Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”)
is made and entered into effective as of March 31, 2005 (the “Effective Date”), by and between Discovery
Partners, Inc., a Delaware corporation (the “Company”),
and Michael C. Venuti, Ph.D. (“Executive”).  The Company and Executive are hereinafter
collectively referred to as the “Parties”,
and individually referred to as a “Party”.

 

RECITALS

 

A.                                    The Company desires assurance of the
association and services of Executive in order to retain Executive’s
experience, skills, abilities, background and knowledge, and is willing to
engage Executive’s services on the terms and conditions set forth in this
Agreement.

 

B.                                    Executive desires to be in the employ of the
Company, and is willing to accept such employment on the terms and conditions
set forth in this Agreement.

 

AGREEMENT

 

In consideration of the
foregoing Recitals and the mutual promises and covenants herein contained, and
for other good and valuable consideration, the Parties, intending to be legally
bound, agree as follows:

 

1.                                      EMPLOYMENT.

 

1.1                               Term. 
Executive shall be employed at will, meaning that either Executive or
the Company may terminate this Agreement and Executive’s employment by the
Company at any time, with or without cause.

 

1.2                               Title. 
Executive shall initially have the title of Chief Scientific Officer of
the Company and shall serve in such other capacity or capacities as the Company
may from time to time prescribe. 
Executive shall report to the Chief Executive Officer of the Company.

 

1.3                               Duties.  Executive shall do and perform all services, acts or things necessary
or advisable to manage and conduct the business of the Company and which are
normally associated with the position of Chief Scientific Officer, consistent
with the bylaws of the Company and as required by the officers to whom
Executive shall report.  The position of
Chief Scientific Officer is a full time position.

 

1.4                               Policies and Practices.  The employment relationship between the Parties shall be governed by
the policies and practices established by the Company and the Board.  Executive acknowledges that he has read the
Company’s Employee Handbook and other governing policies, which will govern the
terms and conditions of his employment with the Company, along with this
Agreement.  In the event that the terms
of this Agreement differ from 

 

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or are in conflict with the
Company’s policies or practices or the Company’s Employee Handbook, this
Agreement shall control.

 

1.5                               Location. 
Unless the Parties otherwise agree in writing, during the term of this
Agreement, Executive shall perform the services Executive is required to
perform pursuant to this Agreement at the Company’s offices, located in South
San Francisco, California, or at any other place at which the Company maintains
an office; provided, however, that the Company may from time to time require
Executive to travel temporarily to other locations in connection with the
Company’s business.

 

2.                                      LOYAL AND CONSCIENTIOUS PERFORMANCE;
NONCOMPETITION.

 

2.1                               Loyalty. 
During Executive’s employment by the Company, Executive shall devote
Executive’s full business energies, interest, abilities and productive time to
the proper and efficient performance of Executive’s duties under this
Agreement.

 

2.2                               Covenant not to Compete. 
Except with the prior written consent of the Company’s Board of
Directors or the Company’s Chief Executive Officer, Executive will not, during
any period during which Executive is receiving any compensation or any other
consideration from the Company, engage in competition with the Company and/or any of its
Affiliates, either directly or indirectly, in any manner or capacity, as
adviser, principal, agent, affiliate, promoter, partner, officer, director,
employee, stockholder, owner, co-owner, consultant, or member of any
association or otherwise, in any phase of the business of developing,
manufacturing and marketing of products or services which are in the same field
of use or which otherwise compete with the products or services or proposed
products or services of the Company and/or any of its Affiliates.  For purposes of this Agreement, “Affiliate” means, with respect to any
specific entity, any other entity that, directly or indirectly, through one or
more intermediaries, controls, is controlled by or is under common control with
such specified entity.

 

2.3                               Agreement not to Participate
in Company’s Competitors.  During any period during which Executive is
receiving any compensation or consideration from the Company, Executive agrees
not to acquire, assume or participate in, directly or indirectly, any position,
investment or interest known by Executive to be adverse or antagonistic to the
Company, its business or prospects, financial or otherwise or in any company,
person or entity that is, directly or indirectly, in competition with the
business of the Company or any of its Affiliates.  Ownership by Executive, as a passive
investment, of less than two percent (2%) of the outstanding shares of capital
stock of any corporation with one or more classes of its capital stock listed
on a national securities exchange or publicly traded on the Nasdaq Stock Market
or in the over-the-counter market shall not constitute a breach of this
paragraph.

 

3.                                      COMPENSATION OF EXECUTIVE.

 

3.1                               Base Salary.  The
Company shall pay Executive a base salary of three hundred fifty-one thousand
five hundred dollars ($351,500.00) per year, less payroll deductions and all
required withholdings payable in regular periodic payments in accordance with
Company 

 

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policy (the “Base Salary”).  The Base Salary shall be prorated for any
partial year of employment on the basis of a 365-day fiscal year.

