**Exhibit 10.1**

*Portions of this Exhibit wereomitted and filed separately with the Secretary of the Commission pursuant toan application for confidential treatment filed with the Commission pursuant toRule 406 under the Securities Act of 1933. Such omissions are designated as***.*

**COLLABORATION AND LICENSE AGREEMENT**

**ThisCOLLABORATION AND LICENSE AGREEMENT** (the “Agreement”),effective as of the 25th day of February 2002 (the “Effective Date”), asmodified by the Addendum effective December 22, 2003 and the Second Addendumeffective December 1, 2004, and as further amended and restated effective as ofFebruary 8th, 2007 (the “Amendment Date”), is made by and between Pharmacopeia Drug Discovery, Inc. (assuccessor in interest to Pharmacopeia, Inc.), a Delaware corporation,having a principal place of business at 3000 Eastpark Boulevard, Cranbury, NewJersey 08512 (“Pharmacopeia”), and N.V. Organon, a Dutch Company limited byShares, having a principal place of business at Kloosterstraat 6, 5342 AB Oss,The Netherlands (“Organon”).

**BACKGROUND**

**WHEREAS**, Pharmacopeia has internal expertise in the screeningand optimization of compounds;

**WHEREAS**, Organon is interested in utilizing the expertise ofPharmacopeia in the identification of Lead Compounds and Optionable DevelopmentCandidates against certain Targets; and

## **WHEREAS,** Organon andPharmacopeia wish to enter into a Research Collaboration the objective of whichwill be for Pharmacopeia to deliver Lead Series (as defined herein); forPharmacopeia and Organon to collaboratively optimize certain of these LeadSeries into Optionable Development Candidates; for Organon to develop marketand sell Collaboration Products; and for Pharmacopeia to have certainco-development and co-commercialization rights.

**NOW THEREFORE,**in consideration of the mutual covenants andconditions hereinafter set forth in this Agreement, the Parties hereto agree asfollows:

**ARTICLE 1**

# **DEFINITIONS**

Asused herein, the following terms shall have the meanings set forth below:

1.1                                 “Affiliate”means any Person controlled by, controlling, or under common control with aParty. For the purpose of this Section 1.1 only, “control” shall refer to (a)the possession, directly or indirectly, of the power to direct the managementor policies of a Person, whether through the ownership of voting securities, bycontract or otherwise, or (b) the ownership,

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directly or indirectly,of at least fifty percent (50%) (or, if less, the maximum ownership interestpermitted by law) of the voting securities or other ownership interest of aPerson.

1.2                                 “AcquiredProgram” has the meaning set forth in Section 2.9(c1).

1.3                                 “Assay”collectively refers to the Primary Assay and the Secondary Assay.

1.4                                 “AssayImprovements” have the meaning set forth in Section 2.3.

1.5                                 “Back-upProgram” has the meaning set forth in Section 2.2(b)(iii).

1.6                                 “Buy-up”has the meaning set forth in Section 2.9.

1.7                                 “CollaborationProduct” means any therapeutic or prophylactic product that contains aSecond Research Term Lead Compound or Derivative Compound thereof or an OptionableDevelopment Candidate.

1.8                                 “ColumbiaLicense” means that certain license agreement effective as of July 16,1993, as amended and restated as of October 6, 1995, and as further amended andrestated effective as of July 1, 2003, entered by and between Pharmacopeia andthe Trustees of Columbia University in the City of New York and the Cold SpringHarbor Laboratory.

## 1.9                                 “CombinationProduct” means any therapeutic or prophylactic product that comprises two(2) or more active ingredients, at least one of which is a Second Research TermLead Compound or a Derivative Compound thereof or an Optionable DevelopmentCandidate.

1.10                           “ConfidentialInformation” as to each Party, means such Party’s confidential information,Patent Rights and Know-how, all the data and materials of that Party relatingto the Research Collaboration, the Target Information, Lead Compounds, OrganonCompounds, Derivative Compounds thereof and Collaboration Products, andincluding without limitation, all research, technical, clinical development,manufacturing, marketing, financial, personnel, and other business informationand plans of such Party.

1.11                           “Controls”or “Controlled” means possession of the ability to grant licenses orsublicenses without violating the terms of any agreement or other arrangementwith, or the rights of, any Third Party.

1.12                           “DerivativeCompound” means a compound which is a chemical modification of a Lead Compoundor other active structure disclosed by one Party to the other with respect to aparticular Target, having potency at a level to be determined by the JRC withrespect to such Target, which (i) results from a chemical synthesis programbased on a Lead Compound or other active structure disclosed by one Party tothe other, or (ii) is based on structure-function data relating thereto, or(iii) is based on Developed Technology. For clarification purposes, subject to***. These compounds will ***. Further, it is understood that DerivativeCompounds ***.

1.13                           “DevelopedTechnology” means any and all data or information whether tangible orintangible, including without limitation the Parties’ Know-how and PatentRights, which (i) is necessary to make or use Lead Compounds or DevelopmentCandidates, or to develop, make, use or sell Collaboration Products basedthereon, and (ii) which was conceived or reduced to

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practice during and inthe course of the Research Collaboration, by employees or agents of Organon,Pharmacopeia and any of their respective Affiliates, either alone or jointly.Developed Technology shall not include Pharmacopeia Base Technology, OrganonBase Technology or Excluded Technology.

1.14                           “DevelopmentCandidate” means any Lead Compound or Derivative Compound with respect towhich Organon has elected to pursue a GLP toxicity study.

1.15                           “DevelopmentProgram” has the meaning set forth in Section 2.9(b).

1.16                           “EconomicInterest” means the ***.

1.17                           “EMEA” means the European MedicinesEvaluation Agency and any successor entity thereto.

1.18                           “ExcludedTechnology” means any and all technical data or information, whethertangible or intangible, including without limitation Know-how and Patent Rightsowned or Controlled by Pharmacopeia or its Affiliates relating to the ColumbiaLicense, the creation or use of encoded combinatorial chemical compoundlibraries, tag or marker compound engineering and decoding, computer software,or high throughput screening assays.

1.19                           “ExclusivityPeriod” has the meaning set forth in Section 4.1.

1.20                           “FairMarket Value” means the cash consideration, which a willing seller wouldrealize from an unrelated willing buyer in an arm’s length sale of an identicalitem sold in the same quantity and at the same time and place of thetransaction.

1.21                           “FDA”means the U.S. Food and Drug Administration, or any successor thereto.

1.22                           “FirstCommercial Sale” means, with respect to a Collaboration Product in anycountry, the first sale for use or consumption by the general public of suchCollaboration Product in such country after all Regulatory Approvals have beenobtained in such country.

1.23                           “FTE” means a ***.

1.24                           “InactiveCompound” means a Pharmacopeia Compound that was screened in the ResearchCollaboration against a Target and was not found to show activity against suchTarget. This activity can be agonistic or antagonistic or modulatory in nature.

1.25                           “IND”means an Investigational New Drug Application, as defined in the U.S. Food,Drug and Cosmetic Act and the regulations promulgated thereunder for initiatingclinical trials in the United States, or any corresponding foreign application,registration or certification.

1.26                           “InitialResearch Term” means the period commencing on the Effective Date and endingon the earlier of (i) the designation of the eighth (8th) Lead Compound pursuant to Section 2.4,2.2(c)(i)(4) or 2.2(c)(i)(5), or (ii) February 25, 2007.

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1.27                           “InitialResearch Term Lead Compound” or “Initial Research Term Lead Series”means any Lead Compounds designated during the Initial Research Term pursuantto Section 2.4, 2.2(c)(i)(4) or 2.2(c)(i)(5). Such Lead Compounds shall beconsidered Transferred Programs as defined in this Agreement. Notwithstandingthe preceding sentences, “Initial Research Term Lead Compounds” shall excludeany Lead Compound selected for Lead Optimization pursuant to Section 2.2(b) hereof.Promptly following the conclusion of the Initial Research Term, the JRC’smeeting minutes shall be updated to reflect all Lead Series identified duringthe Initial Research Term.

1.28                           “JointResearch Committee” or “JRC” means the entity organized to supervisethe Research Collaboration and acting pursuant to Article 3.

1.29                           “Know-how” means all inventions,technology, or other information discovered or developed by or for a Party asof the Effective Date, or in connection with and during the Research Collaboration,whether or not patentable, constituting materials, methods, processes,techniques or data, necessary for the development, manufacture or use of LeadCompounds or Derivative Compounds, or for the manufacture, use or sale of aCollaboration Product.

1.30                          “Lead Compound” means aPharmacopeia Compound, other than a Non-Designated Lead Compound orNon-Designated Development Series, which meets the criteria set forth inSection 2.4 and is available for license to Organon pursuant to the terms and conditionsof this Agreement. For clarification purposes, subject to Section 4.5.3, it isunderstood that Organon can independently find compounds against the Targetfrom its own discovery activities. These compounds will not be designated asLead Compounds if Organon, as shown by contemporaneous documentation, hasdeveloped these compounds independently of the intellectual property describedin Section 1.12(i) - (iii). Further, it is understood that Lead Compounds withrespect to a Target shall not include a compound if information about suchcompound’s activity against the Target already was in the public domain.

1.31                           “LeadOptimization” means the work carried out by the Parties to produceOptionable Development Candidates from Lead Compounds as per Section 2.2(b).

1.32                           “LeadSeries” has the meaning set forth in Section 2.4.

1.33                           “Library”means any chemical compound library prepared by or on behalf of Pharmacopeiaand screened pursuant to the Research Collaboration.

1.34                           “LibraryCompound” means any compound that was, prior to the Effective Date, or is,at any time during the Research Term, contained in a Library.

1.35                           “MajorMarket Country” means the U.S., U.K., Germany, France, Spain, Italy, TheNetherlands, or Japan.

1.36                           “Manhour”shall mean the ***. Manhours shallinclude ***.

1.37                           “ManhourTariff” shall mean the ***. The ***. It is understood and agreed that the***.

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1.38                           “NDA”means a New Drug Application, as defined in the U.S. Food, Drug and CosmeticAct and the regulations promulgated thereunder, or any corresponding foreignequivalent with a Regulatory Agency.

1.39                           “NetSales” means the ***.

A“sale” ***. In the event that a ***. A “sale” ***. In the event that a ***

The sale of a ***. Allsales of ***. The sale of a ***. All sales of ***.

To calculate the ***.

1.40                           “Non-Active Compound” means any compound jointly conceived bythe Parties during the Second Research Term, which is not a Second ResearchTerm Lead Compound, Derivative Compound or Development Candidate, and withrespect to which the JRC has explicitly decided not to pursue research anddevelopment against the Target. It is understood and agreed that if ***.

1.41                           “Non-DesignatedDevelopment Series” has the meaning set forth in Section 2.2(b)(viii)(A).

1.42                           “Non-DesignatedLead Compound” has the meaning set forth in Section 2.4(c).

1.43                           “OptionFee” has the meaning set forth in Section 2.9.

1.44                           “Opt-out”has the meaning set forth in Section 2.9(d).

1.45                           “OptionableDevelopment Candidate” means a compound that was the subject of LeadOptimization work under this Agreement as per Section 2.2(b) that meets theDevelopment Candidate criteria defined by the JRC for the specific Target.

## 1.46                           “Organon Base Technology”means any and all technical data or information, whether tangible orintangible, including without limitation Organon’s Know-how and Patent Rights(i) ***, and (ii) ***.

1.47                           “OrganonCompound” has the meaning set forth in Section 2.5.

1.48                           “Party”means Pharmacopeia or Organon. Pharmacopeia and Organon shall be collectivelyreferred to as the Parties.

1.49                           “PatentCommittee” means that committee to be formed pursuant to Section 3.5.

1.50                           “Patent Rights”means any and all patents and patent applications (which shall be deemed toinclude certificates of invention and applications for certificates ofinvention) which as of the Effective Date or during the term of this Agreementare ***.

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## 1.51                           “Person” means anynatural person, corporation, firm, business trust, joint venture, association,organization, company, partnership or other business entity, or any governmentor agency or political subdivision thereof.

1.52                           “PharmacopeiaCompound” means a Library Compound or a compound identified by Pharmacopeiain the Research Collaboration.

1.53                           “Phase I,” “PhaseII” and “Phase III” means Phase I (or Phase I/II), Phase II (orPhase II/III) and Phase III clinical trials, respectively, in each case asprescribed by applicable FDA IND Regulations, or any corresponding foreignstatutes, rules or regulations.

## 1.54                           “Pharmacopeia BaseTechnology” means any and all technical data or information, whethertangible or intangible, including without limitation Pharmacopeia’s Know-howand Patent Rights (i) ***, and (ii) ***.

1.55                           “Pivotal Trial” means a clinical trial designed to establishefficacy sufficient to allow Regulatory Approval for marketing authorization.

1.56                           “Potential Lead Compound” has the meaning set forth in Section2.4(b).

1.57                           “PrimaryAssay” means on a Target-by-Target basis, the primary assay provided byeither Party for screening in the Research Collaboration.

1.58                           “Program Development Costs” means,with respect to any ***.

1.59                           “Project Team” has the meaning setforth in Section 3.1.

1.60                           “ProposedTarget” has the meaning set forth in Section 2.2(a).

1.61                           “RegulatoryAgency” means the FDA or the applicable department, bureau or othergovernmental regulatory authority in each country in the Territory involved inthe granting of Regulatory Approvals.

1.62                           “RegulatoryApproval” means any and all approvals (including price reimbursementapprovals), licenses, registrations, or authorizations of any RegulatoryAgency, necessary for the commercial marketing of a Collaboration Product.

1.63                           “ResearchCollaboration” means the research activities undertaken by the Partiespursuant to Article 2.

1.64                           “ResearchPlan” on a Target-by-Target basis, means all information relating to theParties’ respective activities with respect to a Target, including but notlimited to the Target Information. Minutes of JRC meetings, if signed by a JRCrepresentative of each Party, shall be deemed included within the ResearchPlan.

1.65                           “ResearchTerm” is defined in Section 15.2.

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1.66                           “ResearchYear One” means the period commencing at the end of the Start-Up Phase andending twelve (12) months thereafter.

1.67                           “ResearchYear Two” means the period commencing at the end of Research Year One andending twelve (12) months thereafter.

1.68                           “ResearchYear Three” means the period commencing at the end of Research Year Two andending twelve (12) months thereafter.

1.69                           “ResearchYear Four” means the period commencing at the end of Research Year Threeand ending twelve (12) months thereafter.

1.70                           “RevertedLead Compound” has the meaning set forth in Section 7.2.

1.71                           “SecondResearch Term” means the period commencing on the day after the end of theInitial Research Term, and ending five (5) years thereafter, unless earlierterminated pursuant to Section 15.3.3(c).

1.72                           “SecondResearch Term Lead Compound” or “Second Research Term Lead Series”means any Lead Compound other than an Initial Research Term Lead Compound.

1.73                           “SecondaryAssay” means on a Target-by-Target basis, one or more assays provided byeither Party, such as, for example, an assay for the characterization ofselectivity or in vitro efficacy of a Pharmacopeia Compound against a Target.

1.74                           “Start-UpPhase” means the period commencing on the Effective Date and ending six (6)months thereafter.

1.75                           “Sublicensee”as to each Party means a Person other than an Affiliate of a Party to whom hasbeen granted sublicense rights under the license granted each Party hereunder,which rights include at least the right to sell a Collaboration Product. Asused in this Agreement, “Sublicensee” shall also include a Third Party to whoma Party has granted a sublicense under this Agreement to distribute suchCollaboration Product, provided that such Third Party has the primaryresponsibility for marketing and promotion, at its expense, of suchCollaboration Product within countries in the Territory for which suchdistribution rights are granted, which marketing and promotional activities arenot subsidized directly or indirectly by that Party, such as, withoutlimitation, through a specific allowance or a guaranteed selling margin forsuch Third Party meant to cover its expenses. Third Parties that are permittedto manufacture or finish Collaboration Products for supply to a Party, itsAffiliates or Sublicensees are not “Sublicensees.”

1.76                           “SublicenseIncome” means, as it relates to Pharmacopeia, any consideration paid toPharmacopeia by each Sublicensee gaining rights pursuant to the provisions ofSection 5.6.2, such consideration including, without limitation, any income orcompensation received from Third Parties either as upfront payments, signingfees, milestone payments, as well as the Fair Market Value of any quid productor other non-cash consideration paid by each Sublicensee to Pharmacopeia.

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1.77                           “Target”has the meaning set forth in Section 2.2.

1.78                           “TargetInformation” means on a Target-by-Target basis, all information relating tothe identity of the Target, any modifications that Organon proposes to thestandard criteria for a Lead Compound set forth in Table 1, the chemistry andprotocol of the Primary Assay, any reference standards and Secondary Assay tobe run at Organon or transferred to Pharmacopeia as the case may be, and anyother enabling information relevant to the conduct of the activities of theParties hereunder. “Target Information” shall also include on aTarget-by-Target basis, any relevant Organon or Third Party patent applicationor patent of which Organon is aware, as well as the status of Organon’s effortsin connection with its development of compounds against a Target. For theavoidance of doubt, compound structure information shall not be part of TargetInformation.

1.79                           “Territory”means all the countries of the world.

1.80                           “ThirdParty” means any Person other than Organon, its Affiliates or Sublicenseesand Pharmacopeia or its Affiliates.

1.81                           “TransferredPrograms” means those compounds referred to in Section 2.2(c)(i) for whichPharmacopeia has agreed, pursuant to this Agreement, to forgo milestone androyalty payments from Organon as set forth in Section 2.2(d). A list of thetargets applicable to such Transferred Programs as of the Amendment Date isattached hereto as Exhibit B.

**ARTICLE 2**

**RESEARCH COLLABORATION**

2.1                                 Goalsof Research Collaboration.

2.1.1                        General.Each Party shall (i) undertake an interactive, cooperative role in the ResearchCollaboration with the other Party as set forth in the Research Plan, and suchother activities which from time to time, the JRC decides are necessary for thecontinuing success of the Research Collaboration; (ii) use commerciallyreasonable efforts to diligently perform its activities pursuant to theResearch Plan, including, without limitation, by using personnel withsufficient skills and experience together with sufficient equipment andfacilities, to carry out such Party’s obligations under the ResearchCollaboration and to accomplish the objectives of the Research Collaboration;and (iii) conduct the Research Collaboration in good scientific manner, and incompliance in all material respects with all requirements of applicable laws,rules and regulations, and all other requirements of any good laboratorypractices to attempt to achieve its objectives efficiently and expeditiously.

2.1.2                        Activitiesof Pharmacopeia. In consideration for the funding provided by Organon,Pharmacopeia shall:

(a)utilize the appropriate screening and optimization resources to screen ***,with the ***,

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(b)utilize the appropriate screening and optimization resources to screen ***.(The delivery of ***). It is expected that the foregoing can be accomplishedthrough the screening of Pharmacopeia Compounds against *** as provided herein.

(c)during the Second Research Term, at any one time, pursue an ***, selected bythe Parties as set forth in Section 2.2(b) below, ***, these to be referred toas “Optionable Development Candidates”.

(d)provide Organon with the necessary feedback on the progress of its screeningand optimization efforts to enable Organon to provide Pharmacopeia the supportit requires to conduct its activities hereunder.

(e)subject to Section 15.3.3(c), continue to perform diligently under theAgreement during the Second Research Term even after achievement of the goalsspecified in Section 2.1.2(b) and (c).

(f) atits sole discretion, suggest and contribute Targets for consideration by theJRC under the terms of this Agreement.

2.1.3                        Activitiesof Organon. Organon Shall:

(a)during the Initial Research Term, identify and make available to Pharmacopeia***

(b)during the Second Research Term, identify and make available to Pharmacopeia***, to enable Pharmacopeia to select a subset of such targets that shallbecome the focus of the screening activities of Pharmacopeia hereunder. Organonshall make available to Pharmacopeia ***. With each such target, Organon shall alsoprovide to Pharmacopeia all pertinent Target Information and key reagentsessential to run the Assay. In addition, with respect to each Target, Organonshall make available to Pharmacopeia any Secondary Assay that (i) is requiredto confirm that a Pharmacopeia Compound potentially meets the criteria for aLead Compound and (ii) is not already in Pharmacopeia’s possession. In additionto the foregoing, Organon shall support the Research Collaboration, by makingavailable to Pharmacopeia any other information, except for the structureinformation regarding Organon Compounds (as defined in Section 2.5) that isessential for Pharmacopeia to continue its activities hereunder, and ifrequested by Pharmacopeia, Organon shall ***.

(c)with respect to each Lead Compound or Lead Series selected by the Parties forLead Optimization as set forth in Section 2.2(b) below, ***.

