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                            FIRST VIRTUAL CORPORATION

                           1997 EQUITY INCENTIVE PLAN

              ADOPTED BY THE BOARD OF DIRECTORS ON OCTOBER 22, 1997
                APPROVED BY THE STOCKHOLDERS ON DECEMBER 2, 1997

              AMENDED BY THE BOARD OF DIRECTORS ON DECEMBER 9, 1998
                AMENDED BY THE STOCKHOLDERS ON FEBRUARY 17, 1999

1.       INTRODUCTION; PURPOSES.

        (a) The Board of Directors previously adopted the Company's 1996
Stock Option Plan, 1996 Stock Option Plan No. 2, and 1993 Employee Consultant
and Director Stock Purchase Plan (collectively, the "Prior Plans"). In
October 1997, the Board of Directors amended and restated the Prior Plans in
the form of this 1997 Equity Incentive Plan. Shares reserved for issuance
under the Prior Plans shall hereafter be reserved for issuance, and issued,
under the terms of this Plan in the form below.

        (b) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company and its Affiliates
may be given an opportunity to benefit from increases in value of the common
stock of the Company ("Common Stock") through the granting of (i) Incentive
Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv)
rights to purchase restricted stock, all as defined below.

        (c) The Company, by means of the Plan, seeks to retain the services
of persons who are now Employees, Directors or Consultants, to secure and
retain the services of new Employees, Directors and Consultants, and to
provide incentives for such persons to exert maximum efforts for the success
of the Company and its Affiliates.

        (d) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which
responsibility for administration of the Plan has been delegated pursuant to
subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof,
including Incentive Stock Options and Nonstatutory Stock Options, or (ii)
stock bonuses or rights to purchase restricted stock granted pursuant to
Section 7 hereof. All Options shall be separately designated Incentive Stock
Options or Nonstatutory Stock Options at the time of grant, and a separate
certificate or certificates will be issued for shares purchased on exercise
of each type of Option.

2.       DEFINITIONS.

        (a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.

        (b) "BOARD" means the Board of Directors of the Company.

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        (c) "CODE" means the Internal Revenue Code of 1986, as amended.

        (d) "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.

        (e) "COMPANY" means First Virtual Corporation, a Delaware corporation.

        (f) "CONSULTANT" means any person, including an advisor, engaged by
the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who
are not compensated by the Company for their services as Directors.

        (g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
that the service of an individual to the Company, whether as an Employee,
Director or Consultant, is not interrupted or terminated. The Board or the
Chief Executive Officer of the Company may determine, in that party's sole
discretion, whether Continuous Status as an Employee, Director or Consultant
shall be considered interrupted in the case of: (i) any leave of absence
approved by the Company, including sick leave, military leave, or any other
personal leave; or (ii) transfers between the Company, Affiliates or their
successors.

        (h) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange
Act, as determined for purposes of Section 162(m) of the Code.

        (i) "DIRECTOR" means a member of the Board.

        (j) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient
to constitute "employment" by the Company.

        (k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

        (l) "FAIR MARKET VALUE" means, as of any date, the value of the
Common Stock of the Company determined as follows:

                (i) If the Common Stock is listed on any established stock
exchange, or traded on the Nasdaq National Market or The Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in Common Stock) on the last market trading day
prior to determination, as reported in THE WALL STREET JOURNAL or such other
source as the Board deems reliable;

                (ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

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        (m) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

        (n) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does
not receive compensation (directly or indirectly) from the Company or its
parent or subsidiary for services rendered as a consultant or in any capacity
other than as a Director (except for an amount as to which disclosure would
not be required under Item 404(a) of Regulation S-K promulgated pursuant to
the Securities Act ("Regulation S-K"), does not possess an interest in any
other transaction as to which disclosure would be required under Item 404(a)
of Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.

        (o) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

        (p) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

        (q) "OPTION" means a stock option granted pursuant to the Plan.

        (r) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of
the Plan.

        (s) "OPTIONEE" means a person to whom an Option is granted pursuant
to the Plan.