 

3.2                               Annual Bonus Program.  In
addition to the Base Salary, Executive shall be eligible to participate in such
performance bonus programs for executive officers of the Company as may be
provided from time to time by the Company. 
Executive shall be eligible to earn an annual bonus of up to a maximum
of thirty-five percent (35%) of the Base Salary provided that both corporate
performance targets and individual performance targets established by the
Compensation Committee of the Company’s Board of Directors or such other
committee or individual as the Board of Directors may specify are met.

 

3.3                               Restricted Stock Award. 
Subject to approval by the Board of Directors, and pursuant to the terms
of the Company’s 2000 Stock Incentive Plan, the Company will grant to Executive
the right to receive two hundred thousand (200,000) shares of the common stock
of the Company which right shall vest, provided that Executive remains a full
time employee of the Company without break or interruption of service, on the
fifth anniversary of Executive’s first day of employment by the Company (the “Restricted Stock Award”).  The vesting of the Restricted Stock Award may
be accelerated provided that Executive and the Company meet specific
performance targets to be agreed by the Parties; any such agreement shall
specify the performance target(s), any deadline(s) or milestone(s), and the
number of shares of the Restricted Stock Award to be accelerated upon
attainment of the specific performance targets.

 

3.4                               Changes to Compensation. 
Executive’s compensation will be reviewed on a regular basis by the
Company and may be changed from time to time as deemed appropriate.

 

3.5                               Employment Taxes.  All
of Executive’s compensation shall be subject to customary withholding taxes and
any other employment taxes as are commonly required to be collected or withheld
by the Company.

 

4.                                      SEVERANCE AND CHANGE IN CONTROL
BENEFITS

 

4.1                               Severance Benefits.  If Executive’s employment terminates due to a Covered Termination after
the date of execution of this Agreement, Executive shall receive any annual
base salary and bonus compensation that has been earned but is unpaid as of the
date of such Covered Termination.  In
addition, Executive shall continue to receive Executive’s Base Salary in effect
as of the date of such Covered Termination for a period of (12) months,
commencing on the date on which the Release described in Section 4.3 below
becomes effective in accordance with its terms, subject to applicable tax
withholding and paid on the Company’s standard payroll dates and in accordance
with the Company’s standard payroll practices. 
In addition, within ten (10) business days following the effective date
of the Release described in Section 4.3 below, the Company shall pay to
Executive a lump sum amount in cash, less standard deductions and withholdings,
equal to the quotient of: (i) Executive’s average bonus for the three prior
full calendar years of employment with the Company (or such lesser number of
full calendar years during which Executive was employed by the Company), times
(ii) the number of days in the calendar year through the effective date of the
Covered Termination, divided by (iii) 365. 
In addition, following a Covered Termination, Executive and Executive’s
covered 

 

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dependents shall be eligible
to continue their health care benefit coverage as permitted by COBRA (Internal
Revenue Code Section 4980B) at the same cost to Executive as in effect
immediately prior to the Covered Termination for the one (1)-year period
following the Covered Termination, provided that Executive timely elects COBRA
coverage.  Executive shall be entitled to
maintain coverage for Executive and Executive’s eligible dependents at
Executive’s own expense or the balance of the period that Executive is entitled
to coverage under COBRA in accordance with applicable law.

 

4.2                               Parachute Payments.  If any payment or benefit Executive would receive in connection with a
Change in Control from the Company or otherwise (“Payment”) would (i)
constitute a “parachute payment” within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), then such Payment shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be either (x) the
largest portion of the Payment that would result in no portion of the Payment
being subject to the Excise Tax or (y) the largest portion, up to and including
the total, of the Payment, whichever amount, after taking into account all
applicable federal, state and local employment taxes, income taxes, and the
Excise Tax (all computed at the highest applicable marginal rate), results in
Executive’s receipt, on an after-tax basis, of the greater amount of the
Payment notwithstanding that all or some portion of the Payment may be subject
to the Excise Tax.  If a reduction in
payments or benefits constituting “parachute payments” is necessary so that the
Payment equals the Reduced Amount, reduction shall occur in the following order
unless Executive elects in writing a different order (provided, however, that
such election shall be subject to Company approval if made on or after the
effective date of the Change in Control): reduction of cash payments;
cancellation of accelerated vesting of stock awards; reduction of employee
benefits.  In the event that acceleration
of vesting of stock award compensation is to be reduced, such acceleration of
vesting shall be cancelled in the reverse order of the date of grant of
Executives stock awards unless Executive elects in writing a different order
for cancellation.

 

The
accounting firm engaged by the Company for general audit purposes as of the day
prior to the effective date of the Change in Control shall perform the
foregoing calculations.  If the
accounting firm so engaged by the Company is serving as accountant or auditor
for the individual, entity or group effecting the Change in Control, the
Company shall appoint a nationally recognized accounting firm to make the
determinations required hereunder.  The
Company shall bear all expenses with respect to the determinations by such
accounting firm required to be made hereunder.