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2.1.4                        Subcontracting. A Party (hereinafter the “SubcontractingParty”) may engage Third Party subcontractors (including contract researchorganizations) to perform certain of its obligations under this Agreement. AnyThird Party subcontractor to be so engaged to perform a Party’s obligations setforth in this Agreement shall have sufficient expertise to meet thequalifications typically required by such Subcontracting Party for theperformance of work similar in scope and complexity to the subcontractedactivity. The activities of any such Third Party subcontractors shall beconsidered activities of the Subcontracting Party under this Agreement. ASubcontracting Party shall be responsible for ensuring compliance by its ThirdParty subcontractors, if any, with the terms of this Agreement, includingobligations of confidentiality. Further, the Subcontracting Party shall ensurein any subcontracting arrangement that it obtains sole ownership of allinventions, data and related intellectual property rights made or developed bysuch Third Party subcontractor involving the manufacture or use of any Target,Lead Compound, Derivative Compound, Optionable Development Candidate, orCollaboration Product.

2.2                                 Selectionof Targets.

(a)                                  Selectionof Targets for Screening. As provided in Section 2.1.3, during the InitialResearch Term and the Second Research Term, Organon shall make available toPharmacopeia respective sets of ***, from which Pharmacopeia shall select asubset that will become the focus of the Parties’ activities in the ResearchCollaboration. At any one time, Organon shall make available ***. Each targetmade available to Pharmacopeia shall be referred to as a “Proposed Target.”Pharmacopeia shall inform Organon if it has previously screened against aProposed Target, or is prevented from screening a Proposed Target pursuant toThird Party obligations. For each Proposed Target, Organon shall make availableto Pharmacopeia the Target Information, and such other information asPharmacopeia may reasonably request. For each Proposed Target, Pharmacopeiashall review and, if need be, discuss with Organon the Target Information. Foreach Proposed Target, Pharmacopeia shall assess whether the criteria for LeadCompound designation set forth in Section 2.4(a) is applicable to such ProposedTarget and shall determine whether such criteria need to be modified to enablePharmacopeia to accomplish the goals of the Research Collaboration with respectto such Proposed Target. If the Target Information for any given ProposedTarget requires a modification of the criteria in Table 1, the JRC shalldiscuss such modification and shall redefine such criteria. Following suchmodification, if any, Pharmacopeia shall notify Organon whether it accepts theProposed Target, and following such acceptance, the Proposed Target shall bedeemed a “Target” for purposes of this Agreement. Any target which is notselected by Pharmacopeia as it is made available by Organon may be selected ata later date by Pharmacopeia subject to approval by Organon, which approvalshall not be unreasonably withheld, and subject to the procedure set forth inthis Section.

(b)                                 Selection ofLead Compounds for Lead Optimization. During theSecond Research Term, Organon shall propose to Pharmacopeia Lead Optimizationprograms based on Lead Series designated pursuant to Section 2.4, with the goalof optimizing such Lead Series so as to be suitable for designation asOptionable Development Candidates, provided that ***. Organon shall endeavor toenable Pharmacopeia to ***. If ***. If Organon is unable to enable Pharmacopeiato conduct any Lead Optimization as set forth above, this shall not result inany change in the payments due from Organon to Pharmacopeia under thisAgreement.

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(i) Development Candidate Criteria. Forany program which is selected for Lead Optimization activities under thisAgreement, specific Development Candidate criteria shall be discussed andapproved by the JRC. The Development Candidate Criteria will, in general,include the items shown in Exhibit D. The JRC may, at any time, review theprogress of the specific Lead Optimization program. In such an event, the JRCmay determine that the Research Collaboration with respect to a particularcompound has, notwithstanding the express criteria set forth and approved bythe JRC, on balance achieved a stage of development consistent with suchcriteria, and therefore, such compound shall be designated as an OptionableDevelopment Candidate.

(ii)  Pharmacopeia Co-development / Co-promotionOption. With respect only to the Optionable Development Candidates, Section 2.9will apply.

(iii)  Back-up Development Candidates. AfterPharmacopeia has exercised the Buy-up with respect to an Optionable DevelopmentCandidate pursuant to Section 2.9, the Parties may further agree to initiate aprogram, independently of any Lead Optimization program, to produce a back-updevelopment candidate with respect to the same Target as such OptionableDevelopment Candidate (a “Back-up Program”). Prior to reaching such agreement,the Parties shall have a good faith discussion concerning the strategy for suchproposed Back-up Program, including a review of all potential startingcompounds. The Parties will agree where and how the work with respect to suchBack-up Program will be carried out. Any such Back-up Program (a) shall be ***;(b) shall be ***; but (c) shall not be *** under this Agreement.

(iv)  Pharmacopeia Co-development / Co-promotion ofBack-up Development Candidates. In the event that a Back-up Program results inthe designation of a back-up Development Candidate pursuant to Section2.2(b)(iii), further development and commercialization of such back-upDevelopment Candidate shall be handled in accordance with Section 2.9 (i.e.,*** pursuant to Section 2.9), except that such back-up Development Candidateshall ***.

(v)  Pharmacopeia’s Decision not to Pursue Back-upProgram. If Pharmacopeia decides not to participate in a Back-Up Programpursuant to Section 2.2(b)(iii) with respect to a particular Target, thenOrganon may either, at Organon’s sole option:

(A)  ***.  In the event such***. ***; or

(B) ***. It is understoodand agreed that any decision by Pharmacopeia not to exercise the Buy-up withrespect to such a back-up Development Candidate pursuant to Section 2.2(b)(v)shall not affect Pharmacopeia’s continued joint development and promotion, withOrganon, of the previous Optionable Development Candidate active against thesame Target pursuant to Section 2.9.

(vi)  INTENTIONALLY OMITTED.

(vii)  INTENTIONALLY OMITTED.

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(viii)  Discontinuationof a Lead Optimization Program.

(A)  The JRC may, at any time, agree to terminatea Lead Optimization program. For a ***. During the ***. If ***. Inthe event that ***. In the event that ***.

(B)  In the event the JRC fails to reach agreementto terminate a particular Lead Optimization program, ***. In such case, theLead Series associated with such program shall be considered and treated as“Non-Designated Lead Compounds” pursuant to Section 2.4(c), except that anysuch *** shall be subject to the following special conditions: (1) ***; and (2)***. Notwithstandingthe foregoing, at any time beginning ***.  If ***. The Partiesmay also discuss including the program under Section 2.2(b).

(C)  ResearchUses After Termination of a Lead Optimization Program. Each Party mayretain in its internal compound collection samples of any compound that was (1)jointly conceived by the Parties and (2) synthesized in the course of a Lead Optimizationprogram with respect to any Target. After the termination of such LeadOptimization program, either Party may *** pursuantto the Research Collaboration. For example, such ***.Notwithstanding the foregoing, neither Party shall be obligated to supplysamples of any such compound to the other Party. Further, neither Party grantsto the other Party any rights under any intellectual property Controlled bysuch Party with respect to the research and development contemplated by thisSection 2.2(b)(viii)(C). For the avoidance of doubt, reference to the ***.

(c)                                  OngoingStatus of Targets Screened by Pharmacopeia during the Initial Research Term.Effective as of the Amendment Date,

(i)  The following will be considered TransferredPrograms:

(1)All Lead Series transferred under programs for the Targets specificallyidentified in Exhibit B, for which the ***;

(2)Those compounds disclosed or physically transferred under programs for thetargets specifically identified on Exhibit B as ***;

(3)The *** compounds identified by Pharmacopeia during the Initial Research Term;

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(4)  Subject to the terms of this Agreement, inthe event that (i) Pharmacopeia has *** and (ii) the ***. Organon shall havethe right to *** under this Section.

(5)  Subject to the terms of this Agreement, inthe event that (i) Pharmacopeia has *** and (ii) the ***

(x) ***; or

(y) ***.

(z)*******.

(6) Any programs transferred under Section15.3.3(c).

(ii)Should any current Research Collaboration program****be subject to issue resolution pursuant to Sections3.4 or 16.19, any decision under Section 2.2(c)(i)(4) or 2.2(c)(i)(5) will bedelayed until resolution of the issue with respect to such program.

(iii)  On a Target-by-Target basis, and subject tothe terms of this Agreement, including 2.2(c)(ii), all Targets screened byPharmacopeia during the Initial Research Term, with respect to which no LeadCompound “delivery payment” has been paid pursuant to Section 7.1.2, and whichPharmacopeia is continuing to investigate as of the end of the Initial ResearchTerm, may continue to be the subject of Pharmacopeia’s activities under theAgreement during the Second Research Term, unless Organon provides Pharmacopeiawith written notice to the contrary within five (5) business days following theend of the Initial Research Term.

(d)  Transferred Programs. Effective as of the Amendment Date, Pharmacopeia hereby waives its right toreceive further compensation with respect to Transferred Programs or anycompounds derived therefrom made by Organon based on a Transferred Program,subject to the following terms:

(i) Pharmacopeia shall have no further obligation to make any furtherexpenditures with respect to the Transferred Programs.

(ii)Pharmacopeia agrees that it shall have no further rights to use the TransferredPrograms or to file any patent applications with respect thereto.

(iii)All such programs are hereby transferred to Organon, and Organon shall berelieved of any obligation with respect to Transferred Programs under this orany other previous agreement.

(iv) Pharmacopeia shall provide Organon with any information, materials or datareasonably available and reasonably necessary for Organon to continue thedevelopment or commercialization of the Transferred Programs.

(v)Organon’s licenses to the Transferred Programs under the agreements listed inExhibit B are hereby replaced by the following:  Subject to Section2.2(d)(vii), Pharmacopeia hereby grants to Organon a ***.

(vi)  Pharmacopeia further agrees ***.

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(vii) The only licensegranted to Organon with respect to the Transferred Programs is that set forthin Section 2.2(d)(v), above. The only *** is that set forth in Section2.2(d)(vi), above. Nothing in this Section 2.2(d) shall be construed to grant***.

### 2.3                                 Assay Development.  Itis anticipated that the Assay has been developed and validated by Organon,Pharmacopeia or a Third Party prior to validation by Pharmacopeia. An Assayshall be considered validated if it meets the criteria set forth in Exhibit A.On a Target-by-Target basis, Pharmacopeia shall provide ***. Insofar as theAssay requires additional development by Pharmacopeia or the use of any keyreagents that have not been supplied by Organon, the Parties shall ***. TheParties agree that all improvements and modifications directly relating to theAssay (collectively the “Assay Improvements”) made solely by Pharmacopeia shallbe owned by Pharmacopeia. All Assay Improvements that are made jointly by theParties shall be jointly owned by the Parties. Each Party agrees to grant tothe other Party license rights in its interest in Assay Improvements as providedherein.

2.4                                 Lead Compounds.

(a)                                  For each Target, Pharmacopeia willendeavor to identify those Pharmacopeia Compounds that meet the criteria setforth in Table 1. The Lead Compound criteria in Table 1 shall apply uniformlyon a Target-by-Target basis. If the characteristics of the Proposed Targetwarrant it, the criteria in Table 1 may be amended by the JRC to accommodatesuch characteristics, provided, however, that on balance the setof criteria for any Lead Compound for a Proposed Target shall not be made morestringent than the criteria set forth in Table 1. In addition, the JRC willdetermine which criteria are considered to be essential and which criteria needto be substantially met. For those criteria that need to be substantially met,the JRC will define the boundaries within which certain materialcharacteristics of a Lead Compound at least should fall. It is understood byboth Parties that the boundaries of one of the criteria might depend on theother criteria. The Parties agree that if a Pharmacopeia Compound meets all thecriteria set forth in Table 1 (as it may have been amended by the JRC), suchPharmacopeia Compound shall be automatically designated as a “LeadCompound.”  Without limitation of theforegoing, the JRC may, at any time, review the progress of the ResearchCollaboration. In such an event, the JRC may determine that, with respect toany Pharmacopeia Compound, the Research Collaboration with respect to suchPharmacopeia Compound has, notwithstanding the express criteria set forth inTable 1, on balance achieved a stage of development consistent with suchcriteria, and therefore, such Pharmacopeia Compound shall be designated as aLead Compound.

# **Table 1**

| Criteria | ** ** | ** ** |
|----------|------------|------------|
| ***      |       | ***        |
| ***      |       | ***        |
| ***      |       | ***        |
| ***      |       | ***        |
| ***      |       | ***        |
| ***      |       | ***        |
| ***      |       | ***        |
| ***      |       | ***        |
| ***      |       | ***        |
| ***      |       | ***        |

 

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(b)                                 On an on-going basis, throughout theResearch Term,  Pharmacopeia shallconduct screening of its Libraries and optimization efforts to identify PharmacopeiaCompounds that have the potential to meet the criteria for a Lead Compound(each such Pharmacopeia Compound a “Potential Lead Compound”). On an on-goingbasis, Organon shall ***. To enable Organon to ***. The *** and for no other purpose. Following the receipt of a *** for any purpose except as set forthherein. Organon shall ***. The Parties agree that if Organon is unable to provide ***. If no ***. On an as needed basis, the Parties may agree on acommercially reasonable set of additional activities to be carried by either orboth Parties to enable the designation of one or more such Potential LeadCompounds as a Lead Compound. If a Potential Lead Compound is designated as aLead Compound, following such designation, Pharmacopeia shall deliver toOrganon the structure and enabling synthetic information with respect to suchLead Compound. In addition, Pharmacopeia will provide all data it has developedin the course of developing such Lead Compound which is reasonably required toenable Organon to further optimize such Lead Compound. On a Target-by Targetbasis, the series of Potential Lead Compounds having activity with respect to aparticular Target and that have been designated as a Lead Compound shall form a“Lead Series.”

(c)                                  Atany time during the Research Term, Pharmacopeia may elect to discontinue itsactivities with respect to a particular Target, and may elect to proceed withits activities with respect to the remainder of the Targets. If Pharmacopeiaelects to discontinue its activities with respect to a particular Target, itwill notify Organon of its decision not to continue, the reason fordiscontinuing and the stage of the project at the moment of discontinuation. Inthe event that prior to discontinuing its activities, Pharmacopeia hasidentified one or more Potential Lead Compounds with respect to a particularTarget and such Potential Lead Compounds failed to meet the criteria for a“Lead Compound,” Organon shall ***

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Such Potential LeadCompounds shall be referred to as “Non-Designated Lead Compounds” and ***. Inaddition, the provisions of ***.

2.5                                 OrganonCompounds. Subject to Section 4.5.3, it is understood that Organon may beconducting its own internal screening and optimization activities with respectto one or more targets which have been selected as a Target as providedhereunder. Organon shall keep Pharmacopeia informed on a consistent basis ofthe foregoing activities. If Organon elects to *** shall be designated as an“Organon Compound”. On a Target-by-Target basis, the Parties agree that thedesignation of an Organon Compound shall not be a factor in the designation ofa Lead Compound. Further, such designation shall not, by itself, cause, nor bea factor in the decision for, Pharmacopeia to cease activities with respect toa Target pursuant to Section 2.4(c).

2.6                                 Designationof Development Candidates other than Optionable Development Candidates.During the period that Organon has a license under Section 5.4 to a LeadCompound, Organon may designate any Second Research Term Lead Compound orDerivative Compound, that is not the subject of a Lead Optimization program, asa Development Candidate and may commence GLP toxicity studies. Organon shallprovide written notice to Pharmacopeia to such effect and such initiation ofGLP toxicity studies shall trigger the milestone payment for initiation of GLPtoxicity studies set forth in Section 7.1.

2.7                                 ThirdParty Licenses. Pharmacopeia may request that Organon acquire rights fromThird Parties to technology necessary for the conduct of the activities of theParties with respect to a particular Target. The JRC shall endeavor to minimizethe need for such licenses; provided, however, if the JRC isunable to agree whether a particular license is necessary to conduct theactivities of the Parties with respect to a particular Target, Pharmacopeia maydecline to screen against such Target. If Pharmacopeia declines to screenagainst such Target, this shall not be considered a breach of this Agreement byPharmacopeia or a ground for termination of the Research Collaboration byOrganon.

2.8                                 Recordsand Reports. Each Party shall maintain records in sufficient detail and ingood scientific manner appropriate for patent and FDA purposes and so as toproperly reflect all work done and results achieved in the performance of thisAgreement (including all data in the form required under any applicablegovernmental regulations and as directed by the JRC). Such records shallinclude applicable books, records, reports, research notes, charts, graphs,comments, computations, analyses, recordings, photographs, computer programsand documentation thereof, samples of materials and other graphic or writtendata generated in connection with the Research Collaboration, including anydata required to be maintained pursuant to applicable governmental regulations.During the Research Term, each Party shall respond to reasonable requests fromthe other for information based on such records.

2.9                                 PharmacopeiaCo-development / Co-promotion Option.     Withrespect to ***. The ***. With respect to each Optionable Development Candidatefor which Pharmacopeia *** hereunder, the following provisions shall apply:

(a)  Pharmacopeia shall ***;

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Milestoneand Royalties:  Subject to Section2.9(d), once Pharmacopeia has ***, Pharmacopeia will ***.

(b)  Activities. During the period afterPharmacopeia *** pursuant to this Section 2.9, Organon will ***.

(c)  FinancialSupport. The Parties shall ***, as follows. Organon shall ***.Pharmacopeia shall ***.

TheParties shall ***.

(c1)At any time after ***.

(c2)  Pharmacopeia’s Prior Decision not to ***. IfPharmacopeia did not ***.

(d)  *** by Pharmacopeia. At any time after ***. For the avoidanceof doubt, Pharmacopeia shall ***. Notwithstanding the foregoing, the provisionsspecified in Section ***.

(e)  *** byPharmacopeia. At any time after ***.

(f)  Cessation of Development ***. In theevent ***. This Provision shall not apply to an Optionable DevelopmentCandidate against a Target in which the parties are ***.

(g)  Co-Promotion. In the event thatPharmacopeia has not ***. Any additional terms of such ***. Further, all ***. The Parties agree that the Development Programshould continue even in case a ***, but the Parties shall use ***. In the eventthat such ***.

(h)  Governanceand Diligence. *** relating to development and commercialization of the applicableOptionable Development Candidate (or corresponding Collaboration Product) shallbe made ***, which shall ***, and shall ensure that its Affiliates,Sublicensees and subcontractors ***. *** shall provide *** with ***. At alltimes during such joint development and commercialization, each Party shallhave the right to ***. Such right to *** shall be subject to ***.

**ARTICLE 3**

# **JOINT RESEARCH COMMITTEE; JOINT PATENT COMMITTEE**

### 3.1                                 Joint ResearchCommittee. Organon and Pharmacopeia agree to establish a Joint ResearchCommittee (“JRC”) to oversee, review, manage and direct the ResearchCollaboration, and, in coordination with the Patent Committee, provide advicein connection with intellectual property issues relating to the DevelopedTechnology. The responsibilities of the JRC shall

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include: (i) monitoringand reporting the progress of the Research Collaboration and ensuring open andfrequent exchange between the Parties; (ii) establishing criteria for theselection of Lead Compounds and/or Optionable Development Candidates for eachTarget pursuant to Section 2.4, (iii) resolving any conflicts between theParties, (iv) approving and administering the Research Plan, (v) coordinatingwith the Patent Committee all patent activities as they relate to the resultsof the Research Collaboration, and in keeping with the overall patent strategydelineated by the Patent Committee, (vi) selecting Lead Compounds for LeadOptimization during the Second Research Term, (vii) appointing a project teamto coordinate the day-to-day conduct of each Lead Optimization program (in eachcase, the “Project Team”), with oversight by the JRC and subject to JRCapproval of all key Project Team decisions, (viii) designating OptionableDevelopment Candidates, and recording each such designation in the JRC’smeeting minutes, (ix) deciding whether/when to terminate a Lead Optimization program without designating an OptionableDevelopment Candidate, and planning in advance for a successor LeadOptimization program, and (x) setting a *** with respect to each Target.

## 3.2                                 Membership. TheJRC shall include *** of each of the Parties, and each Party’s representativesshall be selected by that Party. Each Party may replace its representatives atany time, upon written notice to the other Party. From time to time, the JRCmay establish subcommittees, to oversee particular projects or activities, andsuch subcommittees will be constituted as the JRC determines, in its solediscretion.

## 3.3                                 Meetings andMinutes. During the Research Term, unless otherwise agreed to by theParties, the JRC shall meet ***, or more frequently as agreed by the Parties,at such locations or by such teleconferencing means as the Parties maydetermine from time to time. In addition to regularly scheduled meetings, theJRC representatives will communicate regularly by telephone, electronic mail,facsimile and/or videoconference. Other representatives of Pharmacopeia orOrganon may attend JRC meetings as nonvoting observers. Each Party shall beresponsible for all of its expenses associated with attending the JRC meetings.Pharmacopeia shall prepare written minutes of each JRC meeting and shallprepare a written record of all JRC voting and decisions, whether made at a JRCmeeting or otherwise. The written minutes of each JRC meeting and the writtenrecord of all JRC voting and decisions shall be submitted to Organon forreview, and upon signature by Organon, shall become final.