        (t) "OUTSIDE DIRECTOR" means a Director who either (i) is not a
current employee of the Company or an "affiliated corporation" (within the
meaning of Treasury regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an "affiliated
corporation" at any time, and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in
any capacity other than as a Director, or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the Code.

        (u) "PLAN" means this 1997 Equity Incentive Plan.

        (v) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

        (w) "SECURITIES ACT" means the Securities Act of 1933, as amended.

        (x) "STOCK AWARD" means any right granted under the Plan, including
any Option, any stock bonus, and any right to purchase restricted stock.

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        (y) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of
an individual Stock Award grant. Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.

3.       ADMINISTRATION.

        (a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).

        (b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

                (i) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each
Stock Award shall be granted; whether a Stock Award will be an Incentive
Stock Option, a Nonstatutory Stock Option, a stock bonus, a right to purchase
restricted stock, or a combination of the foregoing; the provisions of each
Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive stock pursuant to a Stock
Award; and the number of shares with respect to which a Stock Award shall be
granted to each such person.

                (ii) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations
for its administration. The Board, in the exercise of this power, may correct
any defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.

                (iii) To amend the Plan or a Stock Award as provided in
Section 13.

                (iv) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests
of the Company which are not in conflict with the provisions of the Plan.

        (c) The Board may delegate administration of the Plan to a committee
of the Board composed of not fewer than two (2) members (the "Committee"),
all of the members of which Committee shall be, in the discretion of the
Board, Non-Employee Directors and/or Outside Directors. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee of two (2) or more Outside
Directors any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or such a subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan. Notwithstanding anything to the
contrary contained herein, the Board may delegate administration of the Plan
to any person or persons and the term "Committee" shall apply to any person
or persons to whom such authority has been delegated. In addition, and
notwithstanding anything in this Section 3 to the contrary, the Board or the
Committee may delegate to a committee of one or more members of the Board the
authority to grant Options to eligible persons who (1) are not then subject
to Section 16 of the Exchange Act

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and/or (2) are either (i) not then Covered Employees and are not expected to
be Covered Employees at the time of recognition of income resulting from such
Option, or (ii) not persons with respect to whom the Company wishes to comply
with Section 162(m) of the Code.

4.       SHARES SUBJECT TO THE PLAN.

        (a) Subject to the provisions of Section 12 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
shall not exceed in the aggregate five million three hundred seventy-five
thousand (5,375,000) shares of Common Stock (which includes shares remaining
for future issuance and shares subject to unvested options under the Prior
Plans, as of the date of adoption of the amended and restated Plan). In the
event an option or right to purchase restricted stock granted pursuant to the
Prior Plans or a Stock Award granted pursuant to the Plan shall for any
reason expire or otherwise terminate after the date of grant, in whole or in
part, without having been exercised in full, the stock not acquired under
such option, right to purchase restricted stock or Stock Award shall revert
to and again become available for issuance under the Plan.

        (b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

5.       ELIGIBILITY.

        (a) Incentive Stock Options may be granted only to Employees. Stock
Awards other than Incentive Stock Options may be granted only to Employees,
Directors or Consultants.

        (b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or of any of its Affiliates unless the exercise price of such
Option is at least one hundred ten percent (110%) of the Fair Market Value of
such stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.

        (c) Subject to the provisions of Section 12 relating to adjustments
upon changes in stock, no person shall be eligible to be granted Options
covering more than five hundred thousand (500,000) shares of the Company's
common stock in any calendar year. This subsection 5(c) shall not apply until
(i) the earliest of: (A) the first material modification of the Plan
(including any increase to the number of shares reserved for issuance under
the Plan in accordance with Section 4); (B) the issuance of all of the shares
of common stock reserved for issuance under the Plan; (C) the expiration of
the Plan; or (D) the first meeting of stockholders at which directors are to
be elected that occurs after the close of the third calendar year following
the calendar year in which occurred the first registration of an equity
security under Section 12 of the Exchange Act; or (ii) such other date
required by Section 162(m) of the Code and the rules and regulations
promulgated thereunder.

