in the event that, and at such time as,
Dr. Browne is in breach of his


 

















 


obligation
not to compete as set forth in this Section 12.  For purposes of this Section, the term “Competing
Entity” shall mean any entity which is in possession of drugs substantially
similar to those of the Company that are in pre-clinical development or
clinical trials, or which is presently or hereafter engaged in the business of
providing to third parties chemistry products or services for pre-clinical drug
discovery or chemical development which i) include the outlicensing of small
molecule libraries, the undertaking of drug candidate screening, and/or related
drug optimization activities; or ii) utilize combinatorial chemistry or
high-throughput screening technologies in offering pre-clinical drug discovery
services.  The term “Territory” shall
mean North America, Europe and Japan. 
Notwithstanding anything in the above to the contrary, Dr. Browne
may engage in the activities set forth in Section 12(a) hereof with
the prior written consent of the Company, which consent shall not be
unreasonably withheld.  In determining
whether a specific activity by Dr. Browne for a Competing Entity shall be
permitted, the Company will consider, among other things, the nature and scope
of i) the duties to be performed by Dr. Browne, and ii) the
business activities of the Competing Entity at the time of Dr. Browne’s
proposed engagement by such entity.


 


Dr. Browne acknowledges and agrees that the
covenants set forth in this Section 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).  Dr. Browne
acknowledges and agrees that, in the event that he breaches any of the
covenants set forth in this Section, the Company may be irreparably harmed and
may 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 12 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.


 


13.                                 Arbitration.  Any and all disputes between
the parties (except actions to enforce the provisions of Section 12 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, 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 the Parties.  The arbitrator shall have no authority to
depart from, modify, or add to 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 the United States District
Court for the District of New Jersey. 
The parties consent to the jurisdiction of (and the laying of venue in)
such court. 


 


14.                                 Waiver.  The waiver by either party of
any breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by the other party of any provision of the
Agreement.


 


15.                                 Severability.  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, and any such section, paragraph,
or term shall be deemed modified to the extent to make it enforceable.


 


16.                                 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 Dr. Browne.  This Agreement may not be assigned by Dr. Browne.  This Agreement may be assigned to any
successor in interest to the Company and Dr. Browne hereby consents to
such assignment.


 


17.                                 Warranties and Representations.  Dr. Browne
hereby warrants and represents to the Company that he is not a party to any
other agreement or understanding with any other person or entity (including
without limitation any agreements containing restrictive covenants governing
post-employment competition, solicitation, the disclosure of confidential
information, and intellectual property rights, and the like) that would,
directly or indirectly, prevent him in any way from lawfully entering into this
Agreement, performing any of the duties required hereunder (or that might be
assigned to him in the future hereunder), or fully complying with and honoring
each and every term, covenant, and promise contained in this Agreement.


 


18.                                 Lawful Employment in United States.  This
Agreement is contingent upon Dr. Browne’s ability to be lawfully employed
in the United States indefinitely, without employer sponsorship.  Customary documentation establishing work
eligibility will be required in accordance with applicable law.


 


19.                                 Entire Agreement; Amendments.  This
Agreement, including the recitals (which are a part hereof), together with the
applicable bylaws and policies of the Company, constitutes the entire Agreement
between the parties hereto and there are no other understandings, agreements or
representations, expressed or implied. 
This Agreement may amended only in writing signed by both parties.


 





















 


20.                                 Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of New Jersey.


 


21.                                 General Release.  Notwithstanding anything in this Agreement to the contrary, no payments
shall be made or benefits provided by the Company under Section 4 prior to
the execution by Dr. Browne at the time of termination 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 A.


 


 


	
  PHARMACOPEIA DRUG

  	
   

  	
   

  
	
  DISCOVERY, INC.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Joseph A. Mollica

  	
   

  	
   

  	
  /s/ Leslie J. Browne

  	
   

  
	
  Name:

  	
   Joseph A. Mollica, Ph.D.

  	
   

  	
  Leslie Johnston Browne, Ph.D.

