**Exhibit 10.4**

** **

**PHARMACOPEIA,INC.**

 

**RESTRICTEDSTOCK UNIT AGREEMENT**

 

This RESTRICTED STOCKUNIT AGREEMENT, dated as of                (the “Date of Grant”), is delivered by Pharmacopeia, Inc. (“Pharmacopeia”)to                (the “Grantee”).

 

RECITALS

 

The Pharmacopeia, Inc.Amended and Restated 2004 Stock Incentive Plan (the “Plan”) provides for thegrant of Stock Awards in the form of restricted stock units in accordance withthe terms and conditions of the Plan. The Compensation Committee of Pharmacopeia’s Board of Directors (the “Committee”),which administers the Plan, has decided to make a grant of restricted stockunits as an inducement for the Grantee and to promote the best interests ofPharmacopeia and its shareholders.

 

NOW, THEREFORE, the partiesto this Agreement, intending to be legally bound hereby, agree as follows:

 

1.             Grantof Restricted Units.  Subject to theterms and conditions set forth in this Agreement and the Plan, Pharmacopeiahereby grants the Grantee                restricted stock units, subject to the restrictions set forth below and in thePlan (the “Restricted Units”).

 

2.             RestrictedUnit Account.  Each Restricted Unitrepresents one hypothetical share of common stock of Pharmacopeia (“CommonStock”).  The Restricted Units representhypothetical shares and not actual shares of Common Stock.  Pharmacopeia shall establish and maintain aRestricted Unit account as a bookkeeping account on its records for the Granteeand shall record in such account the number of Restricted Units granted to theGrantee.  No shares of Common Stock shallbe issued to the Grantee at the time the grant is made, and the Grantee shallnot be, nor have any of the rights or privileges of, a shareholder of Pharmacopeiawith respect to any Restricted Units recorded in the account.  The Grantee shall not have any interest inany specific assets of Pharmacopeia by reason of this award or the RestrictedUnit account established for the Grantee.

 

3.             Vesting.

 

(a)           Exceptas provided in subparagraph 3(b) below, the Restricted Units shall besubject to forfeiture until the Restricted Units vest.  The Restricted Units shall vest and bepayable according to the following vesting schedule, if the Grantee continuesto be employed by the Company from the Date of Grant until the applicablevesting date:

 

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| **Vesting  Date** | ** ** | **Percentage of********Restricted Units Vested** |
|-------------------|------------|--------------------------------------------------|
|              |       |                                             |
|              |       |                                             |
|              |       |                                             |

 

Thevesting of the Restricted Units shall be cumulative, but shall not exceed 100%of the Restricted Units.  If theforegoing schedule would produce fractional Units, the number of RestrictedUnits that vest shall be rounded up to the nearest whole Restricted Unit.

 

(b)           TheRestricted Units shall become fully vested in the event the Grantee’semployment with the Company terminates on account of (i) death, (ii) Disability,(iii) Retirement, or (iii) involuntary termination of employment bythe Company without Cause.  Retirement,Disability and Cause shall have the meanings given those terms in the Plan.

 

4.             Terminationof Restricted Units.  If the Grantee’semployment with the Company terminates for any reason, other than as describedin subparagraph 3(b) above, before the Restricted Units vest, any unvestedRestricted Units shall automatically terminate and shall be forfeited as of thedate of the Grantee’s termination of employment.  No payment shall be made with respect to anyRestricted Units that terminate as described in this Section 4.

 

5.             Paymentof Restricted Units.

 

(a)           When theRestricted Units vest in accordance with Section 3 above (the “VestingDate”), Pharmacopeiashall issue to the Grantee one share of Common Stock for each vested RestrictedUnit, subject to tax withholding as described below.  Payment shall be made within 30 days afterthe Vesting Date.

 

(b)           Allobligations of Pharmacopeia under this Agreement shall be subject to the rightsof Pharmacopeia as set forth in the Plan to withhold amounts required to bewithheld for any taxes, if applicable. The Grantee shall be required to pay to Pharmacopeia, or make otherarrangements satisfactory to Pharmacopeia to provide for the payment of, anyfederal, state, local or other taxes that Pharmacopeia is required to withholdwith respect to the Restricted Units. The Grantee may elect to satisfy any tax withholding obligation withrespect to Restricted Units by having shares of Common Stock withheld up to anamount that does not exceed the minimum applicable withholding tax rate forfederal (including FICA), state, local and other tax liabilities.

 

(c)           Theobligation of Pharmacopeia to deliver shares of Common Stock shall also besubject to the condition that if at any time the Committee shall determine inits discretion that the listing, registration or qualification of the CommonStock upon any securities exchange or under any state or federal law, or theconsent or approval of any governmental regulatory body is necessary ordesirable as a condition of, or in connection with, the issue of Common Stock,the Common Stock may not be issued in whole or in part unless such listing,registration, qualification, consent or approval shall have been effected orobtained free of any conditions not acceptable to the Committee.  The issuance of Common Stock to Granteepursuant to this

 

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Agreement is subject to any applicable taxes and otherlaws or regulations of the United States or of any state having jurisdictionthereof.