6.       OPTION PROVISIONS.

         Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each

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Option shall include (through incorporation of provisions hereof by reference
in the Option or otherwise) the substance of each of the following provisions:

        (a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

        (b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted, and the
exercise price of each Nonstatutory Stock Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of the stock subject to
the Option on the date the Option is granted. Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of
Section 424(a) of the Code.

        (c) CONSIDERATION. The purchase price of stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii)
at the discretion of the Board or Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other Common Stock of the Company,
(B) according to a deferred payment arrangement, except that payment of the
common stock's "par value" (as defined in the Delaware General Corporation
Law) shall not be made by deferred payment, or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
Common Stock of the Company) with the person to whom the Option is granted or
to whom the Option is transferred pursuant to subsection 6(d), or (C) in any
other form of legal consideration that may be acceptable to the Board. In the
case of any deferred payment arrangement, interest shall be payable at least
annually and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of the Code,
of any amounts other than amounts stated to be interest under the deferred
payment arrangement.

        (d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option may
be transferred to the extent provided in the Option Agreement; provided that
if the Option Agreement does not expressly permit the transfer of a
Nonstatutory Stock Option, the Nonstatutory Stock Option shall not be
transferable except by will, by the laws of descent and distribution or
pursuant to a domestic relations order, and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such person or
any transferee pursuant to a domestic relations order. Notwithstanding the
foregoing, the person to whom the Option is granted may, by delivering
written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionee, shall
thereafter be entitled to exercise the Option.

        (e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that

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period, and may be exercised with respect to some or all of the shares
allotted to such period and/or any prior period as to which the Option became
vested but was not fully exercised. The Option may be subject to such other
terms and conditions on the time or times when it may be exercised (which may
be based on performance or other criteria) as the Board may deem appropriate.
The provisions of this subsection 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.

        (f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that
the Optionee was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three
(3) months after the termination of the Optionee's Continuous Status as an
Employee, Director or Consultant (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance under the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified in the
Option Agreement, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.

        (g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it as of the date of
termination), but only within such period of time ending on the earlier of
(i) the date twelve (12) months following such termination (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, at the date
of termination, the Optionee is not entitled to exercise his or her entire
Option, the shares covered by the unexercisable portion of the Option shall
revert to and again become available for issuance under the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.

        (h) DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within a period specified in the Option Agreement after the
termination of, the Optionee's Continuous Status as an Employee, Director or
Consultant, the Option may be exercised (to the extent the Optionee was
entitled to exercise the Option as of the date of death) by the Optionee's
estate, by a person who acquired the right to exercise the Option by bequest
or inheritance or by a person designated to exercise the option upon the
Optionee's death pursuant to subsection 6(d), but only within the period
ending on the earlier of (i) the date eighteen (18) months following the date
of death (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of such Option as set forth in
the Option Agreement. If, at the time of death, the Optionee was not entitled
to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after death, the Option is not exercised within the time
specified herein, the Option

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shall terminate, and the shares covered by such Option shall revert to and
again become available for issuance under the Plan.

        (i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to
any other restriction the Board determines to be appropriate.

7.       TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

         Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the
terms and conditions of separate agreements need not be identical, but each
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions as appropriate:

        (a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement but in no event shall the purchase
price be less than eighty-five percent (85%) of the stock's Fair Market Value
on the date such award is made. Notwithstanding the foregoing, the Board or
Committee may determine that eligible participants in the Plan may be awarded
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company for its benefit.

        (b) TRANSFERABILITY. No rights under a stock bonus or restricted
stock purchase agreement shall be transferable except by will or the laws of
descent and distribution or, if the agreement so provides, pursuant to a
domestic relations order, so long as stock awarded under such agreement
remains subject to the terms of the agreement.

        (c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or Committee, according to a
deferred payment or other arrangement with the person to whom the stock is
sold, except that payment of the common stock's "par value" (as defined in
the Delaware General Corporation Law) shall not be made by deferred payment;
or (iii) in any other form of legal consideration that may be acceptable to
the Board or Committee in its discretion. Notwithstanding the foregoing, the
Board or Committee to which administration of the Plan has been delegated may
award stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company for its benefit.