## 3.4                                 Decision-Making.Decisions of the JRC shall be made ***, and ***. In the event that *** withinthe JRC, the matter shall be referred to ***. In the event ***. In the eventthat ***. If such individuals cannot resolve such dispute, then such disputeshall be subject to the dispute resolution provisions set forth in Section16.19.

## 3.5                                 Patent Committee.Upon recommendation of the JRC, the Parties shall form a patent committee(“Patent Committee”) to be in existence as long as Patent Rights within theDeveloped Technology are being filed and/or prosecuted. Each Party shalldesignate ***, as its representatives on the Patent Committee. The PatentCommittee shall be responsible for recommending patent filings and coordinatingpatent-related matters, including, but not limited to, the determination ofinventorship according to U.S. Patent Law, and the preparation, filing andprosecution of patent applications. Any disputes of the Patent Committee duringthe Research Term shall be handled pursuant to Section 3.4. Any disputes of thePatent Committee after the end of the Research Term shall be handled pursuantto Section 16.19. Unless otherwise

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agreed by the Parties,the Patent Committee shall meet ***. Such meetings shall be held at mutuallyagreed times and locations. Each Party shall bear its own expenses associatedwith such meetings and the activities of the Patent Committee; provided,however, that each Party shall ***.

**ARTICLE 4**

# **EXCLUSIVITY**

4.1                                 Target.Subject to Section 4.5.2, during the ***. On a Target-by-Target basis, the ***.Further, Pharmacopeia ***.

4.2                                 Useof Libraries. Except as provided herein, Organon shall have no exclusivitywith respect to any Library or any Pharmacopeia Compound. It is understood thatthe Libraries are and will be regularly used by Pharmacopeia and may have beenor may be provided to Third Parties for screening. Pharmacopeia shall have theright to screen the Libraries during the Research Term or thereafter on its ownbehalf or on behalf of Third Parties, subject to the exclusivity provisions inSection 4.1 above.

4.3                                 PhysicalOwnership. Pharmacopeia shall retain physical ownership of the tangibleproperty embodied in all Libraries. Organon shall retain physical ownership ofall tangible material provided by Organon to Pharmacopeia hereunder. Anytangible material provided by Organon to Pharmacopeia shall only be used forthe purposes of the Research Collaboration.

4.4                                 Development.

4.4.1  For as long as Organon is ***, Pharmacopeiaagrees ***.

4.4.2  For as long as Organon or the Parties are***.

4.4.3  For purposes of clarity, it is understoodthat the restrictions set forth in Sections 4.4.1 and 4.4.2 shall not apply toany ***, and further shall not apply to any activities permitted under Section *** above.

4.5                                 OtherRestrictions on Targets.

4.5.1   General Restrictions. Pharmacopeia shallnot use Organon Base Technology relating to any Target for any purpose otherthan fulfillment of Pharmacopeia’s responsibilities with respect to LeadCompounds and Collaboration Products under this Agreement. Organon shall notuse Pharmacopeia Base Technology relating to any Target for any purpose otherthan fulfillment of Organon’s responsibilities with respect to Lead Compoundsand Collaboration Products under this Agreement.

4.5.2   GeneralResearch Use of Targets. Subject to Section 4.5.1, both Organon andPharmacopeia shall be free to use any Target for general research purposes(e.g., basic biological research, performance of counterscreens and the like)outside the scope of this

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Agreement,provided that such use does not materially impair the commercial value of anyprogram conducted pursuant to the Research Collaboration.

4.5.3  FurtherObligations During Lead Optimization . Subject to Section 4.5.2, duringsuch time as any Lead Optimization activities are being conducted in theResearch Collaboration pursuant to a Research Plan with respect to any Target, neither Pharmacopeia nor Organon shall, ***.If, at the time of initiation of Lead Optimization activities with respect to aparticular Target, either Party is ***. Notwithstanding the precedingsentences, if, in the course of a Party’s work outside the ResearchCollaboration on a target not included in the Research Collaboration, a ***.If, at any time during the course of such optimization with respect to thecombination of the Target and the non-Research Collaboration target, the primaryactivity of any of the compounds is found to be ***. If the Party wishes tocontinue to *** pursuant to this Agreement.

**ARTICLE 5**

**LICENSES**

5.1                                 OrganonBase Technology; Regulatory Filings. Organon shall own all rights, titleand interest in and to Organon Base Technology and in all Regulatory Filings.

5.2.                              DevelopedTechnology. Subject to the licenses expressly granted hereunder, ***.Pharmacopeia shall own ***.

5.3                                 PharmacopeiaBase Technology. Pharmacopeia shall own all rights, title and interest inand to Pharmacopeia Base Technology.

5.4.                              Licenses.Subject to the terms and conditions of this Agreement, upon the designation ofa Lead Compound, on a Lead Compound-by-Lead Compound basis, andTarget-by-Target basis, ***. The foregoing license provides Organon ***. Unlessearlier terminated pursuant to this Agreement, this license grant shall remainin effect for the time period set forth in and subject to the provisions setforth herein, and so long as *** hereunder.

5.5                                 ResearchLicense. Subject to the terms and conditions of this Agreement, ***provided herein.

Subject to theterms and conditions of this Agreement, *** provided herein.

5.6                                 OtherLicenses.

5.6.1                        Licenseto Non-Designated Lead Compounds, Non-Designated Development Series andcorresponding Products. Subject to the terms and conditions of thisAgreement, ***. The provisions of this Section shall survive termination orexpiration of this Agreement. The license granted pursuant to this Sectionunder the Organon Base Technology shall not include *** pursuant to the termsof this Agreement. In exchange for the licenses granted by Organon in thisSection, in the event that Pharmacopeia ***. Organon shall inform Pharmacopeia in writing of ***. If Organon ***.

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5.6.2                        Licenseto Reverted Lead Compounds and Corresponding Products.

(a)                                  Uponthe request of Pharmacopeia and subject to the terms and conditions of thisAgreement, ***. Such a license shall be subject to the payment obligationsprovided in Section 8.2.2.

(b)                                 IfOrganon is ***. To the extent that there will be an ***. To the extent thatthere will be an ***. Upon Pharmacopeia’s written request, not to beunreasonably denied by Organon, Organon shall allow Pharmacopeia access to alldata and information (including but not limited to its regulatory filings)reasonably required by Pharmacopeia in connection with its development effortsrelating to such Reverted Lead Compound.

5.7                                 Sublicenses.

5.7.1                        Subject tothe terms and conditions of this Agreement and except as set forth herein,Organon shall have the right to sublicense the rights granted to it in Section5.4, provided that Organon shall provide Pharmacopeia with at least thefollowing information with respect to each Sublicensee: (i) the identity of theSublicensee; (ii) a description of the Collaboration Product, and the rightsgranted to the Sublicensee; and (iii) the territory in which the CollaborationProduct will be sold. Each such sublicense shall be consistent with all theterms and conditions of this Agreement, and shall be subject to the priorconsent of Pharmacopeia, which consent shall not be unreasonably withheld.Organon shall remain primarily liable to Pharmacopeia for all of each suchSublicensee’s applicable financial and other obligations under the sublicense.No sublicense granted by Organon may be assigned, transferred or furthersublicensed to any Third Party without the prior written consent ofPharmacopeia, which consent shall not unreasonably be withheld.

5.7.2                        Subject tothe terms and conditions of this Agreement and except as set forth herein,Pharmacopeia shall have the right to sublicense the rights granted to it inSection 5.6, provided that Pharmacopeia shall provide Organon with at least thefollowing information with respect to each Sublicensee: (i) the identity of theSublicensee; (ii) a description of the Collaboration Product, and the rightsgranted to the Sublicensee; and (iii) the territory in which the CollaborationProduct will be sold. Each such sublicense shall be consistent with all theterms and conditions of this Agreement, and shall be subject to the priorconsent of Organon, which consent shall not be unreasonably withheld.Pharmacopeia shall remain primarily liable to Organon for all of each suchSublicensee’s applicable financial and other obligations under the sublicense.No sublicense granted by Pharmacopeia may be assigned, transferred or furthersublicensed to any Third Party without the prior written consent of Organon,which consent shall not unreasonably be withheld.

5.7.3                        Thefollowing procedure shall apply to a sublicense being granted by either Partyhereunder:  Following the granting of thesublicense, the sublicensee shall covenant that it will fully perform theapplicable obligations of the sublicensor under this Agreement. In addition,the sublicensee shall represent and warrant that it will comply with allapplicable laws and regulations in carrying out its obligations under thisAgreement, including all relevant antitrust and competition laws. Evidence ofsuch covenant and representation shall be provided to the non-sublicensingparty within ten (10) days following the effective date of the sublicensegrant.

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5.8                                 ThirdParty Rights.

### 5.8.1                        Pharmacopeia Third PartyActivities. It is understood that Pharmacopeia is in the business ofproviding libraries to Third Parties, and that Pharmacopeia will grant suchThird Parties ***. Notwithstanding the licenses granted to Organon hereunder,***. Accordingly, Pharmacopeia’s grant of rights under Section 5.4 shall be***. 

### 5.8.2                        No Liability. It isunderstood and agreed that, even if Pharmacopeia complies with its obligationsunder this Agreement, *** hereunder. Pharmacopeia shall ***. Notwithstandingthe foregoing, it is understood that, unless ***.

### 5.9                                 Third PartyRoyalties. Organon shall be responsible for procuring such licenses as itdeems, in its sole discretion, appropriate for the manufacture, use, marketing,sale or distribution of Collaboration Products by Organon, its Affiliates or Sublicenseesand the payment, subject to Section 2.9, of any amount due Third Parties undersuch licenses.

### 5.10                           Third Party Royaltieswith respect to Reverted Lead Compounds, Non-Designated Lead Compounds, orNon-designated Development Series being developed by Pharmacopeia.Pharmacopeia shall be responsible for procuring such licenses as it deems, inits sole discretion, appropriate for the manufacture, use, marketing, sale ordistribution of Collaboration Products by Pharmacopeia, its Affiliates or Sublicenseesand the payment of any amount due Third Parties under such licenses.

5.11                           CommercializationStatus. During the period from the end of the Research Term to the FirstCommercial Sale of a Collaboration Product, Organon or Pharmacopeia, as thecase may be, shall keep the other Party informed of its development activitieswith respect to such Collaboration Product, including without limitation, theachievement of the milestones set forth in Section 7.1 and thecommercialization of such Collaboration Product, by *** providing the otherParty with a written report stating the status of development of each suchCollaboration Product.

5.12                           NoImplied Licenses. Only the licenses granted pursuant to the express termsof this Agreement shall be of any legal force or effect. No other licenserights shall be created by implication, estoppel or otherwise.

5.13                           Non-Active Compounds. Subjectto Section 4.5, Non-Active Compounds may be used for research, development andcommercialization, independently by each Party at its own option and expense,against targets other than a Target, with the proviso that such use does not(i) materially impair the value of any Lead Optimization program orCollaboration Product or (ii) infringe any intellectual property Controlled bythe other Party.

**ARTICLE 6**

# **FUNDING**

6.1                                 Funding.  Inpartial consideration for Pharmacopeia’s activities set forth herein, Organonagrees to pay Pharmacopeia at the rate of one million dollars (USD1,000,000) onor

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before the first day ofthe Second Research Term and then every three months thereafter throughout theduration of the Second Research Term.

### 6.2                                 Assay Development.In the event that that Pharmacopeia shall conduct any additional assayvalidation as provided in Section 2.3, Organon shall pay to Pharmacopeia anamount equal to the number of FTE’s to be utilized for such assay developmentmultiplied by Pharmacopeia’s FTE Rate for the agreed period of such assaydevelopment program. Solely for purposes of this Section 6.2, Pharmacopeia’s“FTE Rate” shall be ***. In addition, in the event Organon agrees to themodification of an Assay, Organon shall reimburse Pharmacopeia for the cost ofany reagents that Pharmacopeia needs to obtain to conduct its activitiespursuant to this Section. Payments under this Section shall be made withinthirty (30) days of receipt of an invoice.

6.3                                 Amendment Payment to Pharmacopeia. Organon agrees to pay Pharmacopeia thenonrefundable sum of fifteen million dollars (USD15,000,000), due withinthirty (30) days after the Amendment Date.

6.4                                 NoWithholding. All amounts paid to Pharmacopeia pursuant to Sections 6.1through 6.3 shall be made without withholding for taxes or other charges.

6.5                                 EquityInvestment.                                           Pharmacopeiashall have a one-time option to sell to Organon ***. Such sale of shares shallbe at the ***, and in accordance with other terms substantially as set forth inthe Stock Purchase Agreement attachedhereto as Exhibit C.

**ARTICLE 7**

# **MILESTONE PAYMENTS**

7.1                                 MilestonePayments.

7.1.1                        MilestonePayments for Second Research Term Lead Compounds.

(a)                                  Milestonepayments based on Pharmacopeia’s delivery to Organon of each Second ResearchTerm Lead Compound. Organon shall pay to Pharmacopeia the followingnonrefundable amounts within thirty (30) days following the first achievementby Organon, its Affiliates, Sublicensees or other designees, as the case maybe, of each of the following milestones with respect to any Second ResearchTerm Lead Compound or corresponding Derivative Compound (and each correspondingCollaboration Product) with respect to each Target with respect to whichPharmacopeia has not conducted Lead Optimization pursuant to this Agreement:

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| **Milestones for a Lead Compound** | ** ** | **Amount** | ** ** |
|------------------------------------|------------|------------|------------|
| ***                                |       | ***        |       |
| ***                                |       | ***        |       |
| ***                                |       | ***        |       |
| ***                                |       | ***        |       |
| ***                                |       | ***        |       |

 

(b)                                 Milestonepayments based on Pharmacopeia’s delivery to Organon of each Optionable DevelopmentCandidate. Organon shall pay to Pharmacopeia the following nonrefundableamounts within thirty (30) days following the first achievement by Organon, itsAffiliates, Sublicensees or other designees, as the case may be, of each of thefollowing milestones with respect to any Lead Compound or correspondingDerivative Compound (and each corresponding Collaboration Product) with respectto each Target with respect to which (i) Pharmacopeia has conducted LeadOptimization pursuant to this Agreement and (ii) Organon has initiated GLPtoxicity studies with respect to any compound identified by Pharmacopeiapursuant to the Research Collaboration (or any Derivative Compound thereof):
| **Milestones for a Development Candidate** | ** ** | **Amount** | ** ** |
|--------------------------------------------|------------|------------|------------|
| ***                                        |       | ***        |       |
| ***                                        |       | ***        |       |
| ***                                        |       | ***        |       |
| ***                                        |       | ***        |       |
| ***                                        |       | ***        |       |
| ***                                        |       | ***        |       |
| ***                                        |       | ***        |       |
| ***                                        |       | ***        |       |

 

(c)                                  Itis understood and agreed that ***. Notwithstanding the preceding sentence, inthe event that ***.

7.1.2                        Delivery Payments under the InitialResearch Term.Organon shall pay to Pharmacopeia the following delivery payments in additionto all the payments accrued hereunder as follows: At the time that Pharmacopeiadelivers to Organon the *** due within thirty (30) days following such delivery. At the time thatPharmacopeia delivers to Organon each of *** due within thirty (30) days following each suchdelivery.

7.1.3                        NoWithholding. All amounts paid to Pharmacopeia pursuant to this Section 7.1shall be made without withholding for taxes or other charges.

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7.2 DueDiligence.  For each Lead Compound,corresponding Derivative Compound, and Development Candidate, Organon will use*** to develop and commercialize such Lead Compound and correspondingCollaboration Product.  Without limitingany of the foregoing, for each Lead Compound, Organon’s efforts shall includewithout limitation the ***.  In the eventthat Organon decides to out-license the applicable Lead Compound, correspondingDerivative Compound, or Development Candidate, Organon shall ***.  Notwithstanding the foregoing, in the eventthat ***.

7.3  Invoices. Unless otherwise specifiedin writing, all payments required according to the sections 6 and 7 of thisAgreement shall be made by transfer to the bank account nominated by thereceiving Party upon timely receipt of an invoice.

If invoice to Organon:N.V. Organon

PurchaseAccounting (KA1041)

P.O. Box 20

5340 BH Oss

The Netherlands

Attn:***

**ARTICLE 8**

**ROYALTYPAYMENTS**

8.1                                 Royalty Term.

### 8.1.1                        Royalty Term Organon.Organon shall pay Pharmacopeia royalties on Net Sales of CollaborationProducts, ***, for a period from the date of First Commercial Sale of suchCollaboration Product in such country until the date which is the later of ***.

### 8.1.2                        Royalty Term Pharmacopeia.Pharmacopeia shall pay Organon royalties on Net Sales or Sublicense Income, asthe case may be, of Collaboration Products, ***, for a period from the date ofFirst Commercial Sale of such Collaboration Product in such country until thedate which is the later of ***.

### 8.1.3                        ***. If the licensesgranted to either Party pursuant to Section 5.4 or Section 5.6, as the case maybe, are still in force with respect to a particular Lead Compound, at the endof the period for which royalties on the corresponding Collaboration Productare due pursuant to this Agreement, ***.

8.2                                 RoyaltyRate.

8.2.1                        Royaltieson Collaboration Product based on Pharmacopeia’s delivery to Organon of aSecond Research Term Lead Compound. Organon shall pay to Pharmacopeia royalties on Net Sales of eachCollaboration Product based on any Second Research Term Lead Compound orcorresponding Derivative Compound with respect to each Target with respect to 

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which Pharmacopeia hasnot conducted Lead Optimization pursuant to this Agreement, according to thefollowing schedule:

(a)                                  ***.

(b)                                 ***.

(c)                                  ***.

(d)                                 ***.

8.2.2                        Royaltieson Collaboration Product based on a Reverted Lead Compound not Arising from aLead Optimization Program.

(a)                                  Inthe event Pharmacopeia sells any Collaboration Product based on a Reverted LeadCompound with primary activity against a Target with respect to whichPharmacopeia has not conducted Lead Optimization pursuant to this Agreement,then Pharmacopeia shall pay to Organon royalties on Net Sales of each suchCollaboration Product, according to the following schedule:

(i)                                     ***.

(ii)                                  ***.

(iii)                               ***.

(iv)                              ***.

(v)                                 ***.

It is understood by both Parties that the royaltyrates pursuant to this Section 8.2.2(a) reflect the fact that ***. If, in thefuture, the ***.

(b)                                 Inthe event Pharmacopeia sublicenses its rights pursuant to the provisions ofSection 5.6.2, then Pharmacopeia shall pay to Organon, in lieu of the royaltiesdue under 8.2.2(a) for any Collaboration Product, compensation based onSublicense Income for each Collaboration Product based on a Reverted Lead Compoundwith primary activity against a Target with respect to which Pharmacopeia hasnot conducted Lead Optimization pursuant to this Agreement, according to thefollowing schedule:

(i)                                     ***;

(ii)                                  ***;

(iii)                               ***;and

(iv)                              ***.

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(v)                                 ***.

8.2.3                        Royaltieson Collaboration Product based on Pharmacopeia’s delivery to Organon of anOptionable Development Candidate. Organon shall pay to Pharmacopeia royalties on Net Sales of eachCollaboration Product based on any Second Research Term Lead Compound orcorresponding Derivative Compound with respect to each Target with respect towhich (i) Pharmacopeia has conducted Lead Optimization pursuant to thisAgreement and (ii) Organon has initiated GLP toxicity studies with respect toany compound identified by Pharmacopeia pursuant to the Research Collaboration(or any Derivative Compound thereof):

(a)                                  ***.

(b)                                 ***.

(c)                                  ***.

(d)                                 ***.

(e)                                  ***.

### 8.2.4                        Royalties on CollaborationProducts based on a Non-Designated Lead Compounds.  In the event Pharmacopeia sells anyCollaboration Product based on a Non-Designated Lead Compound, thenPharmacopeia shall pay to Organon aroyalty on Net Sales equal to ***.

8.2.5                        Royalties on Collaboration Products based on a Non-DesignatedDevelopment Series.  In the event Pharmacopeia sells any CollaborationProduct based on a Non-Designated Development Series, then Pharmacopeia shallpay to Organon a royalty on Net Sales equal to ***.  In addition, ***.

8.2.6                        Royaltieson Collaboration Product based on a Reverted Lead Compound Arising from a LeadOptimization Program.

