**Exhibit 10.25(a)**

 

**CONFIDENTIAL**

 

**SEPARATION AGREEMENT AND RELEASE OF CLAIMS**

 

This **SEPARATION AGREEMENT AND RELEASE OF CLAIMS**(the “Agreement”) is entered into as of the 30th day of September, 2002, by andbetween **PHARMACOPEIA, INC.**, aDelaware corporation (the “Company”), and **MICHAELR. STAPLETON, PH.D.** (the “Employee”).

 

**BACKGROUND**

 

**WHEREAS,** theEmployee has served as Executive Vice President and Chief Operating Officer ofAccelrys Inc. (“Acclerys”) pursuant to the terms of an Employment Agreementdated as of May 1, 2001 (the “Employment Agreement”); and

 

**WHEREAS,** the partieshave agreed that the Employee’s employment arrangement with the Company andAccelrys shall cease effective as of December 31, 2002 (the “Termination” or“Termination Date”) and, in connection therewith, the Employee shall resign asExecutive Vice President and Chief Operating Officer of Accelrys effective asof the date hereof; and

 

**WHEREAS,** the partieshereto desire to set forth their respective rights and obligations with respectto the Termination;

 

**NOW, THEREFORE,** in consideration of thecovenants and conditions set forth herein and **INTENDINGTO BE LEGALLY BOUND HEREBY,**the undersigned parties to thisAgreement hereby agree as follows:

 

**1.****                           Termination;Performance of Duties.**

 

(a)  The parties hereby agree that the employmentarrangement between the Employee and the Company is terminated as of theTermination Date.  Except as expresslyprovided in this Agreement, the Employment Agreement and all rights andobligations of the Employee and the Company with respect to the Employee’semployment with the Company, Accelrys and their respective affiliates are dulyand effectively terminated as of the Termination Date.  The Employee acknowledges and agrees thatthe Company’s obligations under this Agreement shall replace in their entiretythe Company’s obligations under the Employment Agreement and all otherincentive compensation arrangements for which the Employee is currentlyeligible as of the Termination Date. The Employee hereby resigns as Executive Vice President and ChiefOperating Officer of Accelrys and resigns from all other executive officerpositions of the Company, Accelrys and their respective affiliates, effectiveSeptember 30, 2002.  At the request ofthe Company’s Chief Executive Officer, the Employee shall also resign as amember of the Board of Directors of Accelrys and the Company’s otheraffiliates, and in any event shall resign such directorships no later than theTermination Date.

 

(b)  During the period commencing on the datehereof and ending on the Termination Date, the Employee agrees to perform suchprojects and assignments and to discharge such duties and responsibilities asare reasonably assigned to him by Dr. Joseph A. Mollica in such period.  Without limiting the generality of theforegoing, the Employee agrees to use his best efforts to assist the Companyand Accelrys (i) in achieving their respective financial targets for the fourthquarter and full year 2002, and (ii) in connection with all transitional issuesrelating to the Employee’s departure from the Company and Accelrys.

 

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**2.****                           Severance;Forgiveness of Loan; Other Benefits.**

 

(a)  As a severance payment and in lieu of anypayments otherwise due under the Employment Agreement, the Company agrees topay the Employee an amount equal to his current annual base salary, Two HundredEighty-Five Thousand Dollars ($285,000). Eighty-Five Thousand Dollars ($85,000) of this amount, less normallyapplicable payroll withholdings, shall be paid to the Employee in cash in alump sum as soon as practicable after the Termination Date but no later thanJanuary 15, 2003.  The other Two HundredThousand Dollars ($200,000) of this amount shall be paid to the Employee incash in equal semi-monthly installments pursuant to the Company’s normalpayroll schedule, less normally applicable payroll withholdings, commencing onor about January 15, 2003 and ending on or about December 31, 2003, unlessterminated sooner pursuant to Section 5 hereof.

 

(b)  Notwithstanding the terms of the EmploymentAgreement, the Company’s or Accelrys’ Management Incentive Plan or any otherincentive or bonus plan of the Company or Accelrys, or any other agreement orarrangement to which the Employee is a party or which may apply to theEmployee, the Employee acknowledges and agrees that he shall not be entitled toany payment under any such Management Incentive Plan (or any such otherincentive or bonus plan) for the year 2002 or otherwise.