        (d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or Committee.

        (e) TERMINATION OF CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Director or Consultant

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terminates, the Company may repurchase or otherwise reacquire any or all of
the shares of stock held by that person which have not vested as of the date
of termination under the terms of the stock bonus or restricted stock
purchase agreement between the Company and such person.

8.       CANCELLATION AND RE-GRANT OF OPTIONS.

        (a) The Board or the Committee shall have the authority to effect, at
any time and from time to time (i) the repricing of any outstanding Options
under the Plan and/or (ii) with the consent of the affected holders of
Options, the cancellation of any outstanding Options and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of common stock, but having an exercise price per
share not less than eighty-five percent (85%) of the Fair Market Value (one
hundred percent (100%) of the Fair Market Value in the case of an Incentive
Stock Option or, in the case of a ten percent (10%) stockholder (as defined
in subsection 5(b)), not less than one hundred and ten percent (110%) of the
Fair Market Value) per share of common stock on the new grant date.

        (b) Shares subject to an Option canceled under this Section 8 shall
continue to be counted against the maximum award of Options permitted to be
granted pursuant to the Plan. The repricing of an Option hereunder resulting
in a reduction of the exercise price, shall be deemed to be a cancellation of
the original Option and the grant of a substitute Option; in the event of
such repricing, both the original and the substituted Options shall be
counted against the maximum awards of Options permitted to be granted
pursuant to the Plan, to the extent required by Section 162(m) of the Code.

9.       COVENANTS OF THE COMPANY.

        (a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.

        (b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required
to issue and sell shares under Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities
Act either the Plan, any Stock Award or any stock issued or issuable pursuant
to any such Stock Award. If, after reasonable efforts, the Company is unable
to obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Stock Awards unless and
until such authority is obtained.

10.      USE OF PROCEEDS FROM STOCK.

         Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.

11.      MISCELLANEOUS.

        (a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or
any part thereof will vest,

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notwithstanding the provisions in the Stock Award stating the time at which
it may first be exercised or the time during which it will vest.

        (b) Neither an Employee, Director nor a Consultant nor any person to
whom a Stock Award is transferred in accordance with the Plan shall be deemed
to be the holder of, or to have any of the rights of a holder with respect
to, any shares subject to such Stock Award unless and until such person has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

        (c) Nothing in the Plan nor any instrument executed nor Stock Award
granted pursuant hereto shall confer upon any Employee, Director, Consultant
or Optionee any right to continue in the employ of the Company or any
Affiliate (or to continue acting as a Director or Consultant) or shall affect
the right of the Company or any Affiliate to terminate the employment of any
Employee, with or without cause, to remove any Director as provided in the
Company's By-Laws and the provisions of the General Corporation Law of the
State of Delaware, or to terminate the relationship of any Consultant in
accordance with the terms of that Consultant's agreement with the Company or
Affiliate to which such Consultant is providing services.

        (d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
this Plan and all other plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall
be treated as Nonstatutory Stock Options.

        (e) The Company may require any person to whom a Stock Award is
granted, or any person to whom a Stock Award is transferred in accordance
with the Plan, as a condition of exercising or acquiring stock under any
Stock Award, (1) to give written assurances satisfactory to the Company as to
such person's knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with
the purchaser representative, the merits and risks of exercising the Stock
Award; and (2) to give written assurances satisfactory to the Company stating
that such person is acquiring the stock subject to the Stock Award for such
person's own account and not with any present intention of selling or
otherwise distributing the stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (i)
the issuance of the shares upon the exercise or acquisition of stock under
the Stock Award has been registered under a then currently effective
registration statement under the Securities Act, or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company,
place legends on stock certificates issued under the Plan as such counsel
deems necessary or appropriate in order to comply with applicable securities
laws, including, but not limited to, legends restricting the transfer of the
stock.