(a)                                  Inthe event Pharmacopeia sells any Collaboration Product based on a Reverted LeadCompound with primary activity against a Target with respect to whichPharmacopeia (x) has conducted Lead Optimization pursuant to this Agreement and(y) has received milestone payments pursuant to Section 7.1.1(b), thenPharmacopeia shall pay to Organon royalties on Net Sales of each suchCollaboration Product, according to the following schedule:

(i)                                     ***.

(ii)                                  ***.

(iii)                               ***.

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(iv)                              ***.

It is understood by both Parties that the royaltyrates pursuant to this Section 8.2.6(a) reflect the fact that ***. If, in thefuture, the ***.

(b)                                 Inthe event Pharmacopeia sublicenses its rights pursuant to the provisions ofSection 5.6.2, then Pharmacopeia shall pay to Organon, ***, according to thefollowing schedule:

(i)                                     ***;

(ii)                                  ***;

(iii)                               ***;and

(iv)                              ***.

## 8.3                                 Payment ofRoyalties.

### 8.3.1                        Royalty Report.  After the First Commercial Sale of aCollaboration Product for which royalties are due and payable by either Party,its Affiliates or Sublicensees hereunder, the paying Party shall provide theother Party a royalty report on a ***. Each such report shall state, separatelyfor the paying Party, and each Affiliate and Sublicensee, ***.Contemporaneously with the submission of the royalty reports, the paying Partyshall ***.

### 8.3.2                        Records Retention.  Each Party shall keep, and require itsAffiliates and Sublicensees to keep, for a period of not less than ***,complete and accurate records of all Net Sales. Each Party shall have theright, at its sole expense, through a certified public accountant reasonablyacceptable to the other Party, and following reasonable notice, to inspect suchrecords during regular business hours, during the life of the paying Party’s obligationto pay royalties on Collaboration Products; provided, however,that such inspection shall not (i) take place ***; and (ii) shall not ***, and furtherprovided that, ***.  Copies of suchreports shall be supplied to the paying Party. In the event that the reportdemonstrates that ***.  If the payingParty has ***. The interest available to each Party pursuant to this Sectionshall in no way limit any other remedies available to each Party.

### 8.3.3                        Tax on Royalties.  Any tax paid or required to be withheld by aParty for the benefit of the other Party on account of royalties payable underthis Agreement shall be deducted from the amount of royalties otherwise due.Each Party shall secure and send to the other Party proof of any such taxeswithheld and paid for its benefit of and shall, at the request of the otherParty, provide reasonable assistance to other Party in recovering said taxes.

### 8.3.4                        Form of Payment.  All payments required according to thisSection 8 of the Agreement due Pharmacopeia hereunder shall be made in UnitedStates dollars, for Pharmacopeia’s account, by wire transfer to a bank in theUnited States designated in writing by Pharmacopeia; provided, however,that where payments in respect of Net Sales are based on Net

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Sales in non-U.S. currencies,the amount of Net Sales and any deductions used to calculate Net Sales, if any,shall be converted by Organon, based on the average of the “bid” and “asked”exchange rates provided by the Wall Street Journal Europe or otherrecognized reference source agreed to by the Parties, for all the business daysof each calendar quarter, into United States Dollars, and otherwise inaccordance with the standard exchange rate conversion practices used by Organonfor financial accounting purposes.  Allpayments required according to this Section 8 due Organon hereunder shall bemade in Euros, for Organon’s account, by wire transfer to a bank in theNetherlands designated in writing by Organon. Any payments that are not paid onthe date such payments are due under this Agreement shall bear interest to theextent permitted by applicable law at the prime rate as reported by the ChaseManhattan Bank, New York, New York, on the date such payment is due, plus anadditional two percent (2%) calculated on the number of days such payment isdelinquent. The interest available to each Party pursuant to this Section shallin no way limit any other remedies available.

**ARTICLE 9**

## **REPORTS, BOOKS ANDTAX MATTERS**

9.1.                              Examination of Books.  Each of the Parties shall keep and maintaincomplete and accurate books in respect of its activities during the ResearchTerm and the six month period following termination pursuant Section 15.3.3,and with respect to books and records for which payment may be required, inaccordance with applicable accounting principles consistently applied and inaccordance with local law.  Each Partyshall provide the other the right to inspect such financial records, and shallprovide copies of all requested records, to the extent reasonably related tothe performance of the other Party’s obligations under this Agreement.  The Parties shall retain such records for solong as the Parties shall mutually determine.

9.2                                 TaxMatters.  Each Party agrees that theother Party is entitled to all tax benefits, including in particular, taxcredits and/or tax deductions attributable to amounts the other Party has paidhereunder.  Each Party shall file itsfederal, state, and local tax returns on a basis consistent with this Agreement,and shall not take any action inconsistent with the other Party’s entitlementto such tax benefits. In the event that a Party, in its judgment, determinesthat it must obtain information and verification regarding the use orapplication of such expenditures in order to prepare its tax returns or torespond to an inquiry during a tax audit or any other inquiry relating to suchtreatment of its tax return, or to defend its tax position in any proceedingincluding litigation, the Parties shall reasonably cooperate with each otherand provide such information as the other Party may reasonably require at therequest and expense of the requesting Party.

**ARTICLE10**

**PATENTS**

10.1                           Disclosure by Employees,Agents or Independent Contractors. Organon and Pharmacopeia agree that as to any employees, agents, orindependent contractors of Organon and Pharmacopeia presently in their employor who are hired or retained by Organon or Pharmacopeia to perform, manageperformance of, or participate in the research done pursuant to this Agreement,Organon and Pharmacopeia will ensure that such employees, agents, orindependent contractors will promptly disclose and assign to the Party engagingthem any and all

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rights to inventions,developments, or improvements, (whether patentable or not) conceived and/orreduced to practice during the course of their duties.  Each Party will notify the other Partypromptly of any sole or joint inventions within the Developed Technology.

10.2                           Patent Prosecution andRelated Activities.

10.2.1                  PharmacopeiaBase Technology.  Pharmacopeia shallbe responsible, at its sole discretion and expense, for preparing, filing,prosecuting and maintaining in such countries it deems appropriate, by itselfor with Third Parties, Patent Rights within the Pharmacopeia Base Technologyand conducting any interferences, re-examinations, reissues and oppositionsrelating to such Patent Rights.

10.2.2                  Organon BaseTechnology.  Organon shall beresponsible, at its sole discretion and expense, for preparing, filing,prosecuting and maintaining in such countries it deems appropriate, by itselfor with Third Parties, Patent Rights within the Organon Base Technology andconducting any interferences, re-examinations, reissues and oppositionsrelating to such Patent Rights.

10.2.3                  DevelopedTechnology.

### (a)                                  ***.  For as long as its license rights have notexpired or been terminated, ***.  It isunderstood and agreed that in such Patent Rights ***. Organon shall have aperiod of ***.

(b)                                 ***.  Except as otherwise provided in Section10.2.3(a), ***.

(c)                                  Cooperation; Requestto Responsible Party.  Each ofOrganon and Pharmacopeia shall keep the other fully informed as to the statusof patent matters described in this Section 10.2.3 including, withoutlimitation, by providing the Patent Committee the opportunity to fully reviewand comment on any documents which will be filed in any patent office as far inadvance of filing dates as feasible, and providing the other copies of anydocuments that such Party receives from such patent offices promptly afterreceipt, including notice of all interferences, reissues, re-examinations,oppositions or requests for patent term extensions.  Organon and Pharmacopeia shall eachreasonably cooperate with and assist the other at its own expense in connectionwith such activities, at the other Party’s request.  Either Party may request the other Party tofile a patent application claiming any invention within the DevelopedTechnology for which the other Party has responsibility as set forth inSections 10.2.3(a) or 10.2.3(b).

10.2.4                  Ownership.   Ownership of Patent Rights shall bedetermined based upon US Patent Laws.

### 10.2.5                  Election Notto Prosecute.  Upon ninety (90) dayswritten notice to the other Party, the responsible Party may elect todiscontinue the prosecution of any patent applications filed pursuant toSections 10.2.3(a) or (b) and/or not to file or conduct any further activitieswith respect to the Patent Rights described in such Sections.  In the event the responsible Party declinesto file or, having filed, fails to further prosecute or maintain any PatentRights filed pursuant to this Agreement, which relate to the DevelopedTechnology, or to

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conduct anyinterferences, re-examinations, reissues, oppositions with respect thereto, theother Party shall have the right to prepare, file, prosecute and maintain suchPatent Rights in such countries as it may deem appropriate, and conduct anyinterferences, re-examinations, reissues or oppositions at its soleexpense.  The other Party agrees to cooperatein any manner reasonably requested in connection with any such actions by suchParty, at the expense of the requesting Party, and shall assign all right,title and interest in and to such Patent Rights to the Party continuing suchactivities.

10.3                           Permitted Disclosures.  Following a written notice from the otherParty hereto, the Parties shall in good faith grant each other permission, notto be unreasonably withheld, to disclose in the specification of a patentapplication filed by the other Party pursuant to this Agreement, any PharmacopeiaBase Technology, Organon Base Technology, or Developed Technology necessary tosupport and enable claims in such patent applications.

10.4                           Third Party Infringement.

10.4.1                  DevelopedTechnology.  Organon and Pharmacopeiashall have the right to initiate legal action to enforce the Patent Rightswithin the Developed Technology against infringement or misappropriation byThird Parties or defend any declaratory judgment action relating thereto.  A Party shall have the initial right, but notthe obligation, to initiate and conduct legal proceedings to enforce againstany infringement or defend any declaratory judgment action involving a PatentRight within the Developed Technology licensed to such Party hereunder at itssole expense.  Notwithstanding the precedingsentence, ***.

10.4.2                  Failure toEnforce.  If within sixty (60) daysfollowing receipt of written notice of an infringement or misappropriation ofDeveloped Technology which a Party has the right to enforce pursuant to Section10.4.1 above (or written notice of a declaratory judgment action alleginginvalidity or unenforceability of such Developed Technology), the Party failsto take action to halt such alleged infringement or misappropriation or defendsuch a declaratory judgment action, the other Party may, at its expense, takesuch legal action as it deems appropriate, in its own name, to halt such analleged infringement or misappropriation or defend such a declaratory judgmentaction.  Each Party agrees to render suchreasonable assistance as the prosecuting Party may request.

10.4.3                  Base Technology.  In the event that any Pharmacopeia BaseTechnology or Organon Base Technology is infringed or misappropriated by aThird Party, or is subject to a declaratory judgement action arising from suchinfringement or misappropriation, Pharmacopeia and Organon shall promptlynotify the other Party.  It is understoodand agreed that Pharmacopeia shall have the sole right to initiate and conductlegal proceedings to enforce the Pharmacopeia Base Technology against anyinfringement or misappropriation or defend any declaratory judgment actionrelating thereto, at its sole expense, and that Organon shall have the soleright to initiate and conduct legal proceedings to enforce the Organon BaseTechnology against any infringement or misappropriation or defend anydeclaratory judgment action relating thereto, at its sole expense.

10.4.4                  No Settlement Without Consent.  Neither Party shall enter into any settlementof any claim, suit or proceeding under Sections 10.4.1, or 10.4.3 above whichadmits

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or concedes that anyaspect of the Developed Technology or Base Technology licensed from the otherParty is invalid or unenforceable without the prior written consent of suchother Party.

10.4.5                  Cooperation.  Each Party shall keep the other reasonablyinformed of the progress of any claim, suit or proceeding subject to thisSection 10.4 and cooperate reasonably in connection with such activities at therequest and expense of the Party involved in such claim, suit or proceeding.

10.4.6                  Division of Recoveries.

(a)                                  Any recovery receivedin connection with a suit brought by a Party pursuant to Section 10.4.1 shallbe used ***.

(b)                                 Any recovery receivedin connection with a suit brought by Organon or Pharmacopeia solely pursuant toSection 10.4.3 shall be ***.

10.5                           Infringement Claims byThird Parties.  If the manufacture,sale or use of any Collaboration Product pursuant to this Agreement results inany claim, suit or proceeding alleging patent infringement against a firstParty (or its Sublicensees), such first Party shall promptly notify the otherParty in writing setting forth the facts of such claim in reasonable detail.The first Party shall have the ***. The first Party shall keep the other Partyreasonably informed of all material developments in connection with any suchclaim, suit or proceeding, and the other Party shall have the right (but notthe obligation) to be separately represented, at its expense, by counsel of itsown choice and to advise the first Party on the defense of such claim, suit orproceeding.   Notwithstanding thepreceding sentences, ***.

**ARTICLE11**

# **CONFIDENTIALITY**

11.1                           Confidentiality.

### 11.1.1.               Term of Confidentiality.  Except as otherwise provided in this Section11.1, the Party receiving Confidential Information (the “Receiving Party”)shall keep all Confidential Information disclosed to it by the disclosing Party(the “Disclosing Party”) confidential for the Research Term and ten (10) yearsthereafter.  Without the prior writtenconsent of the Disclosing Party, the Receiving Party shall not disclose anyConfidential Information to any Third Party, except to the officers, employees,agents, or representatives of the Receiving Party or the Receiving Party’sAffiliates (collectively the “Representatives”), who, in each case, have a needto know any such Confidential Information for purposes of the implementationand performance by the Receiving Party of its obligations pursuant to thisAgreement, and will use the Confidential Information provided by the DisclosingParty only for such limited purposes.

### 11.1.2.               Warranty of Obligation.  Each Party warrants that each of itsRepresentatives to whom any Confidential Information is disclosed shallpreviously have been informed of the confidential nature of the ConfidentialInformation and shall have agreed to be bound by the terms and conditions ofthis Agreement.  The Receiving Partyshall ensure that the Confidential Information provided by the Disclosing Partyshall not be used or disclosed by such

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Representatives except aspermitted by this Agreement.  TheReceiving Party shall stand responsible for any breach by its Representativesof the confidentiality provisions set forth in this Agreement.

### 11.1.3.               Ownership of Confidential Information.Except as provided herein with respect to the ownership of DevelopedTechnology, all Confidential Information disclosed by the Disclosing Partyshall remain the property of the Disclosing Party.  Upon the written request of the Disclosing Party(i) all tangible Confidential Information provided by the Disclosing Party(including, but not limited to all copies thereof and all unused samples ofmaterials provided by the Disclosing Party) except for Confidential Informationconsisting of analyses, studies and other documents prepared by or for thebenefit of the Receiving Party, shall be promptly returned to the DisclosingParty, and (ii) all portions of such analyses, studies and other documentsprepared by or for the benefit of the Receiving Party (including all copiesthereof) which are within the definition of Confidential Information shall bedestroyed, and the Receiving Party shall certify such destruction in writing tothe Disclosing Party.

### 11.1.4.               Permitted Disclosures.  The obligations of confidentiality andnon-use set forth in this Agreement shall not apply to any portion of theConfidential Information which:

#### (a)                                  is or becomes publicor available to the general public otherwise than through the wrongful act ordefault of the Receiving Party or its Representatives; or

#### (b)                                 is obtained by theReceiving Party from a Third Party who is lawfully in possession of suchConfidential Information and is not subject to an obligation of confidentialityor non-use owed to the Disclosing Party; or

#### (c)                                  is previously knownto the Receiving Party prior to disclosure by the Disclosing Party, as shown bywritten evidence, and is not obtained or derived directly or indirectly fromthe Disclosing Party; or

#### (d)                                 is independentlydeveloped by the Receiving Party without the use of or reliance on any ConfidentialInformation provided by the Disclosing Party hereunder, as shown bycontemporaneous written evidence.

### 11.1.5.               Legal Disclosure. The ReceivingParty may disclose the Confidential Information of the Disclosing Party to theextent reasonably necessary in prosecuting or defending litigation, complyingwith applicable laws, governmental regulations or court order, or otherwisesubmitting required information to tax or other governmental authorities.  If the Receiving Party intends to so discloseany such Confidential Information, the Receiving Party shall provide theDisclosing Party prompt prior notice of such fact so that the Disclosing Partymay seek to obtain a protective order or other appropriate remedy concerningany disclosure of such Confidential Information.  The Receiving Party will reasonably cooperatewith the Disclosing Party in connection with the Disclosing Party’s efforts toobtain any such order or other remedy. If any such order or other remedy does not fully preclude the disclosureof such Confidential Information, the Receiving Party will make such disclosureonly to the extent that such disclosure is legally required and will use itsreasonable efforts to have confidential treatment accorded to the disclosedConfidential Information. Notwithstanding the foregoing,

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either Party may disclosethe terms of this Agreement and developments in connection with this Agreementto the extent required, in the reasonable opinion of such Party’s legalcounsel, to comply with applicable laws, including, without limitation, therules and regulations promulgated by the U.S. Securities and ExchangeCommission (SEC) or the Dutch Authority of Financial Markets (AFM). In theevent either Party believes it must make a disclosure under this Section 11.1.5,the provisions of prior notice, comment, and consent described in Section 16.12should be followed to the extent possible. Non-limiting examples of suchdevelopments include the promotion of a program from one clinical phase to amore advanced clinical phase; the termination of a clinical stage program and;whether or not a particular trial has met a specified end-point, in all caseswhen Pharmacopeia has a financial interest in such program. Broader clinicaldisclosure describing clinical trial results shall be governed by Section 11.2.

### 11.1.6.               No Warranty As To Reliability.  Each of the Parties acknowledges that neitherParty makes any representation or warranty as to the reliability, accuracy orcompleteness of any of the Confidential Information disclosed hereunder, exceptfor any specific representation or warranty made in other sections of thisAgreement.  The Receiving Party agreesthat neither the Disclosing Party nor any of the Disclosing Party’s Representativesshall have any liability to the Receiving Party arising from the disclosure ofConfidential Information by the Disclosing Party except as otherwise providedherein.

### 11.1.7.               No Implied License.  Except as otherwise expressly set forth inthis Agreement, nothing herein shall be construed as giving the Receiving Partyany right, title and interest in and to the Confidential Information of theDisclosing Party.

### 11.1.8.               Public Domain.  For the purpose of this Agreement, specificinformation disclosed as part of the Confidential Information shall not bedeemed to be in the public domain or in the prior possession of the ReceivingParty merely because it is embraced by more general information in the publicdomain or by more general information in the prior possession of the ReceivingParty.

## 11.2.                        Publications.  The Patent Committee and the JRC will discussand review proposed publications describing the scientific or clinical resultsunder the Agreement.  Subject to Section11.1.5, either Party may, in its sole discretion, decide not to permit publicationby the other Party of any scientific or clinical results.

**ARTICLE12**

**REPRESENTATIONS AND WARRANTIES OF PHARMACOPEIA**

12.1                           Pharmacopeia represents andwarrants to Organon as follows:

### 12.1.1                  Organization.  It is a corporation duly organized, validlyexisting and in good standing under the laws of the State of Delaware.

### 12.1.2                  Authority.  It has full corporate power and authority toexecute and deliver this Agreement and to consummate the transactionscontemplated hereby.  All corporate actsand other proceedings required to authorize such execution, delivery, andconsummation have been duly and properly taken and obtained.

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### 12.1.3                  Enforceability.  This Agreement has been duly executed anddelivered by Pharmacopeia and constitutes legal, valid, and binding obligationsof Pharmacopeia enforceable against Pharmacopeia in accordance with its terms.

### 12.1.4                  Approvals and Consents.  No approval, authorization, consent, or otherorder or action of or filing with any court, administrative agency or othergovernmental authority is required for the execution and delivery byPharmacopeia of this Agreement or the consummation by Pharmacopeia of thetransaction contemplated hereby (other than contemplated Collaboration ProductRegulatory Approvals).

### 12.1.5                  No Conflicts.  None of the execution, delivery, orperformance of this Agreement by Pharmacopeia (i) conflicts with or results ina breach under the charter documents or any material contractual undertaking ofPharmacopeia, or its Affiliates or (ii) conflicts with or results in aviolation of any of the laws of the jurisdiction of incorporation ofPharmacopeia.  Pharmacopeia has not, tothe best of its knowledge entered into, nor will Pharmacopeia, after theEffective Date, knowingly enter into any written or oral agreement that is orwould be inconsistent with its obligations under this Agreement or deprives orwould deprive Organon of the benefits of this Agreement.

### 12.1.6                  Title.  As of the Effective Date, it has good titleto or valid leases or licenses for all its properties, rights, and assetsnecessary for the fulfillment of its obligations and responsibilities underthis Agreement.

