Document:

Exhibit
10.3

August 30, 2007

S. David Kimball, Ph.D.

 

Dear David:

I am pleased to offer you
the following opportunity with Pharmacopeia, Inc.  It is my sincere hope that you will choose to
join our organization, as it is our belief that you possess the ability to make
significant contribution toward our future growth and innovation.  The following will confirm the terms of our
offer of employment to you.

Position/Location:
You will assume the position of Senior Vice President, Chemistry and
Preclinical Chemical Development (the “Position”), based in our Cranbury, New
Jersey headquarters and in this position will report directly to Dr. David
Floyd, Pharmacopeia’s Chief Scientific Officer. 
The Position shall be part of Pharmacopeia’s senior management team (SMT)
and shall require you to assume responsibility for duties generally associated
with the Senior Vice President, Chemistry and Preclinical Chemical Development
position.

Compensation:
Your compensation in the Position will include an annual base salary of
$250,000.00, paid semi-monthly at the rate of $10,416.66 per pay period.  This will be your base salary until our 2007
Salary Review, effective March 1, 2008. 
Any salary increase, due to the 2007 Salary Review, will be prorated to
reflect the duration of your service during the year.

Effective September 17,
2007, or upon your actual start date, whichever is later, you will participate
in our annual management incentive program and will be eligible to earn, at
target, an additional 25% of your base salary based upon the achievement of
corporate and individual objectives.  For
2007, any such additional compensation earned under the program will be
prorated to reflect the duration of your service during the year.

In addition, you will be
paid a one-time bonus of $35,000 upon commencement of your employment with us.

Employment
and Benefits: As an employee of Pharmacopeia, you will
participate in our comprehensive employee benefits package.  We are committed to maintaining a competitive
position in the employment marketplace and in doing so will make available to
you the standard employee benefits package provided to employees. This will
include, but is not limited to, health, disability, and life insurance;
participation in our 401(k) retirement plan; vacation benefits; and
participation in our equity compensation plan. 
Additionally, you will be eligible to participate in our Executive Life
and Long Term Disability plans.  Please
find a complete summary of our benefits enclosed for your review.

 

Severance
Provisions: We have provided a separate agreement that
details our mutual obligations and commitments upon the termination of your
employment.

Stock Option Grant:
Upon joining Pharmacopeia, you will be awarded an option (the “Option”) for
150,000 shares of Pharmacopeia common stock. 
The Option will be memorialized in an option agreement with standard
terms consistent with this letter agreement and your severance agreement.  The first 100,000 shares of common stock
underlying the Option will vest over a 4-year period, 25% at the end of the
first year and monthly thereafter. The remaining 50,000 shares of common stock
underlying the Option will vest in the event of achievement of the following
objective performance criteria:

(i)  Vesting would occur upon the approval by
Pharmacopeia’s Executive Management Committee (“EMC”) of each of the first 2 “Drug
Candidates” attributable to your leadership, at the rate of 25,000 shares of
common stock per Drug Candidate so approved.

(ii) A Drug Candidate would be so approved by the EMC
upon the initiation of a GLP toxicology study.

(iii) A Drug Candidate resulting from (i) any of
Pharmacopeia’s collaborations including, but not limited to, GSK, Organon or
Wyeth or (ii) Pharmacopeia’s programs focused on JAK3 (topical), DARA back-up
or any other internal program, would be eligible for such approval.

(iv) For clarification, a Drug Candidate resulting from Pharmacopeia’s
internal CCR1 program would be eligible for such approval only if
 producing such Drug Candidate requires the identification and study of a
novel series of compounds (i.e., leads and close analogs thereof existing at
this time in the CCR1 program as either the initial or back-up candidates are
not eligible).

All the shares underlying
the Option will be priced at the per share closing price of Pharmacopeia common
stock on the Nasdaq Global Market on your first day of employment with us.

Vacation: 
You will receive four weeks vacation annually, prorated in 2007 for the
number of months you are employed by Pharmacopeia.

Reimbursement of Expenses:   Pharmacopeia will reimburse you for all
normal items of travel, entertainment and other business expenses reasonably
incurred by you on behalf of Pharmacopeia. 
Such expenses shall be documented and submitted to Pharmacopeia in
accordance with the reimbursement policies of Pharmacopeia in effect from time
to time.

Attorney
Fees:   Pharmacopeia agrees to pay the reasonable
legal fees you incur in the negotiation and execution of this agreement, in an
amount not to exceed $3,000.

Confidentiality:  Due to the nature of your responsibilities,
you will be required to execute Pharmacopeia’s Proprietary Information and
Inventions Agreement upon commencement of your employment with us.  We enclose a copy of that agreement for your
review.