        (f) To the extent provided by the terms of a Stock Award Agreement,
the person to whom a Stock Award is granted may satisfy any federal, state or
local tax withholding obligation

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relating to the exercise or acquisition of stock under a Stock Award by any
of the following means or by a combination of such means: (1) tendering a
cash payment; (2) authorizing the Company to withhold shares from the shares
of the Common Stock otherwise issuable to the participant as a result of the
exercise or acquisition of stock under the Stock Award; or (3) delivering to
the Company owned and unencumbered shares of the Common Stock of the Company.

12.      ADJUSTMENTS UPON CHANGES IN STOCK.

        (a) If any change is made in the stock subject to the Plan, or
subject to any Stock Award, without the receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other transaction not involving the receipt
of consideration by the Company), the Plan will be appropriately adjusted in
the class(es) and maximum number of shares subject to the Plan and the
maximum number of shares subject to award to any person during any calendar
year, and the outstanding Stock Awards will be appropriately adjusted in the
class(es) and number of shares and price per share of stock subject to such
outstanding Stock Awards. Such adjustments shall be made by the Board or
Committee, the determination of which shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a "transaction not involving the receipt of consideration by the
Company.")

        (b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or consolidation
in which the Company is not the surviving corporation; (3) a reverse merger
in which the Company is the surviving corporation but the shares of the
Common Stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) the acquisition by any person, entity or group
within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any
comparable successor provisions (excluding any employee benefit plan, or
related trust, sponsored or maintained by the Company or any Affiliate of the
Company) of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors, then to
the extent permitted by applicable law: (i) any surviving corporation (or an
Affiliate thereof shall assume any Stock Awards outstanding under the Plan or
shall substitute similar Stock Awards for those outstanding under the Plan,
or (ii) such Stock Awards shall continue in full force and effect. In the
event any surviving corporation (or an Affiliate) refuses to assume or
continue such Stock Awards, or to substitute similar Stock Awards for those
outstanding under the Plan, then the Stock Awards shall be terminated if not
exercised prior to such event.

13.      AMENDMENT OF THE PLAN AND STOCK AWARDS.

        (a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 12 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder

                                        11

<PAGE>

approval is necessary for the Plan to satisfy the requirements of Section 422
of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing
requirements.

        (b) The Board may in its sole discretion submit any other amendment
to the Plan for stockholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of Section 162(m)
of the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.

        (c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible
Employees, Directors or Consultants with the maximum benefits provided or to
be provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan
and/or Incentive Stock Options granted under it into compliance therewith.

        (d) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.

        (e) The Board at any time, and from time to time, may amend the terms
of any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall not be impaired by any such amendment
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.

14.      TERMINATION OR SUSPENSION OF THE PLAN.

        (a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No Stock Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.

        (b) Rights and obligations under any Stock Award granted while the
Plan is in effect shall not be impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Stock Award was
granted.

15.      EFFECTIVE DATE OF PLAN.

         This amendment and restatement of the Plan shall become effective on
the effective date of the registration statement with respect to the
Company's initial public offering of shares of Common Stock, but no Stock
Awards granted under the Plan shall be exercised unless and until the Plan
has been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board.

                                        12<PAGE>

                                                                   Exhibit 10.52

                                PHARMACOPEIA/MSI
               EXECUTIVE DEFERRED COMPENSATION PLAN RECOMMENDATION
                COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

PLAN SUMMARY:

The Pharmacopeia Deferred Compensation Plan is designed to allow key executives
and members of the Board of Directors to defer compensation from federal taxes
and to provide a vehicle for tax-deferred investment growth. It also functions
as a retention mechanism through the use of a vesting schedule for Company-made
matches and bonus awards. The planned effective date of the plan is 1/1/00.

PARTICIPANT ELIGIBILITY:

Participation in this plan is restricted to full, US-based Vice Presidents of
the Company and members of its Board of Directors, and includes the below named
eligible participants who represent approximately 3.5% of the total US-based
employee population. New participants must be approved by the Board of
Directors.