### 12.1.7                  Disclaimer.  Except as provided herein, Pharmacopeiaspecifically disclaims any guarantee that the Research Collaboration will besuccessful, in whole or in part.  Thefailure of Pharmacopeia to successfully identify Lead Compounds will not, ofitself, constitute a breach of any representation or warranty or otherobligation under this Agreement. Pharmacopeia does not make any representation or warranty or guarantythat the Research Collaboration will be sufficient for the successfulcompletion of the research.  EXCEPT ASOTHERWISE EXPRESSLY SET FORTH HEREIN, PHARMACOPEIA MAKES NO REPRESENTATIONS ANDEXTENDS NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED,WITH RESPECT TO THE DEVELOPED TECHNOLOGY, LEAD COMPOUNDS, ORGANON COMPOUNDSPHARMACOPEIA COMPOUNDS OR LIBRARIES INCLUDING, BUT NOT LIMITED TO, WARRANTIESOF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF PHARMACOPEIABASE OR DEVELOPED TECHNOLOGY, PATENTED OR UNPATENTED, OR NON-INFRINGEMENT OFTHE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

12.1.8                              SufficientRights. As of the Effective Date, it owns or Controls its Patent Rights, toconduct the Research Collaboration and to grant the rights and licenses toOrganon, and to fulfill its duties and obligations pursuant to thisAgreement.  To the knowledge ofPharmacopeia, as of the Effective Date the rights and licenses granted toOrganon hereunder do not violate the rights of any Third Party to whichPharmacopeia has granted a license.

12.1.9                  NoPrior Grant or Patents.  As of theEffective Date, Pharmacopeia has not (i) knowingly granted any licenses toThird Parties, or (ii) knowingly filed any patent

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application, in eithercase inconsistent with the licenses granted or to be granted to Organonhereunder.

12.1.10            PatentRights Applicable to Transferred Programs. To the best of Pharmacopeia’s knowledge, as of the Amendment Date, thePatent Rights identified in Exhibit F constitute all the Patent RightsControlled by Pharmacopeia relating to the Transferred Programs.

**ARTICLE13**

# **REPRESENTATIONS AND WARRANTIES OF ORGANON**

13.1                           Organon represents andwarrants to Pharmacopeia as follows:

13.1.1                  Organization.  It is a corporation duly organized, validlyexisting and in good standing under the laws of the Netherlands.

### 13.1.2                  Authority.  It has full corporate power and authority toexecute and deliver this Agreement and to consummate the transactions contemplatedhereby.  All corporate acts and otherproceedings required to authorize such execution, delivery, and consummationhave been duly and properly taken and obtained.

### 13.1.3                  Enforceability.  This Agreement has been duly executed anddelivered by Organon and constitutes the legal, valid, and binding obligationsof Organon enforceable against Organon in accordance with its terms.

### 13.1.4                  Approvals and Consents.  No approval, authorization, consent, or otherorder or action of or filing with any court, administrative agency or othergovernmental authority is required for the execution and delivery by Organon ofthis Agreement or the consummation by Organon of the transaction contemplatedhereby (other than contemplated Regulatory Approvals).

### 13.1.5                  No Conflicts.  None of the execution, delivery, orperformance of this Agreement by Organon (i) conflicts with or results in abreach under the charter documents or any material contractual undertaking ofOrganon, or its Affiliates or (ii) conflicts with or results in a violation ofany of the laws of the jurisdiction of incorporation of Organon.  Organon has not, to the best of its knowledgeentered into, nor will Organon, after the Effective Date, knowingly enter intoany written or oral agreement that is or would be inconsistent with itsobligations under this Agreement or deprives or would deprive Pharmacopeia ofthe benefits of this Agreement.

### 13.1.6                  Title.  As of the Effective Date, it has good titleto or valid leases or licenses for all its properties, rights, and assetsnecessary for the fulfillment of its obligations and responsibilities underthis Agreement.

13.1.7                  SufficientRights. As of the Effective Date, it owns or Controls its Patent Rights, toconduct the Research Collaboration and to grant the rights and licenses toPharmacopeia, and to fulfill its duties and obligations pursuant to thisAgreement.  To the knowledge of Organon,as of the Effective Date the rights and licenses granted to Pharmacopeiahereunder do not violate the rights of any Third Party to which Organon hasgranted a license.

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13.1.8                  No PriorGrant or Patents.  As of theEffective Date, Organon has not (i) knowingly granted any licenses to ThirdParties, or (ii) knowingly filed any patent application, in either caseinconsistent with the licenses granted or to be granted to Pharmacopeiahereunder.

**ARTICLE14**

# **SURVIVAL AND INDEMNIFICATION**

14.1                           Survival ofRepresentations, Warranties, Covenants, and Agreement.  The representations, warranties, covenants,and agreements contained in this Agreement shall ***.  Except as expressly provided herein, theParties confirm that they have not relied upon any other representations,warranties, covenants, and agreements as an inducement to enter into thisAgreement or the other agreements and instruments to be executed and deliveredby the Parties pursuant to this Agreement.

14.2                           Indemnification byPharmacopeia.  Pharmacopeia herebyagrees to indemnify and hold Organon, its Affiliates and their respectiveofficers, directors, stockholders, employees, agents, and representatives(collectively, the “Organon Indemnitees”) harmless on an after-tax basis fromand against any and all claims, liabilities, losses, damages, costs andexpenses in respect of claims against the Organon Indemnitees by Third Partiesother than the Organon Indemnitees, including fees and disbursements of counseland expenses of reasonable investigation (collectively, “Organon Losses”),arising out of, based upon or caused by: ***.

14.3                           Indemnification byOrganon.  Organon hereby agrees toindemnify and hold Pharmacopeia, its Affiliates, subcontractors and theirrespective officers, directors, stockholders, employees, agents, andrepresentatives (collectively, the “Pharmacopeia Indemnitees”) harmless on anafter-tax basis from and against any and all claims, liabilities, losses, damages,costs and expenses in respect of claims against the Pharmacopeia Indemnitees byThird Parties other than the Pharmacopeia Indemnitees, including fees anddisbursements of counsel and expenses of reasonable investigation(collectively, “Pharmacopeia Losses”), arising out of, based upon or caused by:***.

14.4.                        ***.  With respect to any ***.

14.5                           ***.  In the event of an ***.

14.6.                        Insurance.  Insupport of their indemnification obligations above, the Parties agree tomaintain at least the following insurance coverage and limits at the followingtimes after execution of this Agreement:

(a) Upon the ***.

(b)Upon the ***.

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14.7                           Notices.  Each indemnified Party agrees to give theindemnifying Party prompt written notice of any action, claim, demand, discoveryof fact, proceeding or suit (collectively, “Claims”) for which such indemnifiedParty intends to assert a right to indemnification under this Agreement; providedhowever, that failure to give such notification shall not affect theindemnified Party’s entitlement to indemnification hereunder except to theextent that the indemnifying Party shall have been prejudiced as a result ofsuch failure.  The indemnifying Partyshall have the initial right (but not the obligation) to defend, settle orotherwise dispose of any Claim for which the indemnified Party intends toassert a right to indemnification under this Agreement as contemplated in thepreceding sentence if and so long as the indemnifying Party has recognized in awritten notice to the indemnified Party provided within thirty (30) days ofsuch written notice its obligation to indemnify the indemnified Party for anyPharmacopeia Losses or Organon Losses (as the case may be) relating to suchClaim; provided however that if the indemnifying Party assumes control of thedefense, settlement, or disposition of a Claim, the indemnifying Party shallobtain the written consent of the indemnified Party prior to ceasing to defend,settling or otherwise disposing of the Claim. If the indemnifying Party fails to state in a written notice during suchthirty (30) day period its willingness to assume the defense of such a Claim,the Pharmacopeia or Organon Indemnitee, as the case may be, shall have theright to defend, settle or otherwise dispose of such claim, subject to theapplicable provisions of Sections 14.2 and 14.3 above.

**ARTICLE15**

**TERM, TERMINATION, AND EXPIRATION**

15.1.                        Term of Agreement.  The term of this Agreement shall commence onthe Effective Date and shall continue in full force and effect on a country-by-countryand Collaboration Product-by-Collaboration Product basis until Organon and itsSublicensees have no remaining royalty obligations in a country, unlessterminated earlier as provided in this Article 15.

15.2                           Research Term. Theterm of the Research Collaboration (the “Research Term”) shall commence on theEffective Date and terminate on the last day of the Second Research Term,unless extended by mutual agreement of the Parties, upon twelve (12) monthswritten notice from Organon before the last day of the Second Research Term, inwhich case the Research Collaboration shall terminate on the last day of suchextension.  Such extension may take theform of a limited wind-down period necessary to complete any ongoing ResearchCollaboration activities specifically directed towards the designation of aLead Compound or Optionable Development Candidate.  The Parties will agree oncompensation to Pharmacopeia for such a wind-down period.

15.3                           Termination.

15.3.1                  Breach.  Except as provided in Section 15.3.3, ifeither Party breaches, or defaults in the performance of, or fails to be incompliance with, any material warranty, representation, agreement or covenantof this Agreement, including any payment obligations, and such default ornoncompliance shall not have been substantially remedied, or steps initiated tosubstantially remedy the same to the other Party’s reasonable satisfaction,within sixty (60) days after receipt by the defaulting Party of a writtennotice thereof and demand to cure such

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default from the otherParty (or, in the case of a failure to pay any amount due hereunder, within ten(10) business days after receipt of such notice), the Party not in default orbreach may terminate this Agreement subject to the provisions herein.  Such termination shall be effective onlyafter submission of the dispute to arbitration as set forth in Section 16.19and a determination by the arbitrators that there has been a material breach ordefault.

15.3.2                  Bankruptcy.Either Party may, subject to the provisions herein, terminate the ResearchCollaboration and this Agreement if, at any time, the other Party shall file inany court pursuant to any statute, a petition in bankruptcy or insolvency orfor reorganization in bankruptcy or for an arrangement or for the appointmentof a receiver or trustee of such Party or of its assets, or if such Partyproposes a written agreement of composition or extension of its debts, or ifsuch Party shall be served with an involuntary petition against it, filed inany insolvency proceeding, and such petition shall not be dismissed withinsixty (60) days after the filing thereof, or if such Party shall propose or bea party to any dissolution, or if such Party shall make an assignment for thebenefit of creditors.

15.3.3                  Terminationof Research Collaboration.

(a)                                  Atthe end of Research Year Two and Research Year Three, the Parties shall meet toreview the progress of the Research Collaboration.  If the JRC determines that Organon andPharmacopeia have each exercised commercially reasonable efforts, butPharmacopeia has failed to deliver the following number of Lead Series perResearch Year, Organon shall have the right to terminate the ResearchCollaboration at the end of Research Year Two or Research Year Three upon six(6) months notice to Pharmacopeia in the event that (i) in the case of ResearchYear Two, Pharmacopeia has failed to deliver one (1) Lead Series (withdemonstrated progress towards one additional Lead Series) by the end ofResearch Year Two; or (ii) in the case of Research Year Three, Pharmacopeia hasfailed to deliver a cumulative total of three (3) Lead Series (withdemonstrated progress towards one additional Lead Series) by the end ofResearch Year Three.   In the event thatOrganon elects to terminate the Research Collaboration as provided in thisSection 15.3.3(a), all payments made to Pharmacopeia as of the date of thetermination shall be non-refundable, provided, however, thatduring the six (6) months notice period, Organon shall have no obligation toprovide further funding under Section 6.1, and Pharmacopeia shall providethirty (30) FTE-months of effort in the Research Collaboration, at its ownexpense.

(b)                                 Withrespect to the Initial Research Term, in the event that Pharmacopeia determinesthat (1) Organon has not provided Pharmacopeia with targets in the number andfrequency set forth herein, (2) Pharmacopeia is not able to accept the targetsfor screening in the Research Collaboration, provided that the inability ofPharmacopeia is due to conditions relating to such targets which are outside ofPharmacopeia’s control, or (3) Organon is not diligently carrying itsactivities hereunder (including but not limited to, failing to providePharmacopeia on a Target-by-Target basis with enabling Target Information, keyreagents and the Assay and providing the resources to conduct in vivo models),then Pharmacopeia shall have the right upon six (6) months written notice toOrganon, to terminate the Research Collaboration or to continue its activitieshereunder on the Targets that have been accepted before the occurrence of anyof the foregoing.  In the event thatPharmacopeia elects to terminate the Research Collaboration as provided in thisSection, all payments made to Pharmacopeia hereunder as of the date of the terminationshall be non-refundable, provided, however, that

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during the six (6) monthsnotice period, the Parties shall continue their respective activities in theResearch Collaboration.  In the eventthat Pharmacopeia elects to continue its activities hereunder on the Targetsthat have been accepted prior to the occurrence of any of the foregoing, thenPharmacopeia’s obligation to provide Lead Series shall be reduced in proportionto the reduction in the number of the targets made available to Pharmacopeia andthat Pharmacopeia is able to accept pursuant to the terms set forthherein.  (By way of example, the numberof Lead Series to be delivered by Pharmacopeia is expected to be approximatelyabout 25% of the number of targets made available by Organon.  If the number of targets proposed by Organonis reduced to twenty (20) targets, then Pharmacopeia shall deliver no more thanfive (5) Lead Series to Organon).  TheParties agree that notwithstanding any reduction in the Lead Series to bedelivered, Organon shall continue funding Pharmacopeia as provided herein.

(c)                                  Effective as of ***.  The Parties shall ***.  The Parties will ***.

(i) In the event ***.  In such case, on or about the effective dateof such termination, ***.  Further, in the event of any such termination***.

(ii)In the event ***.  Further, theprovisions of Section ***.

15.3.4                  Rights in Law or Equity.  Except as otherwise expressly providedherein, termination by either Party pursuant to this Section 15.3 shall notprejudice any other remedy that a Party might have in law or equity, exceptthat neither Party may claim compensation for lost opportunity or likeconsequential damages arising out of the fact of such termination.

15.4                           Effect of Breach orTermination.

15.4.1                  AccruedObligations.  Termination of thisAgreement for any reason shall not release any Party hereto from any liabilitywhich, at the time of such termination, has already accrued to the other Partyor which is attributable to a period prior to such termination.

15.4.2                  Return of Materials.  Upon any termination of this Agreement,Organon and Pharmacopeia shall promptly return to the other Party allConfidential Information received from the other Party (except one copy ofwhich may be retained for archival purposes).

15.4.3                  Effect ofTermination of Research Collaboration. After the effective date of any termination of the ResearchCollaboration, subject to the provisions of Sections 7.1.2, 15.3.3 and 15.3.4,Organon shall have no obligation to fund further research activities in theResearch Collaboration, and Pharmacopeia shall have no further obligation toconduct such research activities after such date.

15.4.4                  Licenses.

#### (a)                                  Terminationby Pharmacopeia Pursuant to Section 15.3.1 and 15.3.2. In the event oftermination by Pharmacopeia pursuant to Sections 15.3.1 or 15.3.2, ***.

#### (b)                               Terminationby Organon Pursuant to Sections 15.3.1 or 15.3.2.  In the event of termination by Organonpursuant to Sections 15.3.1 or 15.3.2, ***.

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#### (c)                                  TerminationPursuant to Section 15.3.3. In the event of termination by either Partypursuant to Sections 15.3.3, ***.

15.5                           Survival.

(a)                                  General.  The provisions of Sections 3.5, 4.3, 5.6.1,5.8, 5.9, 5.10, 8.3.2 and Articles 9, 10, 11, 14, 15, and 16 shall survive theexpiration or termination of this Agreement.

(b)                                 ***.  In the event of an ***, (i) the provisions ofSections 8.3.2 and Articles 9, 10, 11, 14, 15 and 16 shall survive with respectto the applicable Optionable Development Candidate and, (ii) ***.  Further, in the event of an ***.

**ARTICLE16**

**MISCELLANEOUS**

16.1                           Notices.  Any notice or other communication required orpermitted to be given by either Party under this Agreement shall be effectivewhen delivered, if delivered by hand or by electronic facsimile or five daysafter mailing if mailed by registered or certified mail, postage prepaid andreturn receipt requested, and shall be addressed to each Party at the followingaddresses or such other address an may be designated by notice pursuant to thisSection:
| If to Pharmacopeia:

Pharmacopeia Drug  Discovery, Inc.

3000 Eastpark Boulevard

Cranbury, NJ 08512-3516

Attn:  Chief Executive Officer

Fax: ***

 

 

With a copy to:

 

Pharmacopeia Drug  Discovery, Inc.

3000 Eastpark Boulevard

Cranbury, NJ 08512-3516

Attn:  General Counsel

Fax: *** |   | If to Organon:

N.V. Organon

Kloosterstraat 6

5349 AB Oss

The Netherlands

Attn:  President

Fax #:  ***

 

with a copy to:

 

Organon Biosciences B.V.

Wethouder van Eschstraat 1

5342 AV Oss

The Netherlands

 

Attn:  Legal Affairs Department

Fax#:  *** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

16.2                           Amendments.  No amendment, modification or addition heretoshall be effective or binding on either Party unless set forth in writing andexecuted by duly authorized representatives of both Parties.

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16.3                           Waiver.  No waiver of any rights under this Agreementshall be deemed effective unless contained in writing signed by the Partycharged with such waiver, and no waiver of any breach or failure to performshall be deemed a waiver of any future breach or failure to perform or anyother right arising under this Agreement.

16.4                           Headings.  The section headings contained in thisAgreement are included for convenience only and form no part of the agreementbetween the Parties.

16.5                           ApplicableLaw.  This Agreement shall begoverned by, subject to and construed in accordance with the laws of the Stateof Delaware and the Parties consent to the jurisdiction of the State andFederal Courts of Delaware.

16.6                           Severability.  If any provision of this Agreement is held tobe invalid, void or unenforceable for any reason, it shall be adjusted, ifpossible, rather than voided in order to achieve the intent of the Parties tothe maximal extent possible.  In anyevent, all other provisions of this Agreement shall be deemed valid andenforceable to the fullest extent possible.

16.7                           Assignment:Binding Effect.  Neither thisAgreement, nor any obligations or rights hereunder, shall be assignable by anyParty hereto without the prior written consent of the other Party; ***.  Any purported assignment in contravention ofthis Section shall, at the option of the non-assigning Party, be null andvoid and of no effect.

16.8                           NoImplied licenses.  Only the licensesgranted expressly herein shall be of legal force and effect.  No license rights shall be created hereunderby implication, estoppel or otherwise.

16.9                           FurtherAssurances.  Each Party agrees toexecute, acknowledge and deliver such further instruments, and to do all suchother acts as may be necessary or appropriate in order to carry out thepurposes and intent of this Agreement.

16.10                     ForceMajeure.  No Party shall be liablefor any failure or delay in performance under this Agreement to the extent suchfailure or delay arises from Force Majeure. A Force Majeure is fire, explosion, earthquake, storm, flood, strike,labor difficulties, war, insurrection, riot, act of God or the public enemy, orany law, act, order, export or import control regulations, proclamation,decree, regulation, ordinance, or instructions of local, state, federal orforeign governmental or other public authorities, or judgment or decree of acourt of competent jurisdiction (but excluding a court injunction against aParty’s performance) and not otherwise arising out of breach by such Party ofthis Agreement.  In the event of theoccurrence of such an event, the Party so affected shall give prompt writtennotice to the other Party, stating the period of time the occurrence isexpected to continue and shall use best efforts to end the failure or delay andensure that the effects of such Force Majeure are minimized.

16.11                     Negationof Agency.  Nothing herein containedshall be deemed to create an agency, joint venture, amalgamation, partnership,or similar relationship between Organon and Pharmacopeia.  The relationship between the Partiesestablished by this Agreement is that of independent contractors.

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16.12                     Publicity.  No public announcement concerning theexistence or the terms of this Agreement shall be made, either directly orindirectly, by Pharmacopeia or Organon, except as may be legally required byapplicable laws, regulations, or judicial order, without first obtaining theapproval of the other Party and agreement upon the nature, text, and timing ofsuch announcement, which approval and agreement shall not be unreasonablywithheld.  The Party desiring to make anysuch public announcement shall provide the other Party with a written copy ofthe proposed announcement in sufficient time prior to public release to allowsuch other Party to comment upon such announcement, prior to publicrelease.  Neither Party shall issue anypress release or make any public announcement, which includes or otherwise usesthe name of the other Party in any public statement or document except with theprior written consent of such Party.

16.13                     Registrationand Filing of the Agreement.  Tothe extent, if any, that a Party concludes in good faith that it is required tofile or register this Agreement or a notification thereof with any governmentalauthority, including without limitation the U.S. Securities and ExchangeCommission and the Competition Directorate of the Commission of the EuropeanCommunities, in accordance with applicable laws and regulations, such Party maydo so, and the other Party shall cooperate in such filing or notification andshall execute all documents reasonably required in connection therewith at the,expense of the requesting Party.  TheParties shall promptly inform each other as to the activities or inquiries ofany such governmental authority relating to this Agreement, and shall cooperate,to respond to any request for further information therefrom at the expense ofthe requesting Party.