 

The
accounting firm engaged to make the determinations hereunder shall provide its
calculations, together with detailed supporting documentation, to the Company
and Executive within fifteen (15) calendar days after the date on which
Executive’s right to a Payment is triggered (if requested at that time by the
Company or Executive) or such other time as requested by the Company or
Executive.  If the accounting firm
determines that no Excise Tax is payable with respect to a Payment, either
before or after the application of the Reduced Amount, it shall furnish the
Company and Executive with an opinion reasonably acceptable to Executive that
no Excise Tax will be imposed with respect to such Payment.  Any good faith determinations of the
accounting firm made hereunder shall be final, binding and conclusive upon the
Company and Executive.

 

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4.3                               Release.  Upon the occurrence of a Covered Termination, and prior to the receipt
of any benefits under Section 4.1 (except pursuant to the first sentence
thereof) on account of the occurrence of such Covered Termination, Executive
shall execute a Release (the “Release”) in the form attached hereto as Exhibit
A.  The Release shall specifically relate
to all of Executive’s rights and claims in existence at the time of such
execution and shall confirm Executive’s obligations under the Company’s
standard form of proprietary information agreement.  It is understood that Executive has a certain
period to consider whether to execute the Release, and Executive may revoke the
Release within seven (7) business days after execution.  In the event Executive does not execute the
Release within the applicable period, none of the aforesaid benefits shall be
payable under this Agreement and this Agreement shall be null and void.

 

4.4                               Definitions.                                For purposes of this Section 4, the following
terms are defined as follows:

 

4.4.1                     “Cause” means:

 

(a)                                  Executive’s intentional action or intentional
failure to act that was performed in bad faith and to the material detriment of
the business of the Company;

 

(b)                                  Executive’s intentional refusal or
intentional failure to act in accordance with any lawful and proper direction
or order of the Board or the appropriate individual to whom Executive reports;

 

(c)                                  Executive’s willful and habitual neglect of
Executive’s duties of employment;

 

(d)                                  Executive’s violation of any noncompetition
or noninterference agreement that Executive has entered into with the Company;
or

 

(e)                                  Executive’s conviction of a felony crime
involving moral turpitude;

 

provided,
however, that if any
of the foregoing events under clauses (a), (b), (c), or (d) above is, in the
sole and exclusive discretion of the Company, capable of being cured, the
Company shall provide written notice to Executive describing the nature of such
event and Executive shall have ten (10) business days to cure such event.

 

4.4.2                     “Covered Termination” means (i) an Involuntary Termination Without
Cause that occurs at any time, without regard to a Change in Control, or (ii) a
voluntary termination for Good Reason that occurs on or after the effective
date of a Change in Control.

 

4.4.3                     “Good Reason” means that following a Change in Control any of the following are
undertaken without Executive’s express written consent:

 

(a)                                  the assignment to Executive of any duties or
responsibilities that results in any diminution or adverse change of
Executive’s position, status, circumstances of employment or scope of
responsibilities;

 

(b)                                  a reduction by the Company in Executive’s
annual base salary as in effect on the effective date of the Change in Control;

 

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(c)                                  the taking of any action by the Company that
would adversely affect Executive’s participation in, or reduce Executive’s
benefits under, the Company’s benefit plans (including equity benefits) as of
the effective date of the Change in Control, except to the extent the benefits
of all other executives of the Company are similarly reduced;

 

(d)                                  a relocation of Executive’s principal officer
to a location more than forty (40) miles from the location at which Executive
was performing Executive’s duties as the effective date of the Change in
Control, except for required travel by Executive on the Company’s business;

 

(e)                                  any material breach by the Company of any
provision of this Agreement; or

 

(f)                                    any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the Company.

 

4.4.4                     “Involuntary Termination Without Cause” means Executive’s dismissal or discharge
other than for Cause.  The termination of
Executive’s employment as a result of Executive’s death or disability will not
be deemed to be an Involuntary Termination Without Cause.

 

5.                                      Confidential
And Proprietary Information; Nonsolicitation.

 

5.1                               As a condition of employment Executive agrees
to execute and abide by the Proprietary Information and Inventions Agreement
attached hereto as Exhibit B.

 

5.2                               While employed by the Company and for one (1)
year thereafter, Executive agrees that in order to protect the Company’s
Confidential and Proprietary Information from unauthorized use, that Executive
will not, either directly or through others, solicit or attempt to solicit any
employee, consultant or independent contractor of the Company to terminate his
or her relationship with the Company in order to become an employee, consultant
or independent contractor to or for any other person or business entity; or the
business of any customer, supplier, service provider, vendor or distributor of
the Company which, at the time of termination or one (1) year immediately prior
thereto, was doing business with the Company or listed on Company’s customer,
supplier, service provider, vendor or distributor list.