SCHEDULE OF CURRENT PARTICIPANTS:

Joe Mollica-CEO, Saiid Zarrabian-COO, Bruce Myers-CFO, Jack Baldwin-CSO, Tom
Carney-General Counsel, Steve Herbert-MSI VP Life Sciences Software Sales, Akira
Niwayama-VP Asia Pacific Operations, John Newsam-MSI CSO, Steve Spearman-EVP
Drug Discovery Services, Dick Walsh-SVP Business Dev & Mktg, Scott Kahn-VP Life
Sciences Software R&D, John Babiak-VP, Technology, Frank Baldino-BOD Member,
Paul Bartlett-BOD Member, Peter Booth-BOD Member, Gary Costley-BOD Member, Edith
Martin-BOD Member, Charles Sanders-BOD Member

ANNUAL DEFERRAL AMOUNTS & ELECTION TIMING:

The deferred compensation arrangement will be provided as a benefit enhancement
for key executives and members of the Board of Directors allowing deferrals of
up to 100% of annual compensation. Deferral elections must be made prior to
January 1st of the year in which the deferred compensation is earned.

INVESTMENT OPTIONS:

Deferrals will be invested into the Merrill Lynch- trusteed permissible
investment options under the oversight of Merrill Lynch and at the direction of
the participant. Individuals may direct their deferrals into stocks, bonds
and/or preferreds that meet Merrill Lynch Trust requirements (must be rated by
S&P or Moody's: stock as B+ or higher, and debt securities as BBB or higher,
commercial paper as A2 or higher). In addition, the following summarizes the
Merrill Lynch mutual fund options:

<TABLE>
<CAPTION>

    ----------------------- ----------------------- ---------------------- --------------------
<S>                         <C>                     <C>                    <C>
    Aim                     Dreyfus                 Lord Albert            Provident
    ----------------------- ----------------------- ---------------------- --------------------
    Alger                   Eaton Vance             Mainstay Funds         Putnam
    ----------------------- ----------------------- ---------------------- --------------------
    Alliance Capital        Evergreen               Merrill Lynch          Saloman Bros
    ----------------------- ----------------------- ---------------------- --------------------
    American Funds          Federated Investors     MFS                    Seligman
    ----------------------- ----------------------- ---------------------- --------------------
    Aquila                  Fidelity Advisor        Montgomery             Stagecoach
    ----------------------- ----------------------- ---------------------- --------------------
    Blackrock               Forum funds             Munder                 Statestreet
    ----------------------- ----------------------- ---------------------- --------------------
    Calamos                 FPA Funds               Nations Funds          SunAmerica
    ----------------------- ----------------------- ---------------------- --------------------
    Calvert                 Franklin/Templeton      New England Funds      Van Eck
    ----------------------- ----------------------- ---------------------- --------------------
    Chase Vista             GAM Funds               Northstar Funds        Van Kampen
    ----------------------- ----------------------- ---------------------- --------------------
    Cohen & Steers          Hartford Funds          Nuveen                 Victory Funds
    ----------------------- ----------------------- ---------------------- --------------------
    Conseco                 Ivy Funds               Oppenheimer
    ----------------------- ----------------------- ---------------------- --------------------
    Countrywide             John Hancock            Pacific Capital
    ----------------------- ----------------------- ---------------------- --------------------
    Davis Funds             Jundt Funds             Phoenix
    ----------------------- ----------------------- ---------------------- --------------------
    Dean Funds              Kemper                  Pilgrim America
    ----------------------- ----------------------- ---------------------- --------------------
    Delaware Voyager        Kopp Funds              Pimco
    ----------------------- ----------------------- ---------------------- --------------------
    Deutche Funds           Liberty Funds           Pioneer Funds
    ----------------------- ----------------------- ---------------------- --------------------

</TABLE>

COMPANY CONTRIBUTIONS:

MATCHING CONTRIBUTIONS: At its discretion, the Company may recommend to the
Board of Directors that it make a discretionary matching contribution of up to
$5,000 annually per eligible participant. This contribution will be contingent
upon the individual participant making an equivalent annual salary deferral
during the plan year for which the match would be awarded. The maximum 1999
annual payment amount at 100% of eligible participant participation and at a
100% award-level would have been approximately $90,000.