16.14                     EntireAgreement.  This Agreement and theExhibits hereto may be amended from time to time in accordance with thisAgreement) contains the entire agreement between the Parties with respect tothe subject matter hereof.  Any prioragreement, arrangement or undertaking, whether oral or in writing is herebysuperseded.

16.15                     Beneficiaries.  No person, other than Organon or Pharmacopeiaand their permitted assignees hereunder, shall be deemed an intendedbeneficiary hereunder or have any right to enforce any obligation of thisAgreement.

16.16                     Affiliatesof Parties.  Each Party may performits obligations hereunder personally or through one or more Affiliates andshall be responsible for the performance of such obligations, and anyliabilities resulting therefrom.  NeitherParty shall permit any of its Affiliates to commit any act (including any actof omission) which such Party is prohibited hereunder from committing directly.

16.17                     Compliancewith Laws.  In exercising theirrights under this Agreement, the Parties shall fully comply with therequirements of any and all applicable laws, regulations, rules and orders ofany governmental body having jurisdiction over the exercise of rights underthis Agreement.

16.18                     PatentMarking.  Organon agrees to mark andhave its Affiliates and Sublicensees mark all Collaboration Products soldpursuant to this Agreement in accordance with the applicable statute orregulations relating to patent marking in the country or countries ofmanufacture and sale thereof.

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16.19                     DisputeResolution.

(a)                                  Attempt to Settle.  The Parties agree to take all reasonableefforts to resolve any and all disputes between them concerning diligenceobligations and/or questions of material breach and default in connection withthis Agreement in an amicable manner.

(b)                                 Binding Arbitration.  Except in the event of alleged breach,default or lack of diligence by a bankrupt or insolvent Party, the Partiesagree that any such dispute that arises in connection with this Agreement andwhich cannot be amicably resolved by the Parties shall be resolved by bindingarbitration as set forth in this Section, conducted in accordance with theCommercial Arbitration Rules of the American Arbitration Association (AAA) bythree (3) arbitrators.

(c)                                  Written Notice.  If a Party intends to begin an arbitration toresolve a dispute, such Party shall provide written notice to the other Partyinforming the other Party of such intention and the issues to be resolved.  Within twenty (20) business days after itsreceipt of such notice, the other Party may, by written notice to the Partyinitiating arbitration, add additional issues to be resolved.

(d)                                 Selection ofArbitrators.  Within forty-five (45)days following the receipt of the notice of arbitration, the Parties shallagree on the arbitrators, or if the Parties are unable to agree the arbitratorsshall be selected as provided in the AAA Commercial Arbitration Rules.  The arbitrators shall not be employees, directorsor shareholders of either Party or of an Affiliate and shall be selected inaccordance with AAA rules.  Whereapplicable, the arbitrators shall be independent experts in pharmaceuticalproduct development (including clinical development and regulatory affairs) inthe U.S., Japan and Europe.

(e)                                  Hearings.  The arbitrators shall conduct one or morehearings to allow the parties to present their positions regarding the dispute.

(i)                                     Discovery.  The arbitrators shall determine whatdiscovery will be permitted, consistent with the goal of limiting the cost andtime that the Parties must expend for discovery; provided the arbitrators shallpermit such discovery as they deem necessary to permit an equitable resolutionof the dispute.  Any written evidence originallyin a language other than English shall be submitted in English translationaccompanied by the original or a true copy thereof.  The arbitrators shall have sole discretionwith regard to the admissibility of any evidence.

(ii)                                  Proposed Ruling.  At least ten (10) business days prior to ahearing, each Party must submit to the arbitrators and serve on the other Partya proposed ruling on each issue to be resolved. Such writings shall be limited to not more than fifty (50) pages.

(iii)                               Time; Testimony.  Each Party shall be entitled to no more thanfive (5) days of hearing to present testimony or documentary evidence.  Such time limitation shall include anydirect, cross or rebuttal testimony, but such time limitation shall only becharged against the Party conducting such direct, cross or rebuttaltestimony.  It shall be theresponsibility of the arbitrators to determine whether the Parties have had thefive (5) days to which each is entitled.

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(iv)                              Representation by anAttorney.  Each Party shall have theright to be represented by counsel.

(v)                                 Location.  The arbitration shall take place in New York,NY.

(f)                                    Costs.  The costs of the arbitration, includingadministrative and arbitrator fees, shall be shared equally by theParties.  Each Party shall bear its owncosts and attorney and witness fees.

(g)                                 Written Decision.  The arbitrators shall render a writtendecision with their resolution of the dispute. The decision of the arbitrators shall be final and not subject to appealand binding on the Parties hereto.

(h)                                 Remedy.  A disputed performance or suspendedperformances pending the resolution of the arbitration must be completed withinthirty (30) days following the final decision of the arbitrators or such otherreasonable period as the arbitrators determine in a written opinion.

(i)                                     Final DecisionWithin One Year.  Any arbitrationsubject to this Section 16.19 shall be completed within one (1) year from thefiling of notice of a request for such arbitration.

16.20                     NoTrademark Rights.  Except as providedherein, no right, express or implied, is granted by this Agreement to use inany manner the name “Pharmacopeia,” “Organon” or any other trade name ortrademark of the other Party or its Affiliates in connection with performanceof this Agreement.

**IN WITNESSWHEREOF**, the Parties have caused this Agreement to beexecuted by their duly authorized representatives as of the Effective Date.
| **N.V. ORGANON** | **PHARMACOPEIA DRUG**           |
|------------------|---------------------------------|
| ** **       | ** **                      | **DISCOVERY, INC.** |
| ** **       |
| By:              |                            | /s/ C.D. Nicholson |   | By: |   | /s/ Leslie J. Browne |
|             |                            |   |   |   |   |   |
| Name:            | Dr. C.D. Nicholson              | Name: | Leslie J. Browne, Ph.D. |
|             |                            |   |   |
| Title:           | Executive Vice  President       | Title: | President and |
|             | Research &  Development     |   | Chief Executive Officer |
| Date:            |                            | Date: |   |
|             |
| By:              |                            | /s/ A.W.M. Rijnders |   |   |
|             |
| Name:            | Dr. A.W.M. Rijnders             |   |   |
| Title:           | Senior Vice President  Research |   |   |
| Date:            |                            |   |   |
|                  |                                 |  |  |  |  |  |  |

 

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**EXHIBIT A**

***

***.

A-1

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**EXHIBIT B**

**Transferred Programs**

*******

B-1

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**EXHIBIT C**

**Stock PurchaseAgreement**

THIS STOCK PURCHASE AGREEMENT (the “**Agreement**”) is made as of the 8th day of February, 2007 (the “**Effective Date**”) by and between Pharmacopeia Drug Discovery,Inc. (the “**Company**”), a corporation organizedunder the laws of the State of Delaware, with its principal offices at 3000Eastpark Boulevard, Cranbury, New Jersey 08512, and N.V. Organon, a DutchCompany limited by shares, having a principal place of business atKloosterstraat 6, 5342 AB Oss, The Netherlands (the “**Purchaser**”).

**RECITALS**

A.                                   The Company and the Purchaser haveentered into that certain Collaborationand License Agreement, effective as of the 25th day of February, 2002, as modified by theAddendum effective December 22, 2003 and the Second Addendum effective December1, 2004, and as further amended and restated effective as of the Effective Date(the “**Collaboration Agreement**”), and, inconnection with, and as a condition to entering into the CollaborationAgreement, the Company and the Purchaser (collectively, the “**Parties**”) desire to enter into this Agreement providing theCompany an option to sell shares of its capital stock to the Purchaser undercertain circumstances.

B.                                     The Company desires to have the option tosell to the Purchaser, and the Purchaser, upon the exercise of such option bythe Company, desires to make a purchase from the Company of, the Shares (asdefined herein), in accordance with the terms and conditions set forth herein.

C.                                     As of the Effective Date, Purchaser owned222,665 of the Company’s shares of Common Stock purchased in accordance withthe terms of that certain Common Stock Purchase Agreement between the Purchaserand the Company (as successor in interest to Pharmacopeia, Inc.) dated as ofMay 31, 1996 (the “1996 Shares”).

NOW, THEREFORE, in consideration of the foregoingrecitals and the mutual covenants and agreements contained in this Agreement,and for other good and valuable consideration, the receipt and sufficiency ofwhich are hereby acknowledged, the Company and the Purchaser do hereby agree asfollows:

SECTION 1.                                Definitions. Unless otherwise defined herein in this Agreement,all capitalized terms shall have the meanings assigned to them in theCollaboration Agreement. As used in this Agreement, the following terms shallhave the following respective meanings:

1.1.                              “**Affiliate**”shall mean, in regard to any Person (the “referent person”), any Person thatcontrols the referent person, any Person that the referent person controls, orany Person that is under common control with the referent person. For purposesof the preceding sentence, the term “control” shall mean the power, direct orindirect, to direct or cause the direction of the management and policies of aPerson through voting securities, by contract or otherwise.

1.2.                              **“Change of Control Transaction”**means, with respect to the Company, an event in which: (a)any person (as the term “person” is used for purposes of Section 13(d) or14(d) of

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the Exchange Act) not then beneficially owning more thanfifty percent (50%) of the voting power of the outstanding securities of theCompany or any of its controlling Affiliates acquires or otherwise becomes thebeneficial owner (within the meaning of Rule 13d-3 promulgated under theExchange Act) of securities of the Company or any of its controlling Affiliatesrepresenting more than fifty percent (50%) of the voting power of the thenoutstanding securities of the Company with respect to the election of directorsof the Company; (b) the Company (i) consummates a merger, consolidation orsimilar transaction with another Person where the voting securities of theCompany or any of its controlling Affiliates outstanding immediately precedingsuch transaction (or the voting securities issued with respect to the votingsecurities of the Company or any of its controlling Affiliates outstandingimmediately preceding such transaction) represent less than fifty percent (50%)of the voting power of the Company or any of its controlling Affiliates orsurviving entity, as the case may be, following such transaction, (ii) sells orotherwise transfers to any Person(s) in one or more related transactions morethan fifty percent (50%) of its consolidated total assets, or assets from whichmore than fifty percent (50%) of its consolidated operating income for its mostrecent financial year was derived, or (iii) disposes by sale, assignment,exclusive license or otherwise of all or substantially all of its intellectualproperty rights, except for licenses under such intellectual property rights inthe ordinary course of business and any isolated sale or assignment of specificitems of intellectual property; or (c) in the event that the Company has equitysecurities registered under the Exchange Act, any “person” (as the term“person” is used for the purposes of Sections 13(d) or 14(d) of the ExchangeAct) other than the Purchaser acquires forty percent (40%) or more of thevoting power of the then-outstanding voting securities of the Company or any ofits controlling Affiliates. For the purposes of this definition, a “controllingAffiliate” is an Affiliate that “controls” the Company, as such term is used inthe definition of “Affiliate” in Section 1.1.

1.3.                              “**Closing**” shallmean the closing of the purchase and sale of the Shares.

1.4.                              “**Collaboration Agreement**”shall have the meaning set forth in the Recitals.

1.5.                              “**Commission**”shall mean the Securities and Exchange Commission.

1.6.                              “**Common Stock**”shall mean the Company’s common stock, par value $0.01 per share.

1.7.                              “**Exchange Act**”shall mean the Securities Exchange Act of 1934, as amended.

1.8.                              “**Governmental Authority**”shall mean any nation or government, any state or other political subdivisionthereof, any central bank (or similar monetary or regulatory authority)thereof, any entity exercising executive, legislative, judicial, regulatory oradministrative functions of or pertaining to government, and any corporation orother entity owned or controlled, through stock or capital ownership orotherwise, by any of the foregoing.

1.9.                              “**HardCap Limit**” shall mean fourteen and nine-tenths percent (14.9%) ofthe Company’s then outstanding Common Stock, as reported in the Company’s mostrecent SEC Report.

1.10.                        “**Legal Proceeding**”shall mean any action, suit, litigation, arbitration, proceeding (including anycivil, criminal, administrative, governmental or appellate proceeding),hearing, inquiry, audit, examination or investigation commenced, brought,conducted or heard by or

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before, or otherwiseinvolving, any court or other Governmental Authority or any arbitrator or arbitrationpanel.

1.11.                        “**OperatingDocuments**” shall mean the Company’s amended and restated certificate ofincorporation, as filed with the State of Delaware, amended and restatedbylaws, and all modifications and amendments thereto.

1.12.                        “**Parties**” shallhave the meaning set forth in the Recitals.

1.13.                        “**Person**” shall mean any individual, corporation, partnership,joint venture, association, joint stock company, trust, unincorporatedorganization, limited liability company or government or other entity.

1.14.                        “**Securities****Act**” shall mean the Securities Act of 1933, as amended.

1.15.                        “**Shares**” shallmean that number of shares of Common Stock calculated under Section 2.4 whichthe Company shall sell to the Purchaser, and the Purchaser shall purchase fromthe Company at the Closing, if any.

1.16.                        “**Trading Days**”shall mean a day on which The NASDAQ Global Market is open for trading.

1.17.                        **Other Defined Terms.**In addition to the terms defined in the Introductionand Recitals to this Agreement or preceding this in Section 1, the followingterms shall have the meanings defined for such terms in the Sections set forthbelow:
| Term                                  | ** ** | **Section** | ** ** |
|---------------------------------------|------------|-------------|------------|
|                                  | ** ** | ** **  | ** ** |
| “Buy-up”                    |       | 2.3         |       |
|                                  |       |        |       |
| “Closing Date”              |       | 3.1         |       |
|                                  |       |        |       |
| “DWAC”                      |       | 3.2         | (b)        |
|                                  |       |        |       |
| “Form 10”                   |       | 4.2         |       |
|                                  |       |        |       |
| “Intellectual Property”     |       | 4.9         |       |
|                                  |       |        |       |
| “Material Adverse  Effect”  |       | 4.1         |       |
|                                  |       |        |       |
| “Option”                    |       | 2.2         |       |
|                                  |       |        |       |
| “Option Notice”             |       | 2.3         |       |
|                                  |       |        |       |
| “Per Share Purchase  Price” |       | 2.4         | (a)        |
|                                  |       |        |       |
| “Purchase Price”            |       | 2.4         | (a)        |
|                                  |       |        |       |
| “Registration  Statement”   |       | 4.3         |       |
|                                  |       |        |       |
| “SEC Reports”               |       | 4.13        |       |
|                                  |       |        |       |
| “Written Disclosure”        |       | 9           |       |

 

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SECTION 2.                                Authorization and Issuance of the Shares.

2.1.                              Authorization. The Company has, or shall have prior tothe issuance, authorized the issuance and sale of the Shares pursuant to theterms and conditions hereof.

2.2.                              Option of the Company. The Purchaser grants the Company anoption (the “**Option**”) to sell the Shares to thePurchaser, on the terms and subject to the conditions described in thisAgreement.

2.3.                              Exercise of the Option. At such time as the Company ***. TheCompany shall deliver to the Purchaser the Option Notice in accordance withSection 10 hereof. Any such delivery of the Option Notice shall serve as anexercise of the Option by the Company. For the avoidance of doubt, the Companymay not effect more than one Closing under this Agreement.

2.4.                              Number of Shares to be Issued at theClosing.

(a)                                        Subject to the terms and conditions ofthis Agreement, the per share purchase price (the “**Per SharePurchase Price**”) to be paid by the Purchaser for the Shares to bepurchased from the Company on the Closing Date shall be equal to the averageclosing sale price for the Company’s Common Stock as reported in The WallStreet Journal for the thirty (30) business day period ending as of thedate three (3) business days prior to such Closing Date. The number of Sharesto be issued to the Purchaser at the Closing, if any, shall be equal to ***(rounded up or down to the nearest whole share).

(b)                                 *Conditional Limit on Ownership*.  Notwithstanding anything to thecontrary contained in this Agreement, the total cumulative number of shares ofCommon Stock of the Company (including the 1996 Shares) owned by the Purchaserand its Affiliates shall at all times be equal to or less than the Hard CapLimit.  In the event that, together with its ownership of the 1996 Shares,the purchase of Shares would cause the Purchaser and its Affiliates to beholders of Common Stock greater than the Hard Cap Limit, the Purchaser shall berelieved of its obligations to make such purchase but only to the extent thatthe Shares to be acquired by the Purchaser pursuant to the Agreement wouldcause the Purchaser and its Affiliates’ holdings to exceed the Hard CapLimit.  For clarification, the Hard Cap Limit ownership test shall becalculated immediately prior to the Closing Date and it shall include any 1996Shares that the Purchaser continues to own as of such time as well as thenumber of Shares proposed to be purchased pursuant to this Agreement.

2.5.                                    Issuance, Sale and Pricing of the Shares. Subject to the terms and conditions ofthis Agreement and to the Company’s voluntary exercise of the Option anddelivery of the Option Notice to the Purchaser, the Company shall issue andsell to the Purchaser, and the Purchaser shall purchase from the Company, theShares for the Purchase Price on the Closing Date.

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SECTION 3.                                Closing; Delivery; Notice.

3.1.                              Closing. The Closing shall be held within thirty (30) days ofthe date of the delivery of the Option Notice at 10:00 a.m., New York time, oron such date as the Parties may mutually otherwise agree (the “**Closing Date**”).

3.2.                              Payment and Delivery of the Shares.

(a)                                  *Payment*. Subject to the terms and conditions ofthis Agreement, on the Closing Date, the Purchaser shall pay the Purchase Priceby wire transfer in immediately available funds to the account of the Company,in accordance with the wire instructions provided to the Purchaser by theCompany.

(b)                                 *Delivery*. Subject to the terms and conditions ofthis Agreement, on the Closing Date, the Company shall issue instructions tothe Company’s stock transfer agent directing the Company’s transfer agent toprepare and deliver to the account of the Purchaser, by an automated sharetransfer through the Depository Trust Company system (“**DWAC**”),that number of shares of the Company representing the Shares no later than theClosing Date.

3.3.                              Location. The Closing shall be held at the principal officesof Dechert LLP, 997 Lenox Drive, Building 3, Suite 210, Lawrenceville, NewJersey, or at such other place as the Company and the Purchaser may agree.

SECTION 4.                                Representations, Warranties and Covenants of theCompany. TheCompany hereby represents and warrants to, and covenants with, the Purchaser asfollows:

4.1.                              Organization and Qualification. The Company is a corporation dulyincorporated, validly existing and in good standing under the laws of the Stateof Delaware and the Company is qualified to do business as a foreigncorporation in each jurisdiction in which qualification is required, exceptwhere failure to so qualify would not reasonably be expected to have a MaterialAdverse Effect (as defined herein). The Company has no subsidiaries. Forpurposes of this Agreement, the term “**Material Adverse Effect**”shall mean a material adverse effect upon the business, financial condition,properties or results of operations of the Company.

4.2.                              Authorized Capital Stock. As of the Effective Date, theauthorized capital stock of the Company consists of 50,000,000 shares of CommonStock, of which 21,276,051 sharesare outstanding, and 2,500,000 shares of preferred stock (5,000 shares of whichhave been designated as Series A Junior Participating Preferred Stock), ofwhich no shares are outstanding. All of the issued and outstanding shares ofthe Common Stock have been duly authorized and validly issued, are fully paidand nonassessable, have been issued in compliance with all federal and statesecurities laws, were not issued in violation of or subject to any preemptiverights or other rights to subscribe for or purchase securities, and conform tothe description thereof contained in the Company’s Form 10 registrationstatement filed with the Commission on April 9, 2004, including any amendmentsor reports filed by the Company with the Commission for the purpose of updatingsuch description (as amended, “**Form 10**”).Except as disclosed in the SEC Reports, the Company does not have outstandingany options to purchase, or any preemptive rights or other rights to subscribefor or to purchase, any securities or obligations convertible into, or anycontracts or commitments to issue or sell, shares of its capital stock or anysuch options, rights, convertible securities or obligations. The description ofthe Company’s

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stock, stock bonus andother stock plans or arrangements and the options or other rights granted andexercised thereunder, set forth in the Form 10 and the SEC Reports accuratelyand fairly presents all material information with respect to such plans,arrangements, options and rights.

4.3.                              Issuance, Sale and Delivery of theShares; Registration Statement.

(a)                                  The Shares have been, or prior to theissuance will have been, duly authorized and, when issued, delivered and paidfor in the manner set forth in this Agreement, will be duly authorized, validlyissued, fully paid and nonassessable and free and clear of all pledges, liens,restrictions and encumbrances (other than restrictions on transfer under stateand/or federal securities laws). No preemptive rights or other rights tosubscribe for or purchase exist with respect to the issuance and sale of theShares by the Company pursuant to this Agreement. No further approval orauthority of the stockholders or the Board of Directors of the Company will berequired for the issuance and sale of the Shares to be sold by the Company ascontemplated herein.