 

6.                                      Assignment
and Binding Effect.

 

This Agreement shall be
binding upon and inure to the benefit of Executive and Executive’s heirs, executors,
personal representatives, assigns, administrators and legal
representatives.  Because of the unique
and personal nature of Executive’s duties under this Agreement, neither this
Agreement nor any rights or obligations under this Agreement shall be assignable
by Executive.  This Agreement shall be
binding upon and inure to the benefit of the Company and its successors,
assigns and legal representatives.

 

7.                                      Choice
of Law.

 

This Agreement is made in
California.  This Agreement shall be
construed and interpreted in accordance with the internal laws of the State of
California.

 

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8.                                      Integration.

 

This Agreement, including
Exhibits A and B, contains the complete, final and exclusive agreement of the
Parties relating to the terms and conditions of Executive’s employment and the
termination of Executive’s employment, and supersedes all prior and
contemporaneous oral and written employment agreements or arrangements between
the Parties. To the extent this Agreement conflicts with the Proprietary
Information and Inventions Agreement attached as Exhibit B hereto, the
Proprietary Information and Inventions Agreement controls.  To the extent this Agreement conflicts with the
terms of the Employee Handbook, this Agreement controls.

 

9.                                      Amendment.

 

This Agreement cannot be
amended or modified except by a written agreement signed by Executive and the
Chief Executive Officer of the Company.

 

10.                               Waiver.

 

No term, covenant or
condition of this Agreement or any breach thereof shall be deemed waived,
except with the written consent of the Party against whom the wavier is
claimed, and any waiver or any such term, covenant, condition or breach shall
not be deemed to be a waiver of any preceding or succeeding breach of the same or
any other term, covenant, condition or breach.

 

11.                               Severability.

 

The finding by a court of
competent jurisdiction of the unenforceability, invalidity or illegality of any
provision of this Agreement shall not render any other provision of this
Agreement unenforceable, invalid or illegal. 
Such court shall have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or provision
which most accurately represents the Parties’ intention with respect to the invalid
or unenforceable term or provision.

 

12.                               Interpretation;
Construction.

 

The headings set forth in
this Agreement are for convenience of reference only and shall not be used in
interpreting this Agreement.  This
Agreement has been drafted by legal counsel representing the Company, but
Executive has been encouraged to consult with his own independent counsel and
tax advisors with respect to the terms of this Agreement.  The Parties acknowledge that each Party and
its counsel has reviewed and revised, or had an opportunity to review and
revise, this Agreement, and any rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.

 

13.                               Representations
and Warranties.

 

Executive represents and
warrants that Executive is not restricted or prohibited, contractually or
otherwise, from entering into and performing each of the terms and covenants 

 

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contained in this Agreement,
and that Executive’s execution and performance of this Agreement will not
violate or breach any other agreements between Executive and any other person
or entity.

 

14.                               Counterparts.

 

This Agreement may be
executed in two counterparts, each of which shall be deemed an original, all of
which together shall contribute one and the same instrument.

 

15.                               Arbitration.

 

To ensure the rapid and
economical resolution of disputes that may arise in connection with Executive’s
employment with the Company, Executive and the Company agree that any and all
disputes, claims, or causes of action, in law or equity, arising from or
relating to Executive’s employment, or the termination of that employment, will
be resolved pursuant to the Federal Arbitration Act and to the fullest extent
permitted by law, by final, binding and confidential arbitration in San Diego,
California conducted by the Judicial Arbitration and Mediation Services (“JAMS”), or its successors, under the then
current rules of JAMS for employment disputes; provided that the arbitrator
shall:  (a) have the authority to compel
adequate discovery for the resolution of the dispute and to award such relief
as would otherwise be permitted by law; and (b) issue a written arbitration
decision including the arbitrator’s essential findings and conclusions and a
statement of the award.  Both Executive
and the Company shall be entitled to all rights and remedies that either
Executive or the Company would be entitled to pursue in a court of law.  The Company shall pay all fees in excess of
those which would be required if the dispute was decided in a court of law,
including the arbitrator’s fee.  Nothing
in this Agreement is intended to prevent either Executive or the Company from
obtaining injunctive relief in court to prevent irreparable harm pending the
conclusion of any such arbitration.

 

16.                               Trade
Secrets Of Others.

 

It is the understanding of
both the Company and Executive that Executive shall not divulge to the Company
and/or its subsidiaries any confidential information or trade secrets belonging
to others, including Executive’s former employers, nor shall the Company and/or
its Affiliates seek to elicit from Executive any such information.  Consistent with the foregoing, Executive
shall not provide to the Company and/or its Affiliates, and the Company and/or
its Affiliates shall not request, any documents or copies of documents
containing such information.