BONUS CONTRIBUTIONS: Participants will be eligible for a bonus contribution
based upon the stock performance of Pharmacopeia relative to the performance of
the Wilshire Small Cap Index*. The bonus will be awarded based upon Pharmacopeia
stock out-performing the above named and chosen index on a percentage over
percentage basis. For each percentage point that Pharmacopeia stock out-performs
the above named and chosen index, the participant will be eligible to receive a
bonus equivalent to that percentage of his/her base salary or director's fees up
to a maximum bonus

<PAGE>

                                PHARMACOPEIA/MSI
               EXECUTIVE DEFERRED COMPENSATION PLAN RECOMMENDATION
                COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

award of 20% of base salary or of director's fees. Bonus achievement will be
determined based upon stock versus index performance on a calendar year basis
(growth or decline between 1/1 and 12/31of a given year). The maximum 1999
annual payment amount at a 100% award-level would have been approximately
$540,000. In the event that Pharamcopeia Inc. has negative stock price
performance for a given year, the Board of Directors reserves the right to make
a discretionary determination regarding whether or not a bonus contribution
payment is to be made and to its amount, even if such stock price performance is
better than the Wilshire Small Cap Index.

VESTING SCHEDULE: Company-made Matching Contributions and Bonus Contributions
will vest over 3-years at 33 1/3% per year. Vesting will be rolling and commence
on the date the contribution is made on behalf of the eligible individual.

         EXAMPLE- BONUS CONTRIBUTION SCHEDULE: THE FOLLOWING ILLUSTRATES WHAT
         PAYMENTS TO THE PLAN WOULD HAVE BEEN USING PREVIOUS YEARS' RESULTS AND
         AN AVERAGE BASE SALARY OF $150,000.

<TABLE>
<CAPTION>

---------------- --------------- ------------------ ---------------- -------------------
     YEAR         PCOP AVERAGE    WILSHIRE SMALL         PCOP         ESTIMATED BONUS
                  PERFORMANCE        CAP INDEX        PERFORMANCE       CONTRIBUTION
                                      AVERAGE         RELATIVE TO          AWARD
                                    PERFORMANCE     WILSHIRE SMALL
                                                       CAP INDEX
---------------- --------------- ------------------ ---------------- -------------------
<S>                 <C>               <C>              <C>                     <C>
YTD 1999             48.70%           10.15%            38.55%                 $540,000
---------------- --------------- ------------------ ---------------- -------------------
1998                -41.98%            4.13%            -46.12%                $      0
---------------- --------------- ------------------ ---------------- -------------------
1997                -17.42%           25.42%            -42.84                 $      0
---------------- --------------- ------------------ ---------------- -------------------
1996                -30.80%           19.36%            -50.16%                $      0
---------------- --------------- ------------------ ---------------- -------------------

</TABLE>

*THE WILSHIRE SMALL CAP INDEX MEASURES 250 COMPANIES WITH AN AVERAGE MARKET
CAPITALIZATION OF $933MM. IT PROVIDES A BROAD REPRESENTATION OF INDUSTRY SECTORS
AND HAS DEMONSTRATED A HIGH CORRELATION WITH OTHER SMALL CAP INDICES. THE INDEX
WAS CREATED IN 1980 AND WAS DESIGNED SPECIFICALLY TO REFLECT THE TRUE CHARACTER
OF THE SMALL CAP MARKET SEGMENT.

PLAN DISTRIBUTIONS:

Distributions may be made at either in a lump sum on a pre-determined date as
directed by the participant at the time of deferral or at termination of
employment.

PLAN ADMINISTRATION:

The deferred compensation plan will be approved and administered at the
direction of the Compensation Committee of Pharmacopeia's Board of Directors.
The record-keeping administration will be conducted by PenCal Inc., a
third-party administration service provider based in San Ramon, CA. The
estimated annual administration charge of the plan is approximately $2,500.

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