(b)                                 At the Effective Date, the Companymeets the requirements for use of Form S-3 under the Securities Act. TheCompany hereby agrees to use commercially reasonable efforts (i) to file withthe Commission a registration statement on such form as the Company is theneligible to use for registration under the Securities Act of the offering andsale of the Shares (the “**Registration Statement**”)and (ii) to have such Registration Statement be declared effective under theSecurities Act on or before the Closing Date.  When the RegistrationStatement or any amendment thereof or supplement thereto is declared effective,the Company will use its commercially reasonable efforts to ensure that it (x)will comply, in all material respects, with the requirements of the SecuritiesAct and the Exchange Act and the rules and regulations of the Commissionthereunder and (y) will not contain any untrue statement of a materialfact or omit to state any material fact required to be stated therein ornecessary in order to make the statements therein not misleading. On theClosing Date no stop order preventing or suspending the effectiveness of theRegistration Statement will have been issued by the Commission and noproceedings for that purpose will have been instituted or threatened under theSecurities Act.

4.4.                              Due Execution, Delivery and Performanceof this Agreement.The Company has full legal right, corporate power and authority to enter intothis Agreement and perform the transactions contemplated hereby. This Agreementhas been duly authorized, executed and delivered by the Company. The execution,delivery and performance of this Agreement by the Company and the consummationof the transactions herein contemplated will not violate any provision of theOperating Documents and will not result in the creation of any lien, charge,security interest or encumbrance upon any assets of the Company pursuant to theterms or provisions of, and will not conflict with, result in the breach orviolation of, or constitute, either by itself or upon notice or the passage oftime or both, a default under (a) any agreement, lease, franchise, license,permit or other instrument to which the Company is a party or by which theCompany or any of its properties may be bound or affected and in each casewhich would reasonably be expected to have a Material Adverse Effect, or (b)any statute or any judgment, decree, order, rule or regulation of anyGovernmental Authority applicable to the Company or any of its properties wheresuch conflict, breach, violation or default is likely to result in a MaterialAdverse Effect. No consent, approval, authorization or other order of anyGovernmental Authority is required for the execution and delivery of thisAgreement or the

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consummation of thetransactions contemplated by this Agreement, except for compliance with theblue sky laws and federal securities laws applicable to the offering of theShares. Upon the execution and delivery of this Agreement, and assuming thevalid execution thereof by the Purchaser, this Agreement will constitute avalid and binding obligation of the Company, enforceable in accordance with itsterms, except as enforceability may be limited by applicable bankruptcy,insolvency, reorganization, moratorium or similar laws affecting creditors’ andcontracting parties’ rights generally and except as enforceability may besubject to general principles of equity (regardless of whether suchenforceability is considered in a proceeding in equity or at law).

4.5.                              No Defaults. The Company is not in violation ordefault of any provision of its Operating Documents, or in breach of or defaultwith respect to any provision of any agreement, judgment, decree, order, lease,franchise, license, permit or other instrument to which it is a party or bywhich it or any of its properties are bound which could reasonably be expectedto have a Material Adverse Effect and there does not exist any state of factswhich, with notice or lapse of time or both, would constitute an event ofdefault on the part of the Company as defined in such documents and which wouldreasonably be expected to have a Material Adverse Effect.

4.6.                              No Actions. (a) There are no Legal Proceedings pending and (b)there are no inquiries or investigations, nor, to the Company’s knowledge, arethere any Legal Proceedings threatened to which the Company is or may be aparty or of which property owned or leased by the Company is or may be thesubject, or related to discrimination matters, which Legal Proceedings,individually or in the aggregate, might reasonably be expected to have aMaterial Adverse Effect; and no labor disturbance by the employees of theCompany exists or, to the Company’s knowledge, is imminent which mightreasonably be expected to have a Material Adverse Effect. The Company is notparty to or subject to the provisions of any injunction, judgment, decree ororder of any court, regulatory body, administrative agency or otherGovernmental Authority which might reasonably be expected to have a MaterialAdverse Effect.

4.7.                              Properties. The Company has good and marketable title to allproperties and assets reflected as owned in the financial statements includedin the SEC Reports, subject to no lien, mortgage, pledge, charge or encumbranceof any kind except (a) those, if any, reflected in the financial statementsincluded in the SEC Reports or otherwise in the SEC Reports, or (b) those whichare not material in amount and do not adversely affect the use of such propertyby the Company. The Company holds its leased properties under valid and bindingleases, with such exceptions as are not materially significant in relation toits business taken as a whole. The Company leases all such properties as arenecessary to its operations as now conducted.

4.8.                              No Material Change. Since December 31, 2006, and except asdescribed in the SEC Reports (a) the Company has not incurred any materialliabilities or obligations, indirect, or contingent, or entered into anymaterial oral or written agreement or other transaction which is not in theordinary course of business or which could reasonably be expected to result ina material reduction in the future earnings of the Company; (b) the Company hasnot sustained any material loss or interference with its businesses orproperties from fire, flood, windstorm, accident or other calamity not coveredby insurance; (c) the Company has not paid or declared any dividends or otherdistributions with respect to its capital stock and the Company is not indefault in the payment of principal or interest on any outstanding debtobligations; (d) there has not been any change in the capital stock of theCompany other than the sale of the Shares

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hereunder or sharescontributed as a matching contribution to participants’ accounts under theCompany’s 401(k) plan, shares or options issued pursuant to employee equityincentive plans or purchase plans approved by the Company’s Board of Directorsand repurchases of shares or options pursuant to repurchase plans alreadyapproved by the Company’s Board of Directors, or indebtedness not incurred inthe ordinary course of business that is material to the Company; and (e) therehas not been any other event which has caused, or is likely to cause, aMaterial Adverse Effect.

4.9.                              Intellectual Property. (a) The Company owns or has obtainedlicenses or options for the inventions, patent applications, patents,trademarks (both registered and unregistered), trade names, copyrights andtrade secrets necessary for the conduct of the Company’s business as currentlyconducted (collectively, the “**Intellectual Property**”);and (b) (i) to the knowledge of the Company, there are no third parties whohave any ownership rights to any Intellectual Property that is owned by, or hasbeen licensed to, the Company for the products described in the SEC Reportsthat would preclude the Company from conducting its business as currentlyconducted and have a Material Adverse Effect, except for the ownership rightsof the owners of the Intellectual Property licensed or optioned by the Company;(ii) there is no pending or, to the Company’s knowledge, threatened LegalProceeding or claim by others challenging the rights of the Company in or toany Intellectual Property owned, licensed or optioned by the Company, otherthan claims which would not reasonably be expected to have a Material AdverseEffect; (c) there is no pending or, to the Company’s knowledge, threatenedLegal Proceeding or claim by others challenging the validity or scope of anyIntellectual Property owned, licensed or optioned by the Company, other thannon-material Legal Proceedings and claims; and (d) there is no pending or, tothe Company’s knowledge, threatened Legal Proceeding or claim by others thatthe Company infringes or otherwise violates any patent, trademark, copyright,trade secret or other proprietary right of others, other than non-materialLegal Proceedings and claims.

4.10.                        Compliance. The Company has not been advised, nor does theCompany have reason to believe, that it is not conducting its business incompliance with all applicable laws, rules and regulations of the jurisdictionsin which it is conducting its business, except where failure to be so incompliance would not reasonably be expected to have a Material Adverse Effect.

4.11.                        Taxes. The Company has filed all necessary federal, stateand foreign income and franchise tax returns and has paid or accrued all taxesshown as due thereon, and the Company has no knowledge of a tax deficiencywhich has been or might be asserted or threatened against it which mightreasonably be expected to have a Material Adverse Effect.

4.12.                        Insurance. The Company maintains insurance of the types and inthe amounts that the Company reasonably believes is adequate for its business,including, but not limited to, insurance covering all real and personal propertyleased by the Company against theft, damage, destruction, acts of vandalism andall other risks customarily insured against by similarly situated companies,all of which insurance is in full force and effect.

4.13.                        Reporting Company. The Company is subject to the reporting requirementsof the Exchange Act and has filed all reports required thereby (collectively,the “**SEC Reports**”).

4.14.                        Governmental Permits, Etc. The Company has all franchises,licenses, certificates

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and other authorizationsfrom Governmental Authorities that are currently required for the operation ofthe business of the Company as currently conducted, except where the failure topossess currently such franchises, licenses, certificates and otherauthorizations is not reasonably expected to have a Material Adverse Effect.The Company has not received any notice of proceedings relating to therevocation or modification of any such permit which, if the subject of anunfavorable decision, ruling or finding, could reasonably be expected to have aMaterial Adverse Effect.

4.15.                        Financial Statements. The financial statements of the Company and therelated notes contained in its SEC Reports present fairly, in accordance withgenerally accepted accounting principles, the financial position of the Companyas of the dates indicated, and the results of its operations, cash flows andthe changes in stockholders’ equity for the periods therein specified, subject,in the case of unaudited financial statements for interim periods, to normalyear-end audit adjustments. Such financial statements (including the relatednotes) have been prepared in accordance with generally accepted accountingprinciples applied on a consistent basis throughout the periods thereinspecified, except that unaudited financial statements may not contain allfootnotes required by generally accepted accounting principles.

4.16                           Real Property Holding Corporation. The Company is not a “United Statesreal property holding corporation,” as that term is defined in the InternalRevenue Code (“IRC”) Section 897(c)(2) and Treasury Regulation Section1.897-2(b). If at any time in the future the Company shall become a “UnitedStates real property holding corporation,” the Company shall notify thePurchaser of such event as promptly as practicable. Within the thirty (30) daysafter receipt of a request from the Purchaser, the Company shall prepare anddeliver to the Purchaser the statement required under Treasury RegulationSection 1.897-2(h) and, subject to the succeeding sentence, either or both ofthe following documents: (i) an affidavit in conformance with the requirementsof IRC Section 1445(b)(3) and the regulations thereunder or (ii) a notarizedstatement, executed by an officer having actual knowledge of the facts, thatthe shares of the Company stock held by the Purchaser are of a class that isregularly traded on an established securities market, within the meaning of IRCSection 1445(b)(6) and the regulations thereunder. If the Company is unable toprovide either of the documents described in (i) or (ii) above upon request, itshall promptly, and in any event within thirty (30) days, notify the Purchaserin writing of the reason for such inability. Finally, upon the request of thePurchaser and without regard to whether either document described in (i) or(ii) above has been requested, the Company shall reasonably cooperate with theefforts of the Purchaser to obtain a “qualifying statement” within the meaningof IRC Section 1445(b)(4) and the regulations thereunder or such other documentsas would excuse a transferee of the Purchaser’s interest from withholding ofincome tax imposed pursuant to IRC Section 897(a).

SECTION 5.                                Representations, Warranties and Covenants of thePurchaser.

5.1.                              The Purchaser represents and warrants to,and covenants with, the Company that:

(a)                                  the Purchaser is knowledgeable,sophisticated and experienced in making, and is qualified to make, decisionswith respect to investments in shares representing an investment decision likethat involved in the purchase of the Shares, including investments in

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securities issued by theCompany and comparable entities, and has had the opportunity to request,receive, review and consider all information it deems relevant in making aninformed decision to purchase the Shares;

(b)                                 the Purchaser is acquiring the number ofShares set forth in Section 2 above in the ordinary course of its business andfor its own account for investment only and with no present intention ofdistributing any of such Shares or any arrangement or understanding with anyother persons regarding the distribution of such Shares (this representationand warranty not limiting the Purchaser’s right to sell in compliance with theSecurities Act and the rules and regulations promulgated thereunder);

(c)                                  the Purchaser has, in connection with itsdecision to purchase the number of Shares set forth in Section 2 above, reliedsolely upon the SEC Reports filed prior to the date of this Agreement and thedocuments included therein or incorporated by reference and the representationsand warranties of the Company contained herein;

(d)                                 the Purchaser has had an opportunity todiscuss this investment with representatives of the Company and ask questionsof them;

(e)                                  the Purchaser is an “accredited investor”within the meaning of Rule 501(a) of Regulation D promulgated under theSecurities Act; and

(f)                                    the Purchaser agrees to notify theCompany immediately of any change in any of the foregoing information untilsuch time as the Purchaser has sold all of the Shares.

The Purchaserunderstands that the Shares are being offered and sold to it in reliance uponspecific exemptions from the registration requirements of the Securities Act,the rules and regulations promulgated thereunder and state securities laws andthat the Company is relying upon the truth and accuracy of, and the Purchaser’scompliance with, the representations, warranties, agreements, acknowledgmentsand understandings of the Purchaser set forth herein in order to determine theavailability of such exemptions and the eligibility of the Purchaser to acquirethe Shares.

5.2.                              The Purchaser hereby represents andwarrants that as of the Effective Date, the Purchaser and its Affiliatescollectively own 222,665 shares of Common Stock of the Company.

5.3.                              Unless otherwise required by law,including the Exchange Act, or by rules promulgated by the U.S. Securities andExchange Commission, the Parties hereby agree to keep confidential allinformation concerning any sale by the Company of the Shares hereunder. TheParties understand that the information contained in the CollaborationAgreement and this Agreement (including the terms hereof) is strictlyconfidential and proprietary. The Parties hereby acknowledges that they areprohibited from reproducing or distributing the Collaboration Agreement, thisAgreement, or any other materials or other information exchanged in connectionwith the Purchaser’s consideration of its investment in the Company, in wholeor in part, or divulging or discussing any of their contents, except to theirrespective financial, investment or legal advisors in connection with itsproposed investment in the Shares. Further, unless otherwise required by law,including the Exchange Act, or by rules promulgated by the U.S. Securities andExchange Commission, the Purchaser understands that the existence and nature ofall conversations and presentations, if any, regarding the Company and thissale of Shares must

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be kept strictlyconfidential. The Purchaser understands that the federal securities laws imposerestrictions on trading based on information regarding this offering and thetransactions contained in this Agreement and the Collaboration Agreement andany other material nonpublic information of which the Purchaser may becomeaware. In addition, the Purchaser hereby acknowledges that unauthorizeddisclosure of information regarding this offering may result in a violation ofRegulation FD. The Parties’ obligations under this Section 5.3 will terminateupon the filing by the Company of a press release or press releases (pursuantto Section 9 herein) or a Current Report on Form 8-K describing this offeringand the transactions contained in this Agreement and the CollaborationAgreement. The foregoing agreements shall not apply to any information that isor becomes publicly available through no fault of either Party, or that a Partyis legally required to disclose; *provided*, *however*, that if the a Party is requested or ordered to disclose any such informationpursuant to any court or other government order or any other applicable legalprocedure, it shall provide the other Party with prompt notice of any suchrequest or order in time sufficient to enable such Party to seek an appropriateprotective order.

5.4.                              The Purchaser understands that itsinvestment in the Shares involves a significant degree of risk, including arisk of total loss of the Purchaser’s investment, and the Purchaser has fullcognizance of and understands all of the risk factors related to thePurchaser’s purchase of the Shares, including, but not limited to, those setforth under the caption “Risk Factors” in the SEC Reports. The Purchaserunderstands that the market price of the Common Stock has been volatile andthat no representation is being made as to the future value of the CommonStock. The Purchaser has the knowledge and experience in financial and businessmatters as to be capable of evaluating the merits and risks of an investment inthe Shares and has the ability to bear the economic risks of an investment inthe Shares.

5.5.                                    The Purchaser understands that no UnitedStates federal or state agency or any other Governmental Authority has passedupon or made any recommendation or endorsement of the Shares.

5.6.                              The Purchaser’s principal executiveoffices are in the jurisdiction set forth immediately below the Purchaser’sname on the signature pages hereto.

5.7.                              The Purchaser further represents andwarrants to, and covenants with, the Company that (a) the Purchaser has fullright, power, authority and capacity to enter into this Agreement and toconsummate the transactions contemplated hereby and has taken all necessaryaction to authorize the execution, delivery and performance of this Agreement,(b) the making and performance of this Agreement by the Purchaser and theconsummation of the transactions herein contemplated will not violate anyprovision of the organizational documents of the Purchaser or conflict with,result in the breach or violation of, or constitute, either by itself or uponnotice or the passage of time or both, a default under any material agreement,mortgage, deed of trust, lease, franchise, license, indenture, permit or otherinstrument to which the Purchaser is a party, or any statute or anyauthorization, judgment, decree, order, rule or regulation of any court or anyregulatory body, administrative agency or other Governmental Authorityapplicable to the Purchaser, (c) no consent, approval, authorization or otherorder of any court, regulatory body, administrative agency or othergovernmental body is required on the part of the Purchaser for the execution anddelivery of this Agreement or the consummation of the transactions contemplatedby this Agreement, (d) upon the execution and delivery of this Agreement, thisAgreement shall constitute a legal, valid and binding obligation of the

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Purchaser, enforceable inaccordance with its terms, except as enforceability may be limited byapplicable bankruptcy, insolvency, reorganization, moratorium or similar lawsaffecting creditors’ and contracting parties’ rights generally and except asenforceability may be subject to general principles of equity (regardless ofwhether such enforceability is considered in a proceeding in equity or at law),and (e) there is not in effect any order enjoining or restraining the Purchaserfrom entering into or engaging in any of the transactions contemplated by thisAgreement.

SECTION 6.                                Survival of Representations, Warrantiesand Agreements.Notwithstanding any investigation made by any Party to this Agreement, allcovenants, agreements, representations and warranties made by the Company andthe Purchaser herein shall survive the execution of this Agreement, thedelivery to the Purchaser of the Shares being purchased and the paymenttherefor and remain in full force and effect for period of one (1) yearfollowing the Closing Date.

SECTION 7.                                Conditions of Closing.

7.1.                              Conditions to Obligations of Purchaser toConsummate the Closing. The obligation of Purchaser to consummate the Closing and to purchaseand pay for the Shares being issued pursuant to this Agreement is subject tothe satisfaction or Purchaser’s waiver, on or prior to the Closing, of each ofthe following conditions, as applicable:

(a)                                  Company’s representations and warrantiescontained in this Agreement, as updated by Company’s SEC Reports filed prior tothe beginning of the relevant period of thirty (30) days referred to in Section2.4 of this Agreement, are and will be true and correct in all materialrespects as of the date of the Closing, as though made on and as of that date.

(b)                                 An officer’s certificate executed by Company’sChief Executive Officer or Chief Financial Officer shall have been delivered toPurchaser certifying that the representations and warranties contained in thisAgreement are true and correct in all material respects as of the Closing Date, asupdated by Company’s SEC Reports filed prior to beginning of the relevantperiod of thirty (30) days referred to in Section 2.4 of this Agreement,subject to any required updated disclosure, as reflected in such officer’scertificate.

(c)                                  There shall be no Legal Proceedingchallenging this Agreement or the transactions contemplated by this Agreement,or seeking to prevent or delay the consummation of any Closing, instituted andpending before any court or Governmental Authority.

(d)                                 The Common Stock of Company shall betrading or listed on The NASDAQ Global Market or any other national publicsecurities exchange.

(e)                                  Company shall not be insolvent, havefiled a petition for voluntary bankruptcy or have become the subject of aninvoluntary bankruptcy proceeding, have made an assignment for the benefit ofcreditors, have been voluntarily or involuntarily dissolved or have had areceiver, trustee or other court officer appointed for its property.

(f)                                    Purchaser shall have received an opinionof Dechert LLP, dated as of the date of the Closing, in a form reasonablysatisfactory to Purchaser’s counsel.

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(g)                                 Company shall have promptly delivered toPurchaser copies of any amendments or modifications to its Operating Documentscertified by the Secretary of State of Delaware, and, with respect to thebylaws, the Secretary of Company.

(h)                                 The Company and the Purchaser shall haveexecuted the Collaboration Agreement of even date herewith.

(i)                                     The Collaboration Agreement shall be infull force and effect and the Company shall not be in breach or default underthe Collaboration Agreement.

(j)                                     The Company ***.

7.2.                              Conditions to Obligations of Company toConsummate the Closing. The obligations of Company to consummate the Closing and to sell and issue theShares is subject to the satisfaction or Company’s waiver, on or prior to theClosing, of each of the following conditions, as applicable:

(a)                                  Purchaser’s representations andwarranties and covenants contained in this Agreement are true and correct as ofthe date of the Closing, as though made on and as of that date.

(b)                                 There shall be no Legal Proceedingchallenging this Agreement or the transactions contemplated by this Agreement, orseeking to prevent or delay the consummation of any Closing, instituted andpending before any court or Governmental Authority.

(c)                                  The Company shall have exercised theOption and shall have delivered to the Purchaser the Option Notice.

SECTION 8.                                Broker’s Fee. Each of the Parties hereto hereby represents that,on the basis of any actions and agreements by it, there are no brokers orfinders entitled to compensation in connection with the sale of the Shares tothe Purchaser.