  
	
  Title:

  	
   Chairman

  	
   

  	
   

  
							



 

















 


EXHIBIT A


 


General Release


 


IN
CONSIDERATION OF the terms and conditions contained in the Employment
Agreement, dated as of the        th day of             ,
20       , (the “Severance Agreement”) by
and between                    
(“Employee”) and Pharmacopeia Drug Discovery, Inc. (the “Company”), and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, Employee on behalf of himself and his heirs, executors,
administrators, and assigns, releases and discharges the Company and its
subsidiaries, divisions, affiliates and parents, and their respective past,
current and future officers, directors, employees, agents, and/or owners, and
their respective successors, and assigns and any other person or entity claimed
to be jointly or severally liable with the Company or any of the aforementioned
persons or entities (collectively the “Released Parties”) from any and all
manner of actions and causes of action, suits, debts, dues, accounts, bonds,
covenants, contracts, agreements, judgments, charges, claims, and demands
whatsoever (“Claims “) which Employee and his heirs, executors, administrators,
and assigns have, had, or may hereafter have, against the Released Parties or
any of them arising out of or by reason of any cause, matter, or thing
whatsoever from the beginning of the world to the date hereof.  This General Release of Claims includes,
without limitation, any and all matters relating to Employee’s employment by
the Company and the cessation thereof, and any and all matters arising under
any federal, state, or local statute, rule, or regulation, or principle of
contract law or common law, including but not limited to, the Family and
Medical Leave Act of 1993, as  amended, 29 U.S.C. §§ 2601 et
seq., Title VII of the Civil Rights Act of 1964, as  amended,
42 U.S.C. §§ 2000 et  seq., the Age Discrimination in
Employment Act of 1967, as  amended, 29 U.S.C. §§ 621 et
seq. (the “ADEA”), the Americans with Disabilities Act of 1990, as
amended, 42 U.S.C. §§ 12101 et  seq., the Worker
Adjustment and Retraining Notification Act of 1988, as  amended,
29 U.S.C. §§2101 et  seq., Employee Retirement Income Security Act
of 1974, as  amended, 29 U.S.C. §§ 1001 et  seq.
(“ERISA”), the New Jersey Law


 

















 


Against
Discrimination, N.J.S.A. 10:15-1, et seq., the New Jersey Conscientious
Executive Protection Act, N.J.S.A. 34:19-1 to 19-8, the New Jersey Wage and
Hour Act, N.J.S.A. 34-11-56a, et seq., and any other equivalent or similar
federal, state, or local statute; provided, however, that Employee does not
release or discharge the Released Parties from (i) any of the Company’s
obligations to him under the Severance Agreement, and (ii) any vested
benefits to which he may be entitled under any employee benefit plan or program
subject to ERISA.  It is understood that
nothing in this General Release is to be construed as an admission on behalf of
the Released Parties of any wrongdoing with respect to Employee, any such
wrongdoing being expressly denied.


 


Employee
represents and warrants that he fully understands the terms of this General
Release, that he is hereby advised to consult with legal counsel before
signing, and that he knowingly and voluntarily, of his own free will, without
any duress, being fully informed, and after due deliberation, accepts its terms
and signs below as his own free act. Except as otherwise provided herein,
Employee understands that as a result of executing this General Release, he
will not have the right to assert that the Company or any other of the Released
Parties unlawfully terminated his employment or violated any of his rights in
connection with his employment or otherwise.


 


Employee
further represents and warrants that he has not filed, and will not initiate,
or cause to be initiated on his behalf any complaint, charge, claim, or
proceeding against any of the Released Parties before any federal, state, or
local agency, court, or other body relating to any claims barred or released in
this General Release thereof, and will not voluntarily participate in such a
proceeding.  However, nothing in this
general release shall preclude or prevent Employee from filing a claim, which
challenges the validity of this general release solely with respect to Employee’s
waiver of any Losses arising under the ADEA. Employee shall not


 

















 


accept
any relief obtained on his behalf by any government agency, private party,
class, or otherwise with respect to any claims covered by this General Release.


 


Employee
may take twenty-one (21) days to consider whether to execute this General
Release.  Upon Employee’s execution of
this General Release, Employee will have seven (7) days after such
execution in which he may revoke such execution. In the event of revocation,
Employee must present written notice of such revocation to the Company’s Chief
Executive Officer.  If seven (7) days
pass without receipt of such notice of revocation, this General Release shall
become binding and effective on the eighth (8th) day after the execution hereof
(the “Effective Date”).


 


 


INTENDING
TO BE LEGALLY BOUND, I hereby set my hand below:


 


 


	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
   

  
				



 


NOTARIZATION


 


	
  State of

  	
   

  	
   

  	
  )

  	
   

  	
   

  
	
  County of

  	
   

  	
   

  	
  )

  	
   

  	
  ss.

  



 


On
this             day of                   
in the year            
before me, the undersigned, personally appeared                               ;
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is


 

















 


subscribed
to the within instrument, and acknowledged to me that he executed the same in
his capacity as an individual, and that by his signature on the instrument he
executed such instrument, and that such individual made such appearance before
the undersigned.


 


 


	
   

  	
   

  
	
   

  	
  Notary Public