 

(c)  Notwithstanding any other terms orprovisions to the contrary of the $200,000 loan provided by the Company to theEmployee as described in Section 3(d) of the Employment Agreement (the “Loan”),the Company agrees that, subject to the Employee’s compliance with the terms ofthis Agreement (including, without limitation, Sections 5, 6, 9, 11 and 12hereof), effective as of December 31, 2003, it shall forgive all amountsoutstanding under and in respect of the Loan. In such event, assuming that the Employee is not in breach of thisAgreement (including, without limitation, Sections 5, 6, 9, 11 and 12 hereof),as of December 31, 2003, the Loan shall be cancelled and all obligations andliabilities of the Employee to repay any amounts outstanding under and inrespect of the Loan shall be discharged in full.  The Employee agrees that it shall be an express condition to theCompany’s obligation to forgive any amounts outstanding under or in respect ofthe Loan as provided in this Section 2(c) that the Employee (i) pay to theCompany, on or prior to April 20, 2003, sufficient funds to enable the Companyto remit the amount of payroll tax owed in respect of the forgiveness ofindebtedness income and imputed interest income (collectively, “Loan Taxes”)arising from forgiveness of the $50,000 portion of the Loan scheduled to be forgivenon May 1, 2003 and (ii) pay to the Company, on or prior to December 20, 2003,sufficient funds to enable the Company to remit the Loan Taxes arising fromforgiveness of the remaining amounts outstanding under and in respect of theLoan on December 31, 2003 as provided in this Section 2(c).  The Company agrees that it shall provide theEmployee with an invoice, not later than ten (10) days prior to the applicablepayment date, detailing the amount to be paid to the Company in respect of LoanTaxes on or prior to such payment date; provided, that the failure of theCompany to provide any such invoice shall not relieve the Employee of hisresponsibility to pay the Loan Taxes arising from the forgiveness of the Loandescribed in this Section 2(c).  The Employeefurther agrees that, in the event he fails to timely pay any amounts to theCompany required in respect of Loan Taxes as provided above, the Company shallbe entitled (without prejudice to any other rights it may have hereunder, underapplicable law or in equity) to set off against amounts (if any) payable by theCompany to the Employee under any provision of this Agreement.

 

(d)  The Company will continue to provide theEmployee with assistance in obtaining his pending Green Card and all othervisas required for his employment in the United States.  Such assistance will include thereimbursement of the Employee’s expenses incurred in connection with

 

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securing such visas, whichexpenses must be approved by the Company in advance as a condition toreimbursement.

 

(e)  The Company will reimburse the Employee forhis reasonable expenses incurred in connection with the preparation of his 2002United States income tax returns.

 

(f)  The Employee shall be eligible toparticipate, at the Company’s expense, in the Company’s Executive OutplacementAssistance program administered through Right Associates for a period of oneyear after the Termination Date.

 

**3.****                           StockOptions.**  The partiesacknowledge that, pursuant to certain Stock Option Agreements, the Employee hasbeen granted incentive stock options to purchase shares of common stock of theCompany.  So long as the Employee is notin breach of this Agreement and as such remains employed by the Company and Accelrysthrough the Termination Date, 84,699 of these options will be vested andexercisable.  The Employee’s optionsshall remain subject to the terms of, and shall be exercisable during theperiod(s) specified in, the Stock Option Agreements under which such optionswere granted.

 

**4.****                           Benefits.**  The Employee will continue to be eligible toparticipate in the Company’s group health plans as offered to active employeesunder the provisions of COBRA.  TheCompany will pay the applicable COBRA premiums until the earlier of (i) the endof the twelve (12) month period following the Termination Date described inSection 2(a) or (ii) the date upon which the Employee is covered by healthbenefit plans of a successor employer or under any governmental health benefitsprograms of the United Kingdom or any other jurisdiction.  As of that date, the Employee may continuecoverage under COBRA at his own cost. The benefits described in this Section 4(a) are available only duringthe time that the Employee is not eligible for health coverage through anotheremployer or governmental program. Should the Employee obtain such other health benefits coverage, theEmployee shall immediately notify the Company. Further, the Company will take all action necessary for the Employee tocontinue, for a period of one (1) year after the Termination Date, the lifeinsurance coverage currently provided to the Employee through the Company, andthe Company shall pay the premiums in respect of such life insurance throughthe first anniversary of the Termination Date.