Consideration
and Response Times: We would appreciate a response to
this offer no later than September 7, 2007.

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Start
Date: We will mutually agree to a start date and propose
it to be September 17, 2007.

This letter supersedes
any prior or contrary representations that may have been made by Pharmacopeia,
Inc.  The terms of this offer may be
amended only in a writing signed by you and an authorized officer of
Pharmacopeia.  This offer is subject to
satisfactory documentation with respect to your identification and right to
work in the United States.  Please sign
and return one copy of the letter.

We look forward to your
participation as a member of the Pharmacopeia team and your involvement in what
we are confident represents an exciting and professionally rewarding venture.

	
  

  	
  On Behalf of

  	
   

  	
   

  
	
   

  	
  Pharmacopeia, Inc.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
    /s/ BRIAN M. POSNER

  	
   

  	
   

  
	
   

  	
  Brian M. Posner, CPA, MBA

  	
   

  	
   

  
	
   

  	
  Executive Vice President, Chief Financial Officer
  and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signed and agreed by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
    /s/ S. DAVID KIMBALL

  	
   

  	
  August 31, 2007

  	
   

  
	
   

  	
  S. David Kimball, Ph.D.

  	
   

  	
  Date

  	
   

  

 

 3Exhibit
10.4

SEVERANCE AGREEMENT

This
SEVERANCE AGREEMENT (the “Agreement”)
is made and entered into as of the 31st day of
August, 2007 by and between PHARMACOPEIA, INC., a Delaware
corporation (hereinafter, the “Company”), and S. David Kimball, Ph.D., an individual (hereinafter, “Employee”).

RECITALS

WHEREAS, Employee shall be employed by the Company in the capacity of Senior
Vice President, Chemistry and Preclinical Chemical Development of the Company,
pursuant to a Letter Agreement between the Company and Employee, dated August
30, 2007 (the “Letter Agreement”).

WHEREAS, the Company desires to provide
certain benefits and payments to Employee in the event of the termination of
Employee’s employment with the Company.

WHEREAS, Employee desires to accept such
benefits and payments on the terms and subject to the conditions set forth in
this Agreement.

NOW, THEREFORE, in consideration of their mutual promises and intending to be legally
bound, the parties agree as follows:

1.                                     TERMINATION
AND EFFECT OF TERMINATION.  Employee’s
employment hereunder is AT WILL and may be terminated at any time by the
Company for any reason.  In the event of
termination of Employee’s employment, the Company shall have no liability to
Employee for compensation or benefits except as specified in this Section 1 or
as required by the Company’s benefits policy.

(a)                                 Termination
By The Company For Cause.  Employee’s
employment may be terminated by the Company for Cause (as defined below)
at any time upon
delivery of written notice to Employee. 
Upon such a termination, the Company shall have no obligation to
Employee other than the payment of all accrued, but unpaid, base salary and any
unpaid expenses or expense reimbursements prior to the effective date of such
termination.  For purposes of this
Agreement, “Cause” means the occurrence of any one or more of the
following events or conditions:

(i)            any gross failure on the part of
Employee (other than by reason of disability as provided in Section 1(e) below)
to faithfully and professionally carry out Employee’s duties or to comply with
any other material provision of this Agreement, which failure continues for
thirty (30) days after written notice detailing such failure is delivered by
the Company; provided, that the Company shall not be required to provide such
notice in the event that such failure (A) is not susceptible to remedy or (B)
relates to the same type of acts or omissions as to which notice has been given
on a prior occasion;

(ii)           Employee’s dishonesty (which shall
include without limitation any misuse or misappropriation of the Company’s
assets), or other willful misconduct (including without limitation, any conduct
on the part of Employee intended to or likely to injure the business of the
Company);

(iii)          Employee’s conviction of any felony or of any other crime
involving moral turpitude, whether or not relating to Employee’s employment;

(iv)          Employee’s insobriety or
use of drugs, chemicals or controlled substances either (A) in the course of
performing Employee’s duties and responsibilities under this Agreement, or (B)
otherwise affecting the ability of Employee to perform the same;

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(v)           Employee’s failure to comply with a lawful written direction
of the Company; or

(vi)          any wanton or willful dereliction of duties by Employee.