 

17.                               Advertising
Waiver.

 

Executive agrees to permit
the Company and/or its Affiliates, and persons or other organizations
authorized by the Company and/or its Affiliates, to use, publish and distribute
advertising or sales promotional literature concerning the products and/or
services of the Company and/or its Affiliates, or the machinery and equipment
used in the provision thereof, in which Executive’s name and/or pictures of
Executive taken in the course of Executive’s provision of services to the
Company and/or its Affiliates, appear. 
Executive hereby waives and releases any claim or right Executive may
otherwise have arising out of such use, publication or distribution.

 

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In Witness Whereof, the Parties have executed this Agreement as of the date first above
written.

 

	
  Discovery Partners, Inc.

  	
   

  	 

	 
	
   

  	
   

  
	 
	
   

  	
   

  
	
  By:

  	
   /s/ Riccardo
  Piglucci

  	
   

  	
   

  	 

	
   

  	
  Riccardo Piglucci

  	
   

  	 

	 
	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	 

	
  Dated: March 31, 2005

  	
   

  	
   

  	 

	 
	
   

  	
   

  	
   

  
	 
	
   

  	
   

  	
   

  
	 
	
  Michael C. Venuti, Ph.D.

  	
   

  	
   

  
	 
	
   

  	
   

  	
   

  
	 
	
   

  	
   

  	
   

  
	
   /s/
  Michael C. Venuti, Ph.D.

  	
   

  	
   

  	
   

  	 

	
  Michael
  C. Venuti, Ph.D.

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	 
	
  Dated:
  March 31, 2005

  	
   

  	
   

  
										

 

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EXHIBIT A

 

RELEASE AND WAIVER OF CLAIMS

 

In consideration of the
payments and other benefits set forth in the Employment Agreement dated March
31, 2005, to which this form is attached, I, Michael C. Venuti, Ph.D., hereby
furnish DISCOVERY PARTNERS, INC. (the “Company”),
with the following release and waiver (“Release and Waiver”).

 

In exchange for the
consideration provided to me by the Employment Agreement that I am not
otherwise entitled to receive, I hereby generally and completely release the
Company and its directors, officers, employees, shareholders, partners, agents,
attorneys, predecessors, successors, parent and subsidiary entities, insurers,
Affiliates, and assigns from any and all claims, liabilities and obligations,
both known and unknown, that arise out of or are in any way related to events,
acts, conduct, or omissions occurring prior to my signing this Release and
Waiver.  This general release includes,
but is not limited to: (1) all claims arising out of or in any way related to
my employment with the Company or the termination of that employment; (2) all
claims related to my compensation or benefits from the Company, including
salary, bonuses, commissions, vacation pay, expense reimbursements, severance
pay, fringe benefits, stock, stock options, or any other ownership interests in
the Company; (3) all claims for breach of contract, wrongful termination,
and breach of the implied covenant of good faith and fair dealing; (4) all
tort claims, including claims for fraud, defamation, emotional distress, and
discharge in violation of public policy; and (5) all federal, state, and local
statutory claims, including claims for discrimination, harassment, retaliation,
attorneys’ fees, or other claims arising under the federal Civil Rights Act of
1964 (as amended), the federal Americans with Disabilities Act of 1990, the
federal Age Discrimination in Employment Act of 1967 (as amended) (“ADEA”), and the
California Fair Employment and Housing Act (as amended).

 

I also acknowledge that I
have read and understand Section 1542 of the California Civil Code which reads
as follows:  “A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.” I hereby
expressly waive and relinquish all rights and benefits under that section and
any law of any jurisdiction of similar effect with respect to any claims I may
have against the Company.

 

I acknowledge that, among
other rights, I am waiving and releasing any rights I may have under ADEA, that
this Release and Waiver is knowing and voluntary, and that the consideration
given for this Release and Waiver is in addition to anything of value to which
I was already entitled as an executive of the Company.  If I am 40 years of age or older upon
execution of this Release and Waiver, I further acknowledge that I have been advised,
as required by the Older Workers Benefit Protection Act, that:  (a) the release and waiver granted herein
does not relate to claims under the ADEA which may arise after this Release and
Waiver is executed; (b) I should consult with an attorney prior to executing
this Release and Waiver; and (c) I have twenty-one (21) days from the date of
termination of my employment with the Company in which to consider this Release
and Waiver (although I may choose voluntarily to execute this Release and
Waiver earlier); (d) I have seven (7) days following the execution of this
Release and Waiver to 

 

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revoke my consent to this
Release and Waiver; and (e) this Release and Waiver shall not be effective
until the seven (7) day revocation period has expired, which shall be the
eighth day following my execution of this Release and Waiver (the “Effective
Date”).

 

I
acknowledge my continuing obligations under my Proprietary Information and
Inventions Agreement, a copy of which is attached hereto as Exhibit A.  Pursuant to the Proprietary Information and
Inventions Agreement I understand that among other things, I must not use or
disclose any confidential or proprietary information of the Company and I must
immediately return all Company property and documents (including all
embodiments of proprietary information) and all copies thereof in my possession
or control.  I understand and agree that
my right to the severance pay and other benefits I am receiving in exchange for
my agreement to the terms of this Release and Waiver is contingent upon my
continued compliance with my Proprietary Information & Inventions
Agreement.