SECTION 9.                                Publicity. Neither Party shall originate any written publicity,news release or other announcement or statement relating to the announcement orterms of this Agreement (collectively, a “**Written Disclosure**”),without the prompt prior review and written approval of the other Party, whichapproval shall not be unreasonably withheld or delayed. Notwithstanding theforegoing, either Party may make any public Written Disclosure it believes ingood faith based upon the advice of counsel is required by applicable law, ruleor regulation or any listing or trading agreement concerning its or itsAffiliates’ publicly traded securities; *provided*, *however*, that such Written Disclosure shall minimize to theextent possible the financial information disclosed, and that prior to makingsuch Written Disclosure, the disclosing Party shall provide to the other Partya copy of the materials proposed to be disclosed and provide the receivingParty with an opportunity to promptly review the Written Disclosure and providecomments within two (2) Trading Days of the proposed drafts of the WrittenDisclosure.

SECTION 10.                          Notices. All notices required or permitted hereunder shall bein writing and shall be deemed effectively given: (i) upon delivery to theParty to be notified; (ii) when received by confirmed facsimile or (iii) one(1) business day after deposit with a nationally recognized overnight carrier,specifying next business day delivery, with written verification of

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receipt. Allcommunications shall be sent to the Company and the Purchaser as follows or atsuch other addresses as the Company or the Purchaser may designate upon ten(10) days’ advance written notice to the other Party:

(a)                                  if to the Company, to:

PharmacopeiaDrug Discovery, Inc.

3000Eastpark Boulevard

Cranbury,New Jersey 08512

Attn: GeneralCounsel

Facsimile:(609) 452-3672

with acopy to:

EllaDeTrizio, Esq.

DechertLLP

PrincetonPike Corporate Center

P.O.Box 5218

Princeton,NJ 08543-5218

Facsimile:(609) 620-3259

(b)                                 if to the Purchaser, at its address asset forth at the end of this Agreement,

with a copy to:

Organon InternationalInc.

56 Livingston Avenue

Roseland, NJ 07068

Attn:  General Counsel

SECTION 11.                          Changes. This Agreement may not be modified or amended exceptpursuant to an instrument in writing signed by the Company and the Purchaser.No provision

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hereunder may be waivedother than in a written instrument executed by the waiving party.

SECTION 12.                          Headings. The headings of the various sections of thisAgreement have been inserted for convenience of reference only and shall not bedeemed to be part of this Agreement.

SECTION 13.                          Severability. In case any provision contained in this Agreementshould be invalid, illegal or unenforceable in any respect, the validity,legality and enforceability of the remaining provisions contained herein shallnot in any way be affected or impaired thereby.

SECTION 14.                          Governing Law and Jurisdiction. This Agreement shall be governed by andconstrued in accordance with the laws of the State of Delaware and the federallaw of the United States of America. THE COMPANY AND THE PURCHASER HEREBYIRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERALCOURTS SITTING IN THE CITY OF TRENTON, COUNTY OF MERCER FOR THE ADJUDICATION OFANY DISPUTE BROUGHT BY THE COMPANY OR THE PURCHASER HEREUNDER, IN CONNECTIONHEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN(INCLUDING WITH RESPECT TO THE ENFORCEMENT OF THIS AGREEMENT), AND HEREBYIRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDINGBROUGHT BY THE COMPANY OR THE PURCHASER, ANY CLAIM THAT IT IS NOT PERSONALLYSUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION ORPROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICEOF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION ORPROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OROVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS INEFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICESHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHINGCONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESSIN ANY MANNER PERMITTED BY LAW. THE COMPANY AND THE PURCHASER HEREBY WAIVE ALLRIGHTS TO A TRIAL BY JURY.

SECTION 15.                          Counterparts. This Agreement may be executed in two or morecounterparts, each of which shall constitute an original, but all of which,when taken together, shall constitute but one instrument, and shall becomeeffective when one or more counterparts have been signed by each Party heretoand delivered (including by facsimile) to the other Parties.

SECTION 16.                          Entire Agreement. This Agreement and the instruments referenced hereincontain the entire understanding of the parties with respect to the matterscovered herein and therein and, except as specifically set forth herein ortherein, neither the Company nor the Purchaser makes any representation,warranty, covenant or undertaking with respect to such matters.

SECTION 17.                          Parties. This agreement is made solely for the benefit of andis binding upon the Purchaser and the Company, and no other person shallacquire or have any right under or by virtue of this Agreement. The term“successors and assigns” shall not include any

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subsequent purchaser, assuch purchaser, of the Shares sold to the Purchaser pursuant to this Agreement.

SECTION 18.                          Assignment. Except as otherwise expressly provided herein, theprovisions hereof shall inure to the benefit of, and be binding upon, theparties hereto and their respective permitted successors, assigns, heirs,executors and administrators. The rights of the Purchaser to purchase theShares shall not be assigned without the consent of the Company.

SECTION 19.                          Further Assurances. Each Party agrees to cooperate fully with the otherParties and to execute such further instruments, documents and agreements andto give such further written assurance as may be reasonably requested by anyother Party to evidence and reflect the transactions described herein andcontemplated hereby and to carry into effect the intents and purposes of this Agreement.

[Remainder of Page Left Intentionally Blank]

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IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed by their duly authorized representatives as ofthe day and year first above written.
|   | PHARMACOPEIA DRUG  DISCOVERY, INC. |
|--------|------------------------------------|
|   |                               |
|   |                               |   |
|   | By:                                | /s/ Leslie J. Browne |
|   |                               |   |
|   |                               | Name: Leslie J. Browne,  Ph.D. |
|   |                               |   |
|   |                               | Title: President and  Chief Executive Officer |
|   |                               |   |
|   |                               |   |
|   | N.V. ORGANON                       |
|   |                               |   |
|   |                               |   |
|   | By:                                | /s/ C.D. Nicholson |
|   |                               |   |
|   |                               | Name: Dr. C.D.  Nicholson |
|   |                               |   |
|   |                               | Title: Executive Vice  President |
|   |                               |  Research  & Development |
|   |                               |   |
|   |                               |   |
|   | By:                                | /s/ A.W.M. Rijnders |
|   |                               |   |
|   |                               | Name: Dr. A.W.M.  Rijnders |
|   |                               |   |
|   |                               | Title: Senior Vice  President Research |
|   |                               |   |
|   |                               |   |
|   | Address:                           |   |
|   |                               |   |
|   |                               |
|   |                               |
|   |                               |
|   | Telephone:                         |   |
|   |                               |   |
|   | Telecopy:                          |   |
|        |                                    |  |  |  |

 

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**EXHIBIT D**

**General Development CandidateCriteria**

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# **EXHIBIT E**

# **Joint Commercialization AgreementTerms**

## In the event an ***, the Parties agree that the Joint CommercializationAgreement referenced in Section 2.9(g) of the Agreement shall include the termsand principles set forth in this Exhibit E, It is understood that this ExhibitE does not contain all matters upon which agreement must be reached in orderfor the Joint Commercialization Agreement to be executed. The Parties will workin good faith to conclude a commercially standard Joint Commercialization Agreementwithin the time period and under the conditions set forth in Section 2.9(g) ofthe Agreement.

1.Additional Defined Terms. The Parties anticipate that terms not otherwise defined in the JointCommercialization Agreement shall be as defined in the Agreement.

1.1“Allocable Overhead” means ***. Allocable Overhead ***.

1.2“Allowable Commercialization Costs” means ***.

1.3“Bundled Transaction” has the meaning specified in the definition of Net Salesherein.

1.4“Co-Commercialization Territory” means, subject to the Parties’ rights todesignate a Joint Marketing Collaborator in a particular jurisdiction orregion, all of the countries of the world.

1.5“Commercialization” or “Commercialize” means any and all activities associatedwith marketing, promoting, communicating (including medical communications andpublishing), distributing, importing, exporting or selling the CollaborationProduct as set forth in the applicable Commercialization Plan, including theconduct of any activities (including any Post-approval Studies) directed toobtaining pricing and reimbursement approvals and any other Post-approvalStudies not included in Development, in each case by a Party, its Affiliates or(sub)licensees.

1.6“Commercialization Plan” means the plan to be developed by the JointCommercialization Committee and, subject to Section 2.9(h) of theAgreement,  approved by the JointCommercialization Committee for each Contract Year with respect to theCollaboration Product in accordance with the terms of the Joint CommercializationAgreement.

1.6A“Contract Year” means (a) with respect to the first Contract Year, the periodbeginning on the Effective Date and ending on December 31,       (the “First Contract Year”), and (b) with respect to each subsequentContract Year, the twelve (12) month period beginning on the day following theend of the First Contract Year and each succeeding twelve (12) month periodthereafter. Each

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ContractYear (other than the First and last Contract Year, as applicable) shall bedivided into four (4) “Contract Quarters” comprised of successive three(3) month periods. In the First Contract Year, the first Contract Quarter shallbegin on the Effective Date and end on       

1.7“Cost of Goods Sold” means ***. It is understood that ***. For purposes of theforegoing, ***. All ***. Under no circumstance shall ***.

## 1.8 “Detail”means a sales presentation by a professional sales representative to a targetphysician involved in prescribing the Collaboration Product in which theprimary purpose is to discuss the benefits and features of the CollaborationProduct. The Parties will agree in the Joint Commercialization Agreement how tofairly apportion professional sales representatives’ time and effort withrespect to sales presentations in which more than only the CollaborationProduct is discussed.

1.9“Detail Costs” means the ***.

1.10“Distribution Costs” means ***. Notwithstanding the foregoing, DistributionCosts shall ***. It is understood that ***.

1.11“Economic Interest” means the ***.

1.12 “GAAP” means United States generally acceptedaccounting principles or International Financial Reporting Standards (IFRS), asthey exist from time to time, consistently applied, and applicable based on thestandard that the Party incurring costs or invoicing sales customarily uses forother similarly situated products.

1.13“Joint Commercialization Committee” shall have the meaning more fully specifiedin the Joint Commercialization Agreement. Subject to Section 2.9(h) of theAgreement, the Joint Commercialization Committee shall oversee all aspects ofthe Co-Commercialization activities and shall discuss and agree on the partiesrespective roles within the Co-Commercialization activities.

1.14“Manufacturing” or “Manufacture” means all activities set forth in theapplicable manufacturing plan associated with the production, processing,filling, finishing, packaging, labeling, shipping and storage of CollaborationProducts, including stability testing, formulation, manufacturing processdevelopment, process validation, manufacturing scale-up, preclinical, clinicaland commercial manufacture and analytical development and quality assurance andquality control activities. Unless otherwise agreed, it is understood that ***.

1.15“Net Sales” shall mean ***.

***. In the event that a ***. For the avoidance ofdoubt, ***.

***.

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***.

***.

In the event that the***.

***.

***.

1.16“Operating Profit/Loss” means ***. For clarity, the ***.

1.17“Post-approval Study” means a clinical trial conducted after RegulatoryApproval of the Collaboration Product for the applicable indication has beenobtained in the relevant country.

1.18“Product Trademark” means one or more trademarks, slogans or logos that areused for the Commercialization of the Collaboration Product in the Co-CommercializationTerritory.

1.19“Regulatory and Licensing Costs” means the following costs and expensesattributable to ***.

1.20“Sales and Marketing Costs” means ***. For the avoidance of doubt, in no eventshall ***. Sales and Marketing Costs include the following, ***:

1.20.1***;

1.20.2***;

1.20.3***;

1.20.4  ***, and

1.20.5***.

## 2. General. TheParties shall prepare a Commercialization Plan setting forth the Partiesrespective activities within the joint commercialization effort related to theCollaboration Products ***, and will update the Commercialization Plans ***. Itis intended that the ***. Eachparty shall contribute to Allowable Commercialization Costs as specified inArticle 9.

2.1Each annual Commercialization Plan shall be in writing and shall set forth withreasonable specificity the ***.

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3. Marketing and Marketing Plans. The Joint Commercialization Committeeshall coordinate and implement the marketing and Detail strategies and tactics,sales force training programs, sales forecasts and Post-approval Studies forthe Collaboration Product in the Co-Commercialization Territory.

4.Sales Force. TheJoint Commercialization Committee shall determine the number of Details to beperformed by each Party. The Parties shall be responsible for providing Details***. Notwithstanding the foregoing, it is understood that ***. If ***. Forclarity, the measurement of the provision of Details by each Party will be madebased on ***.

5.Labeling and Promotion. Subject to Section 2.9(h) of the Agreement, or unless otherwiseagreed by the Parties: (a) the Collaboration Product will be marketed in eachcountry with one label and will bear one or more Product Trademarks; and (b)all advertising and promotional material in respect of the CollaborationProduct in each country (including any Collaboration Product labeling orpackaging inserts to the extent permitted by law or required by any RegulatoryAuthority and approved by the Joint Commercialization Committee) will includeboth Parties’ respective name, address and logo, with the size and placement ofeach such name, address and logo to be equally prominent, and as furtherdetermined by the Joint Commercialization Committee.

6.Regulatory and Other Inquiries. Upon the entry into a Joint CommercializationAgreement for an Optionable Development Candidate, the following rights andobligations will apply with respect to regulatory matters:  It isunderstood that all regulatory applications, NDAs and Regulatory Approvals forCollaboration Products shall be ***. Upon being contacted by any Regulatory Agency forany regulatory purpose pertaining to this Agreement or to a CollaborationProduct, each Party shall promptly notify and consult with the other, and *** hereunder.

7.Product Recall.In the event that either Party determines that an event, incident orcircumstance has occurred that may result in the need for a recall or otherremoval of the Collaboration Product, or any lot or lots thereof, from a marketin any country, it shall advise and consult with the other Party with respectthereto. ***. The costs and expenses of such recall or removal in each country,including expenses and other costs or obligations to Third Parties, the costand expense of notifying customers and costs and expenses associated with shipmentof the recalled Collaboration Product from a customer to either Party ***.

8.Commercialization by Joint Marketing Collaborators. In the event the JointCommercialization Committee determines that a particular Collaboration Productshould be commercialized entirely by or through one or more Third Parties(each, a “Joint Marketing Collaborator”) throughout the Territory or in one ormore particular countries or regions, then subject to the Parties’ entry, intheir respective sole discretion, into a definitive agreement with respectthereto with the applicable Joint Marketing Collaborator(s).

8.1The Parties shall ***; and

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8.2Each Party shall take, or cause to be taken, all actions reasonably necessaryto consummate and make effective any such agreement with such JointMarketing/Development Collaborator.

9. Financial Terms.

9.1Collaboration Cost and Revenue Sharing. Beginning with the first commercial sale of aCollaboration Product and throughout the term of the CommercializationAgreement, all Operating Profit/Loss shall be ***.

9.2Reporting of Operating Profit/Loss and Detail Efforts.

9.2.1Reports of Net Sales, Allowable Commercialization Costs and Details. During the term of theCommercialization Agreement, each Party shall, within ***, furnish to the otherParty a written report showing in reasonable detail ***.

9.2.2Consolidated Report of Operating Profit/Loss and Detail Efforts. During the term of theCommercialization Agreement, Organon shall, ***, furnish to Pharmacopeia awritten report showing in reasonable detail and in United States Dollars: ***.

9.2.3Payment of Operating Profit/Loss Amounts Owed. Amounts shown as owed by one Party to the otherParty under the report delivered in accordance with Section 9.2.2 shall bepayable within *** following the delivery of such report.

9.3Exchange Rates.Gross sales, Net Sales, Allowable Commercialization Costs and OperatingProfit/Loss attributable to countries other than the United States shall becalculated as the average of the “bid” and “asked” exchange rates provided bythe Wall Street Journal Europe or other recognized reference sourceagreed to by the Parties, for all the business days of each calendar quarter,into United States Dollars, and otherwise in accordance with the standardexchange rate conversion practices used by the reporting Party for financialaccounting purposes.

9.4Records. TheParties shall each keep accurate books and accounts of record in connectionwith the Commercialization of the Collaboration Product in a manner consistentwith GAAP and in sufficient detail to permit accurate determination of allfigures necessary for verification of gross sales, Net Sales, AllowableCommercialization Costs, Operating Profit/Loss and Details performed hereunder.

9.5Audits. Upon thewritten request of a Party, the other Party shall permit an independentcertified public accountant acceptable to the other Party selected by therequesting Party and acceptable to the other Party (such acceptance not to beunreasonably withheld, conditioned or delayed), to have access, at reasonabletimes and during normal business hours, to such records of such other Party asmay be reasonably necessary to verify the accuracy of the reports describedherein

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(and,if not included in such reports, the gross sales of the Collaboration Productsold by such Party, its (sub)licensees and their respective Affiliates alongwith the calculation of Net Sales from such gross sales, in each case, on acountry-by-country basis), in respect of ***. Each Party shall use commerciallyreasonable efforts to schedule all such verifications within *** after therequesting Party makes its written request. A verification of a Party’s booksand records shall be conducted not more than ***. The report of the requestingParty’s independent certified public accountant shall be made available to bothParties. ***. The fees charged by such independent certified public accountantshall be paid ***. Each Party agrees that all information subject to reviewunder this section or under any agreement with a (sub)licensee of a Party isconfidential and that the Party receiving such information shall cause itsindependent certified public accountant to retain all such information inconfidence. The requesting Party’s independent certified public accountantshall only report to the requesting Party as to the ***, and shall not discloseto the requesting Party any other information of the other Party or any(sub)licensee of a Party.

9.6Withholding Taxes.In the event that any royalties or other payments due to a Party are subject towithholding tax required by law to be paid to the taxing authority of anyforeign country, the amount of such tax may be withheld from the applicableroyalties or other payment due such Party. The Party owing such payment shallpromptly pay such tax on behalf of the Party to which such payment is owed andshall furnish the Party to which such payment is owed with a certificate ofwithholding tax so deducted for such Party’s avoidance of duplicate taxation inmultiple countries. The Party owing such payment may not deduct any otherwithholding or any other governmental charges from the payments agreed uponunder this Agreement, except to the extent same are paid on behalf of, or forthe benefit of, the Party to which such payment is owed. The Party owing suchpayment shall maintain official receipts of payment of any such withholdingtaxes and shall forward such receipts to the Party to which such payment isowed.

9.7Blocked Currency.If by Law or fiscal policy of a particular country, conversion into UnitedStates dollars or transfer of funds of a convertible currency to the UnitedStates is restricted or forbidden, the Party owing such payment shall give theParty to which such payment is owed prompt written notice and shall make suchpayment due under this section through such means or methods as are lawful insuch country as the Party to which such payment is owed may reasonablydesignate. Failing the designation by the Party to which such payment is owedof such lawful means or methods within thirty (30) days after such writtennotice is given to such Party, the Party owing such payment shall deposit suchroyalty payment in local currency to the credit of the Party to which suchpayment is owed in a recognized banking institution designated by such Party,or if none is designated by such Party within the thirty (30) day perioddescribed above, in a recognized banking institution selected by the Partyowing such payment and identified in a written notice to other Party, and suchdeposit shall fulfill all obligations of the Party owing such payment to theother Party with respect to such payment.

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9.8Interest on Late Payments. A Party to which payment is owed under this Agreement shall have theright to seek to collect interest on any payments that are not paid on orbefore forty-five (45) days after the date such payments are due under thisAgreement at an annual rate equal to the London Interbank Offered Rate, or themaximum amount permitted by law, whichever is less, calculated on the totalnumber of days payment is delinquent.

9.9Manner of Payment.All payments due Pharmacopeia hereunder shall be made in United States dollars,for Pharmacopeia’s account, by wire transfer to a bank in the United Statesdesignated in writing by Pharmacopeia; provided, however, thatwhere payments in respect of Net Sales are based on Net Sales in non-U.S.currencies, the amount of Net Sales and any deductions used to calculate NetSales, if any, shall be converted by Organon, using the average of the “bid”and “asked” exchange rates provided by the Wall Street Journal Europe orother recognized reference source agreed to by the Parties, for all thebusiness days of each calendar quarter, into United States Dollars, andotherwise in accordance with the standard exchange rate conversion practicesused by the reporting Party for financial accounting purposes. All paymentsrequired according to this Section 9 due Organon hereunder shall be made inEuros, for Organon’s account, by wire transfer to a bank in the Netherlandsdesignated in writing by Organon. Any payments that are not paid on the datesuch payments are due under this Agreement shall bear interest to the extentpermitted by applicable law at the prime rate as reported by the Chase ManhattanBank, New York, New York, on the date such payment is due, plus an additionaltwo percent (2%) calculated on the number of days such payment is delinquent.The interest available to each Party pursuant to this Section shall in no waylimit any other remedies available.

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**Schedule 1**

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**EXHIBITF**

**PatentRights Applicable to Transferred Programs**

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