 

6.             DividendEquivalents.  Until such time as theRestricted Units are paid or forfeited, if any cash dividends are paid withrespect to shares of Common Stock, Pharmacopeia shall pay the Grantee, in cash,the amount of the dividend that would have been distributed if the RestrictedUnits credited to the Grantee’s account at the time of the dividend paymentwere shares of Common Stock, irrespective of whether such Restricted Units havevested pursuant to Section 3.  Thedividend equivalent payment shall be made within 30 days after the dividendpayment date.  In the event of a dividendor distribution payable in Common Stock or other property or areclassification, split up or similar event while Restricted Units areoutstanding, Pharmacopeia shall make appropriate adjustments, pursuant to thePlan, to the Restricted Units credited to the Grantee’s account.

 

7.             Change in Control.  Upon a Change in Control (as defined in thePlan), the outstanding Restricted Units shall become immediately and fullyvested, unless the Restricted Units are assumed by the successor corporationand are substituted with restricted stock units involving the common stock ofthe successor corporation with equivalent value and with the terms andconditions of the substituted restricted stock awards being no less favorablethan the Restricted Units granted hereunder. Substituted restricted stock units shall vest in full if the Grantee’semployment is terminated for any reason other than Cause or voluntarytermination within 18 months of the Change in Control.

 

8.             GrantSubject to Plan Provisions.  Thisgrant is made pursuant to the Plan, the terms of which are incorporated hereinby reference, and in all respects shall be interpreted in accordance with thePlan.  The grant and payment of theRestricted Units are subject to interpretations, regulations and determinationsconcerning the Plan established from time to time by the Committee inaccordance with the provisions of the Plan, including, but not limited to,provisions pertaining to (i) the registration, qualification or listing ofthe shares, (ii) changes in capitalization of Pharmacopeia and (iii) otherrequirements of applicable law.  TheCommittee shall have the authority to interpret and construe the RestrictedUnits pursuant to the terms of the Plan, and its decisions shall be conclusiveas to any questions arising hereunder.

 

9.             NoEmployment or Other Rights.  Thegrant shall not confer upon the Grantee any right to be retained by or in theemploy of the Company and shall not interfere in any way with the right of theCompany to terminate the Grantee’s employment at any time. The right of theCompany to terminate at will the Grantee’s employment at any time for anyreason is specifically reserved.

 

10.           NoShareholder Rights.  Neither theGrantee, nor any person entitled to receive payment in the event of the Grantee’sdeath, shall have any of the rights and privileges of a shareholder withrespect to shares of Company stock, until certificates for shares have beenissued upon payment of Restricted Units.

 

11.           Assignmentand Transfers.  Except as theCommittee may otherwise permit pursuant to the Plan, the rights and interestsof the Grantee under this Agreement may not be sold, assigned,

 

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encumbered or otherwise transferred except, in theevent of the death of the Grantee, by will or by the laws of descent and distribution.  In the event of any attempt by the Grantee toalienate, assign, pledge, hypothecate, or otherwise dispose of the RestrictedUnits or any right hereunder, except as provided for in this Agreement, or inthe event of the levy or any attachment, execution or similar process upon therights or interests hereby conferred, Pharmacopeia may terminate the RestrictedUnits by notice to the Grantee, and the Restricted Units and all rightshereunder shall thereupon become null and void. The rights and protections of Pharmacopeia hereunder shall extend to anysuccessors or assigns of Pharmacopeia and to Pharmacopeia’s parents,subsidiaries, and affiliates.  ThisAgreement may be assigned by Pharmacopeia without the Grantee’s consent.

 

12.           ApplicableLaw.  The validity, construction,interpretation and effect of this Agreement shall be governed by and construedin accordance with the laws of the State of Delaware, without giving effect tothe conflicts of laws provisions thereof. This Agreement is intended to be exempt from the requirements of section409A of the Code pursuant to the exemption applicable to short-term deferrals.

 

13.           Notice.  Any notice to Pharmacopeia provided for inthis Agreement shall be addressed to Pharmacopeia in care of the General Counselat 3000 Eastpark Boulevard, Cranbury, NJ  08512-3516, and any notice to the Grantee shall beaddressed to such Grantee at the current address shown on the payroll ofPharmacopeia, or to such other address as the Grantee may designate toPharmacopeia in writing.  Any noticeshall be delivered by hand or by a recognized courier service such as FedEx orUPS, sent by telecopy or enclosed in a properly sealed envelope

 

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addressedas stated above, registered and deposited, postage prepaid, in a post officeregularly maintained by the United States Postal Service.

 

IN WITNESS WHEREOF, Pharmacopeia has caused its dulyauthorized officers to execute and attest to this Restricted Stock UnitAgreement, and the Grantee has placed his or her signature hereon, effective asof the Date of Grant.

 

 
| Attest:              |   | PHARMACOPEIA,  INC. |
|----------------------|--------|---------------------|
|                 |   |                |
|                 |   |                |   |
|                 |   | By:                 |   |
| Corporate  Secretary |   |                | Name: |
|                 |   |                | Title: |

 

I hereby accept the award of Restricted Unitsdescribed in this Agreement, and I agree to be bound by the terms of the Planand this Agreement.  I hereby agree thatall of the decisions and determinations of the Committee with respect to theRestricted Units shall be final and binding.

 

 
|   |   |   |   |
|--------|--------|--------|--------|
| Date   |   | Name   |   |

 

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