 

This
Release and Waiver, including Exhibit A hereto, constitutes the complete, final
and exclusive embodiment of the entire agreement between the Company and me
with regard to the subject matter hereof. 
I am not relying on any promise or representation by the Company that is
not expressly stated herein.  This
Release and Waiver may only be modified by a writing signed by both me and a
duly authorized officer of the Company.

 

 

	
  Date: 

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
    Michael C.
  Venuti, Ph.D.

  

 

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EXHIBIT
B

 

Proprietary Information

and Inventions Agreement

 

Discovery Partners International, Inc.

9640 Towne Centre Drive

San Diego, CA 92121

 

The following confirms an agreement between Discovery Partners
International, Inc. a California corporation (the “Company,” which term
includes the Company’s subsidiaries, successors and assigns), and me, which is
a material part of the consideration for my employment by the company.

 

1.               “Proprietary
Information” is information that was developed by, became known by, or was
assigned or otherwise conveyed to the Company, and which has commercial value
in the Company’s business.  I understand that
my employment creates a relationship of confidence and trust between me and the
Company with respect to Proprietary Information of the Company or its
customers, which may be learned by me during the period of my employment.  By way of illustration, but not limitation,
Proprietary Information includes trade secrets, processes, cell-lines, gels,
information, compilations, formulas, data and know-how, software programs,
improvements, inventions, techniques, marketing plans, strategies, forecasts,
computer programs and copyrightable material and customer lists.

 

2.               In
consideration of my employment by the Company and the compensation received by
me from the Company from time to time, I hereby agree as follows:

 

a)              All
Proprietary Information shall be the sole property of the Company and its
assigns, and the Company and its assigns shall be the sole owner of all
patents, copyrights and other rights in connection therewith.  I hereby assign to the Company any rights I
may have or acquire in such Proprietary Information.  At all times, both during my employment by
the Company and after its termination, I will keep in confidence and trust all
Proprietary Information, and I will not use or disclose any Proprietary
Information or anything relating to it without the written consent of the
Company, except as may be necessary in the ordinary course of performing my
duties to the Company.

 

b)             All
documents, records, apparatus, equipment and other physical property, whether
or not pertaining to Proprietary Information, furnished to me by the Company or
produced by myself or others in connection with my employment shall be and
remain the sole property of the Company and shall be returned to it immediately
as and when requested by the Company. 
Even if the Company does not so request, I shall return and deliver all
such property upon termination of any

 

 

employment by me or by the Company for any reason and I will not take
with me such property or any reproduction of such property upon such
termination.

 

c)              I
will promptly disclose to the Company, or any persons designated by it, all
improvements, inventions, formulas, ideas, processes, techniques, know-how and
data, whether or not patentable, made or conceived or reduced to practice or
learned by me, either alone or jointly with others during the term of my
employment and for one (1) year thereafter (all said improvements, inventions,
formulas, ideas, processes, techniques, know-how and data shall be hereinafter
collectively called “inventions”).

 

d)             During
the term of my employment and for one (1) year thereafter, I will not encourage
or solicit any employee of the Company to leave the Company for any reason or
to devote less than all of any such employee’s efforts to the affairs of the
Company, provided that the foregoing shall not affect any responsibility I may
have as an employee of the Company with respect to the bonafide hiring and
firing of Company personnel.

 

e)              I
agree that all inventions which I make, conceive, reduce to practice or develop
(in whole or in part, either alone or jointly with others) during my employment
shall be the sole property of the Company to the maximum extent permitted by
Section 2870 of the California Labor Code, a copy of which is attached
hereto.  The Company shall be the sole
owner of all patents, copyrights and other intellectual property or other
rights in connection therewith.  I hereby
assign to the Company any rights I may have or acquire in such inventions.  I agree to perform, during and after my
employment, all acts deemed necessary or desirable by the Company to permit and
assist it, at the Company’s expense, in obtaining and enforcing patents,
copyrights or other rights on such Inventions and improvements in any and all
countries.  Such acts may include, but
are not limited to, execution of documents and assistance or cooperation in
legal proceedings.  I hereby irrevocably
designate and appoint the company and its duly authorized officers and agents,
as my agents and attorney’s-in-fact to act for and in my behalf and instead of
me, to execute and file any applications or related filings and to do all other
lawfully permitted acts to further the prosecution and issuance of patents,
copyrights or other rights thereon with same legal force and effect as if
executed by me.

 

f)                As
a matter of record I attach hereto a complete list of all inventions or
improvements relevant to the subject matter of my employment by the Company
which have been made or conceived or first reduced to practice by me alone or
jointly with others prior to my employment with the Company that I desire to
remove from the operation of this Agreement, and I covenant that such list is
complete.  If no such list is attached to
this Agreement, I represent that I have no such inventions and improvements at
the time of signing this Agreement.