 

**5.****                           Non-Competition.**  The Employee shall not, for a period oftwelve (12) months commencing on the Termination 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 for, anyCompeting Entity which conducts its business within the Territory (as the termsCompeting Entity and Territory are hereinafter defined); provided, however,that notwithstanding the foregoing, the Employee may make solely passiveinvestments in any Competing Entity the common stock of which is “publiclyheld” and of which the Employee shall not own or control, directly orindirectly, in the aggregate securities which constitute 5% or more of the votingrights or equity ownership of such Competing Entity; (b) solicit or divert anybusiness or any customer from the Company or any of its subsidiaries oraffiliates from time to time or assist any person, firm or corporation in doingso or attempting to do so; (c) cause or seek to cause any person, firm orcorporation to refrain from dealing or doing business with the Company or anyof its subsidiaries or affiliates from time to time or assist any person, firmor corporation in doing so; or (d) solicit for employment, or advise orrecommend to any other person that they employ or solicit for employment orretention as an employee or consultant, any person who is an employee of, orexclusive consultant to, the Company or any of its subsidiaries or affiliatesfrom time to time.  The Company’sobligation to make payments pursuant to Section 2(a), to forgive the Loan asprovided in Section 2(c) and to make the COBRA premium payments described inSection 4 above, shall

 

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terminate in the event that,and at such time as, the Employee is in breach of his obligation not tocompete, divert business or solicit customers or employees as set forth in thisSection 5.

 

For purposesof this Section 5, the term “Competing Entity” shall mean any entity which ispresently or hereafter engaged in the business of providing to third partiesproducts or services for pre-clinical drug discovery or chemical developmentwhich (i) include the outlicensing of small molecule libraries, the undertakingof drug candidate screening, and/or related drug optimization activities, (ii)utilize combinatorial chemistry or high-throughput screening technologies inoffering pre-clinical drug discovery services, (iii) engage in the development,marketing or sale of software programs which use molecular simulation oranalysis to predict chemical or biological activities, or (iv) engage in thedevelopment, marketing or sale of software programs that store, manage oranalyze chemical or biological information. For purposes of this Section 5, the term “Territory” shall mean NorthAmerica, Europe and Japan. Notwithstanding anything in the above to the contrary, the Employee mayengage in the activities set forth in Section 5(a) hereof with the prior writtenconsent of the Company, which consent shall not be unreasonably withheld.  In determining whether a specific activityby the Employee for a Competing Entity shall be permitted, the Company willconsider, among other things, the nature and scope of (x) the duties to beperformed by the Employee, and (ii) the business activities of the CompetingEntity or contemplated by such Competing Entity at the time of the Employee’sproposed engagement by such entity.

 

The Employeeacknowledges and agrees that the covenants set forth in this Section arereasonable and necessary in all respects for the protection of the Company’sand Accelrys’ legitimate business interests (including, without limitation, theCompany’s and Accelrys’ confidential, proprietary information and trade secretsand client good-will, which represents a significant portion of the Company’snet worth and in which the Company has a property interest).  The Employee acknowledges and agrees that,in the event that he breaches any of the covenants set forth in this Section,the Company shall be irreparably harmed and shall not have an adequate remedyat law, and, therefore, in the event of such a breach, the Company shall beentitled to injunctive relief, in addition to (and not exclusive of) any otherremedies (including monetary damages) to which the Company may be entitledunder law.

 

If anycovenant set forth in this Section 5 is deemed invalid or unenforceable for anyreason, it is the parties’ intention that such covenants be equitably reformedor modified to the extent necessary (and only to such extent) to render itvalid and enforceable in all respects. In the event that the time period and/or geographic scope referencedabove is deemed unreasonable, overbroad or otherwise invalid, it is the parties’intention that the enforcing court shall reduce or modify the time periodand/or geographic scope to the extent necessary (and only to such extentnecessary) to render such covenants reasonable, valid and enforceable in allrespects.

 

**6.****                           Non-Disparagement.**  The Employee expressly agrees that he willnot make any knowingly false, disparaging or derogatory comments, in public orin private, about the Company or Accelrys or any of their respectivesubsidiaries or affiliates (collectively, the “Company Entities”), about thebusiness affairs or financial condition of any of the Company Entities, orabout any employee, director or officer of any of the Company Entities.  The Company agrees that the officers anddirectors of the Company Entities shall not make any knowingly false,disparaging or derogatory comments concerning the Employee to third parties.

 

**7.****                           Releasesof Claims.**  Subject to andconditioned upon the full performance by the other party of its or hisobligations under this Agreement:

 