 

 

g)             I
represent that my performance of all the terms of this Agreement will not
breach any agreement to keep in confidence Proprietary Information acquired by
me in confidence or in trust prior to my employment by the Company.  I have not entered into, and I agree I will
not enter into, any agreement either written or oral in conflict herewith.

 

h)             I
represent the execution of this Agreement, my employment with the Company and
my performance of my proposed duties to the Company in the development of its
business will not violate any obligations I may have to any former employer.

 

i)                 This
Agreement does not require assignment of an invention, which an employee cannot
be obligated to assign under Section 2870 of the California Labor Code (hereinafter
called “Section 2870”).  However, I will
disclose any Inventions as required by Section 2.c) hereof regardless of
whether I believe the Invention is protected by Section 2870, in order to
permit the Company to engage in a review process to determine such issues as
may arise.  Such disclosure shall be
received in confidence by the Company.

 

3.               This
Agreement shall be effective as of the first day of my employment by the
Company; and shall be binding upon me, my heirs, executors, assigns, and administrators
and shall inure to the benefit of the Company, its successors and assigns.

 

	
  DATE:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
  Signature

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Print Name

  
	
   

  
	
   

  
	
  ACCEPTED AND AGREED TO:

  
	
   

  
	
  Discovery Partners International, Inc.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  
					

 

 

Exhibit A

 

Discovery Partners International, Inc.

9640 Towne Centre Drive

San Diego, CA 92121

 

1.               The
following is a complete list of all inventions or improvements relevant to the
subject matter of my employment by Discovery Partners International, Inc. that
have been made or conceived or first reduced to practice by me alone or jointly
with others prior to my employment by the company that I desire to remove from
the operation of the Company’s Propriety Information and Inventions Agreement:

 

                       No
inventions or improvements.

 

                       See
below:  Any all inventions regarding

 

                       Additional
sheets attached.

 

2.               I
propose to bring to my employment the following materials and documents of a
former employer:

 

                       No
materials or documents

 

                       See
below:

 

	
  DATE:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
  Signature

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Print Name

  

 

 

Exhibit B

 

§2870.  Application of provision
providing that employee shall assign or offer to assign rights in invention to
employer.

 

(a)          Any
provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either:

 

(1)          Relate
at the time of conception or reduction to practice of the invention to the
employer’s business, or actual or demonstrably anticipated research or
development of the employer; or

 

(2)          Result
from any work performed by the employee for the employer.

 

(b)         To
the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.

 

 

	
  DATE:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
  Signature

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Print NameExhibit
10.2

 

DISCOVERY
PARTNERS INTERNATIONAL, INC.

 

Stock Issuance

Grant Notice

(2000 Stock Incentive Plan)

 

This Stock Issuance Grant
Notice (the “Grant
Notice”) sets forth the terms and conditions under which
Discovery Partners International, Inc. (the “Company”),
pursuant to its 2000 Stock Incentive Plan (the “Plan”),
hereby awards to Participant as a stock issuance (a “Stock Issuance Award”)
or as a right (a “Share
Right”) to receive shares of the Company’s common stock in the
future (a “Deferred Stock
Issuance Award”) as set forth below (individually, an “Award”), covering the
number of shares set forth below.  This
Award is subject to all of the terms and conditions as set forth herein and in
the Stock Issuance Agreement (the “Stock Issuance Agreement”) and the Plan, and all attachments
thereto, each of which is attached hereto and incorporated herein in its
entirety.

 

	
  Participant:

  	
   

  	
   

  
	
  Grant Date:

  	
   

  	
   

  
	
  Vesting Commencement
  Date:

  	
   

  	
   

  
	
  Number of Shares
  Subject to Award:

  	
   

  	
   

  
	
  Consideration:

  	
   

  	
  Participant’s Services

  

 

	
  Type of Award:(1)

  	
   

  	
   ̈
  Stock Issuance Award 

  (default if none chosen)

  	
   ̈  Deferred Stock Issuance Award

  
	
  Distribution Date

  For Deferred Stock

  Issuance Award

  (check only one box):

  	
   

  	
  If the Award is a
  Deferred Stock Issuance Award, then, with respect to a Share Right 

  
	
   

  	
   

  	
  that has vested, shares
  of Common Stock shall be distributed upon the earliest of the following
  dates:  (complete only one selection
  below)*

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   ̈

  	
                 ,
  20    (2)

  
	
   

  	
   

  	
   ̈

  	
  Earlier of (i)                ,
  20    (3) and (ii) cessation of Service

  
	
   

  	
   

  	
  o

  	
  Cessation of
  Service  (default if no distribution
  option chosen)

  
	
   

  	
   

  	
  o

  	
                   years
  after cessation of Service

  
	
   

  	
   

  	
   

  	
   

  
	
  
  

  

  

  
	
   

  	
   

  	
  * Notwithstanding the
  selection above, shares of Common Stock will be issued immediately, in a
  single payment, upon either (i) a cessation of Service due to death or
  permanent and total disability, or (ii) a Corporate Transaction (as defined
  in the Plan) in which the Award is not assumed by the successor corporation
  (or parent thereof).

  
	
   

  	
   

  	
   

  
	
  Form of Payment under

  Deferred Stock Issuance Award

  (complete only one selection): 

  	
   

  	
   ̈

  	
  “Lump Sum” payment  (default if no payment option chosen)

  
	
   

  	
   

  	
   ̈

  	
  Annual payments over              
  years

  
	
   

  	
   

  	
   

  	
   

  
	
  Form of Tax Withholding:(4)

  	
   

  	
   

  	
   

  
	
  (check only one box):

  	
   

  	
  o

  	
  Payment with cash or
  check  (default if no form of
  withholding chosen)

  
	
   

  	
   

  	
   ̈

  	
  Withholding of shares
  (only for the minimum statutory withholding)

  
						

 

(1)  The Type of Award, and, in the case of a Deferred Stock
Issuance Award, the Distribution Date and the Form of Payment must be completed
in order for the Award to be effective.

(2)  Date must be subsequent to the date all shares become
fully vested

(3)  Date must be subsequent to the date all shares become
fully vested

(4)  Income tax only.

 

 

 

Vesting Schedule:                                           The
stock grant shall vest in the following manner:

 

a.               25% of
such stock grant shall vest upon the completion of 5 years of service (“Vesting
Period”) following         , provided,
however, that in the event the closing stock price exceeds $     
per share for any 30 consecutive calendar days during the Vesting Period, such
portion of the stock grant shall vest upon the later of: i)          ,
or ii) the first such time that the closing stock price has exceeded $       
per share for 30 consecutive calendar days during the Vesting Period.

 

b.              25% of
such stock grant shall vest upon the completion of the Vesting Period,
provided, however, that in the event the closing stock price exceeds $       
per share for any 30 consecutive calendar days during the Vesting Period, such
portion of the stock grant shall vest upon the later of: i)        ,
or ii) the first such time that the closing stock price has exceeded $         per share for 30 consecutive calendar days
during the Vesting Period.

 

c.               25% of
such stock grant shall vest upon the completion of the Vesting Period,
provided, however, that in the event the closing stock price exceeds $          
per share for any 30 consecutive calendar days during the Vesting Period, such
portion of the stock grant shall vest upon the later of: i)            ,
or ii) the first such time that the closing stock price has exceeded $            per share for 30 consecutive calendar days
during the Vesting Period.

 

d.              25% of
such stock grant shall vest upon the completion of the Vesting Period,
provided, however, that in the event the closing stock price exceeds $        
per share for any 30 consecutive calendar days during the Vesting Period, such
portion of the stock grant shall vest upon the later of: i)         ,
or ii) the first such time that the closing stock price has exceeded $           per share for 30 consecutive calendar days
during the Vesting Period.

 

Additional
Terms/Acknowledgements: 
The undersigned Participant acknowledges receipt of, and understands and
agrees to, this Grant Notice, the Stock Issuance Agreement and the Plan, and
all attachments thereto.  Participant
further acknowledges that as of the Grant Date, this Grant Notice, the Stock
Issuance Agreement and the Plan, and all attachments thereto, set forth the
entire understanding between Participant and the Company regarding the
acquisition of stock in the Company and supersede all prior oral and written
agreements on that subject with the exception of (i) Awards previously granted
and delivered to Participant under the Plan, and (ii) employment contracts,
including employment offer letters, or change in control agreements.

 

 

	
  Discovery
  Partners International, Inc.

  	
   

  	
  Participant:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
						

 

	
  Attachments:

  	
   

  	
  I.

  	
   

  	
  Stock Issuance
  Agreement

  
	
   

  	
   

  	
  II.

  	
   

  	
  Discovery Partners
  International, Inc. 2000 Stock Incentive Plan

  
	
   

  	
   

  	
  III.

  	
   

  	
  Form of Assignment
  Separate From Certificate (for Stock Issuance Awards only)

  
	
   

  	
   

  	
  IV.

  	
   

  	
  Form of Joint Escrow
  Instructions (for Stock Issuance Awards only)

  

 

 

Attachment I

 

STOCK
ISSUANCE AGREEMENT

 

 

Attachment II

 

DISCOVERY
PARTNERS INTERNATIONAL, INC.

2000
STOCK INCENTIVE PLAN

 

 

Attachment III

 

FORM OF
ASSIGNMENT SEPARATE FROM CERTIFICATE 

 

 

Attachment IV

 

FORM OF
JOINT ESCROW INSTRUCTIONS

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