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(a)                                  Inexchange for the benefits received under this Agreement, to which he may nototherwise be entitled, the Employee, his attorneys, heirs, executors,administrators, successors and assigns (collectively, the “Employee Parties”)hereby agrees not to pursue or further any action, cause of action, right,suit, debt, compensation, expense, liability, contract, controversy, agreement,promise, damage judgment, demand or claim whatsoever, at law or in equity, whetherknown or unknown, which the Employee or any of the other Employee Parties everhad, now has or hereafter can, shall or may have for, upon or by any reason ofany matter, cause or thing (collectively, “Employee Claims”) whatsoever,occurring up to and including the date the Employee executes this Agreement,against the Company and Accelrys, their respective successors, assigns,partners, representatives and affiliates and all of their respective employees,agents, officers and directors (collectively, the “Company Parties”) and herebyreleases, acquits and forever absolutely discharges the Company Parties andeach of them of and from all of the foregoing, except with respect to theobligations of the Company set forth in this Agreement, including but not limitedto the Stock Option Agreements referenced in Section 3.  Such Employee Claims include, but are notlimited to, all claims for breach of contract, wrongful discharge, impairmentof economic opportunity, intentional infliction of emotional harm, defamationor other torts, or claims under any applicable federal, state or local law,including any and all federal, state and local employment andanti-discrimination laws, including without limitation the Age Discriminationin Employment Act, the Older Workers Benefit Protection Act, Title VII of theCivil Rights Act of 1964, the California Labor and Civil Code, the CaliforniaFair Employment and Housing Law, the New Jersey Law Against Discrimination andthe New Jersey Conscientious Employee Protection Act.  Notwithstanding anything herein to the contrary, such EmployeeClaims will under no circumstances include any action, cause of action, right,suit, debt, compensation, expense, liability, contract, controversy, agreement,promise, damage judgment, demand or claim relating to, arising under or arisingin connection with any breach by the Company of this Agreement.

 

(b)                                 TheCompany, for itself and any subsidiary (including, without limitation,Accelrys) or affiliate, as well as its and their respective predecessors,successors, assigns, trustees and creditors, hereby agrees not to pursue orfurther any action, cause of action, right, suit, debt, compensation, expense,liability, contract, controversy, agreement, promise, damage judgment, demandor claim whatsoever, at law or in equity, whether known or unknown, which theCompany and any of such other parties ever had, now has or hereafter can, shallor may have for, upon or by any reason of any matter, cause or thing(collectively, “Company Claims”) whatsoever, occurring up to and including thedate Employee executes this Agreement against Employee and the other EmployeeParties and hereby releases, acquits and forever absolutely discharges Employeeand the other Employee Parties and each of them of and from all of theforegoing, except with respect to the obligations of Employee set forth in thisAgreement and under any and all confidentiality, non-disclosure and similaragreements entered into by the Employee prior to the date hereof with theCompany, Accelrys or any of their respective affiliates.  Notwithstanding anything herein to thecontrary, such Company Claims will under no circumstances include any action,cause of action, right, suit, debt, compensation, expense, liability, contract,controversy, agreement, promise, damage judgment, demand or claim relating to,arising under or arising in connection with any breach by the Employee of thisAgreement.

 

**8.****                                      UnknownClaims.**  Both the Employee andthe Company understand that the release of claims described in Section 7 abovecovers claims which they know about and those they may not know about.  The parties waive all rights under Section1542 of the California Civil Code, which the parties have read and understand,and which provides as follows:

 

SECTION 1542.A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time

 

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of executingthe release, which if known by him must have materiallyaffected his settlement with debtor.

 

The partiesacknowledge that they are assuming the risk that the facts may turn out to bedifferent from what they believe them to be and the parties agree that thisrelease shall be in all respects effective and not subject to termination orrescission because of such mistaken belief.

 

**9.****                           AgreementNot to Sue.**  The parties promisenever to file a lawsuit asserting any of the claims that are released inSection 7 above.  If either does so, andthe action is found to be barred in whole or part by this Agreement, the partyasserting the claim found to be barred by this Agreement agrees to pay thereasonable attorneys’ fees and costs, or the portions thereof, incurred by theparty released hereby in defending against the claim(s) which are barred bythis Agreement.

 

**10.****                    FurtherAcknowledgements.**  **The Employee acknowledges that (a) by this Agreement,the Company has advised him in writing that he should consult with an attorneyprior to executing this Agreement, (b) he has had the opportunity to read,review and consider all of the provisions of this Agreement, (c) he understandsits provisions and its final and binding effect on him, and (d) he is enteringinto this Agreement freely, voluntarily and without duress or coercion.  The Employee further acknowledges that (i)he understands that he has twenty-one (21) days from the date of distributionof this Agreement to review and consider its provisions and (ii) he has anadditional seven (7) days following his execution of this Agreement to revokethis Agreement and this Agreement shall not become effective or enforceableuntil the revocation period has expired.**

 

**11.****                    CompanyProperty.**  The Employee warrantsthat, except as provided below, he has returned to the Company, or will returnto the Company on or before the Termination Date, all property belonging to theCompany, which is in his possession or under his control, including withoutlimitation, all credit cards, computers, telecommunications equipment, keys andall documents and files of any nature whatsoever, including any and all copiesof same.  Notwithstanding the foregoing,the Employee shall be entitled to retain his office computer, home officeequipment and cellular telephone, provided, that the Employee understands thatthe Company will not, after the Termination Date, be required to maintain anyDSL or other telephone or computer-based internet connection service, anyinternet service provider (ISP) service or any cellular telephone service inconnection with these retained items or otherwise; and provided, further, thatthe Company information contained in or on this equipment will remain theproperty of the Company and be subject to the terms of this Agreement.

 

**12.****                    Confidentiality.**  The parties hereto agree that the terms and conditionsof this Agreement are confidential and further agree that they shall notdivulge the terms of this Agreement to third parties generally, except asrequired by applicable law or to enforce this Agreement or to defend against aclaim related thereto and except that the Company may reveal such terms to itsaccountants, legal counsel and directors. In addition to and not in limitation of the parties’ respectiveobligations under Section 6 above, (a) the Employee agrees not to make anystatement to any third party (other than the Employee’s accountants andattorneys) regarding the Company or its affiliates, other than in connectionwith an employment opportunity or as may be required by applicable law or toenforce this Agreement or to defend against a claim related thereto, and (b)the Company agrees not to make any statement to any third party regarding theEmployee other than the fact that the Employee was an employee of the Companyduring the relevant time period, except as may be required by applicable law orto enforce this Agreement or to defend against a claim related thereto.  Notwithstanding the foregoing, the Employeeand the Company agree that the Company shall be entitled to provideemployment-related references concerning the Employee, and

 

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that any such references shallnot be deemed a violation of this Agreement. In the event this covenant of confidentiality is breached, the Companyand the Employee will have and may pursue legal remedies for any damage arisingfrom a breach of this provision.  Priorto any press release or other public disclosure relating to the contents ofthis Agreement, the Company shall confer with the Employee on the contents ofany such disclosure.  Notwithstandingthe foregoing, the Company shall be under no obligation to reach agreement withthe Employee on the contents of any such public announcement or disclosurerequired by applicable law, rule or regulation, including, but not limited to,any public announcement or disclosure required by federal or state securitieslaws, rules or regulations.

 

**13.****                    Acknowledgementof Consideration.**  The Employeeacknowledges that the only consideration that he has received for executingthis Agreement is the consideration recited above, and that no other promise,inducement, threat, agreement or understanding of any kind or description hasbeen made with or to the Employee by the Company to cause him to agree to theterms hereof.

 

**14.****                    GoverningLaw; Jurisdiction.**  The partiesacknowledge and agree that because the Company’s headquarters is located in NewJersey, this Agreement will be finalized in New Jersey and a substantialportion of this Agreement is to be performed in New Jersey, the substantivelaws of the State of New Jersey will govern the enforcement of this Agreement,without regard to its choice of law rules. The parties further agree and consent to the jurisdiction of the federaland state courts in New Jersey over any action to enforce this Agreement.

 

**15.****                    Entire Agreement,Etc.**  This Agreement representsthe entire understanding between the parties, and there are no agreements orunderstandings which have not been set forth herein.  This Agreement supersedes any prior understanding, agreement,practice or contract, oral or written, between the Employee and the Companyrelating to the Employee’s employment or compensation.  This Agreement may not be modified except bywritten instrument signed by all parties. This Agreement may be executed in counterparts, each of which shall bedeemed an original, but which together shall constitute one and the sameinstrument.  This Agreement shall bebinding upon the parties’ heirs, executors, administrators, successors, andassigns.

 

IN WITNESSWHEREOF, and INTENDING TO BE LEGALLY BOUND HEREBY, the undersigned haveexecuted this Separation Agreement and Release of Claims as of the date firstwritten above.

 
|                                                      | **PHARMACOPEIA, INC.** |                                                           |
|-----------------------------------------------------------|------------------------|----------------------------------------------------------------|
|                                                      |                   |                                                           |
|                                                      |                   |                                                           |
|                                                      | By:                    | /s/ Joseph  A. Mollica, Ph.D.                                  |   |
|                                                      |                   | Joseph A.  Mollica, Ph.D.                                      |   |
|                                                      |                   | Chairman of  the Board, President  and Chief Executive Officer |   |
|                                                      |                   |                                                           |
| Agreed and  Accepted as of  the Date First Written Above: |                   |                                                           |
|                                                      |                   |                                                           |
| /s/ Michael  R. Stapleton, Ph.D.                          |                   |                                                           |
| Michael R.  Stapleton, Ph.D.                              |                   |                                                           |
|                                                           |                        |                                                                |  |  |

 

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