(b)                                 Involuntary
Termination By The Company Without Cause.  The Company may involuntarily terminate
Employee’s employment under this Agreement at any time without Cause upon
delivery of written notice to Employee. 
Subject to the provisions of Section 1(g) hereof (concerning a
termination in connection with a Change in Control (as defined in
Section 1(g)), if
Employee’s employment is terminated involuntarily by the Company without Cause
pursuant to this Section 1(b), the Company shall:

(i)              pay Employee all compensation and benefits
accrued, but unpaid, up to the effective date of termination of Employee’s
employment; 

(ii)             pay
Employee, within thirty (30) days after the effective date of termination of
Employee’s employment, a lump sum amount equal to nine (9) months of Employee’s
base salary in effect as of the effective date of termination of Employee’s
employment;

(iii)           
pay  Employee, within thirty (30)
days after the effective date of termination of Employee’s employment, a lump
sum pro rata portion of Employee’s target incentive bonus for the calendar year
in which Employee’s employment is terminated as provided in this Section 1(b),
such portion to be based on the number of full months for which Employee was
employed  during the year of  termination;

(iv)          maintain Employee’s group medical
coverage until the earlier of (A) the end of a 
period of nine (9) months following the effective date of such
termination, or (B) until such time as comparable medical coverage is obtained
by Employee; and

(v)           allow all vested options or other incentive
securities to be exercised pursuant to the terms of the option agreement or
other agreements under which such options or other incentive securities were
granted.

(c)                                 Termination By Employee For Good Reason.

(i)                                    Benefits.  Employee
may terminate Employee’s employment under this Agreement for Good Reason (as
defined below) upon the provision of advance written notice to the Company
specifying in reasonable detail the events or conditions upon which Employee is
basing such termination.  Employee must
give such notice within ninety (90) days after the event that gives rise to
Good Reason.  The Company will be given
the opportunity, but shall have no obligation, to “cure” such events or
conditions within thirty (30) days after the provision by Employee of such
notice.  Subject to the provisions of
Section 1(g) hereof (concerning a termination in connection with a Change in
Control), if the Company elects in a written notice to Employee not to cure
such events or conditions or otherwise fails to so cure such events or
conditions within such thirty (30) day period, Employee may terminate his
employment with the Company for Good Reason pursuant to this Section 1(c)
within thirty (30) days after the expiration of the “cure” period.  In the event of such termination, the Company
shall:

(A)          pay Employee all
compensation and benefits accrued, but unpaid, up to the effective date of termination
of Employee’s employment;

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(B)          pay
Employee, within thirty (30) days after the effective date of termination of
Employee’s employment, a lump sum amount equal to nine (9) months of Employee’s
base salary in effect as of the effective date of termination of Employee’s
employment;

(C)          pay Employee, within thirty (30) days
after the effective date of termination of Employee’s employment, a lump sum
pro rata portion of Employee’s target incentive bonus for the calendar year in
which Employee’s employment is terminated as provided in this Section 1(c),
such portion to be based on the number of full months for which Employee was
employed during the year of termination;

(D)          maintain Employee’s
group medical coverage until the earlier of (A) the end of  a period of nine (9) months following the
effective date of such termination, or (B) until such time as comparable
medical coverage is obtained by Employee; and

(E)           allow all vested options or other
incentive securities to be exercised pursuant to the terms of the option
agreement or other agreements under which such options or other incentive
securities were granted.

(ii)                                 Definition of “Good Reason.” For
purposes of this Agreement,
“Good Reason” means any one or more of the following events or conditions:

(A)          a
material diminution in Employee’s base compensation (other than such a
reduction applicable generally to substantially all employees of the Company)
(for this purpose, a “material diminution” means a reduction by more than
twenty percent (20%) in Employee’s annual base salary as in effect on the date
of this Agreement or as the same may be increased from time to time after such
date and prior to the delivery of such notice);

(B)          a
material diminution in Employee’s authority, duties or responsibilities from
those in effect on the date of this Agreement;

(C)          a
material change in the geographic location at which Employee must perform
services (for this purpose, a “material change” means a change to a location
more than fifty (50) miles from Employee’s principal office location on the
date of this Agreement); or

(D)          any
other action or inaction that constitutes a material breach by the Company of
this Agreement or the Letter Agreement.

(d)           Termination
By Employee Without Good Reason (Voluntary Resignation).  Employee may voluntarily resign Employee’s
position and terminate Employee’s employment under this Agreement without Good
Reason at any time.  Upon such a
termination, the Company shall have no obligation to pay compensation and
provide benefits to Employee other than the payment of all accrued and unpaid
base salary and any other unpaid expenses or expense reimbursements prior to
the effective date of such termination.

(e)           Disability.  If Employee becomes disabled for more than
one hundred eighty (180) days in any twelve (12) month period, the Company
shall have the right to terminate Employee’s employment without further
liability upon written notice to Employee. 
Without limiting the generality of the foregoing, Employee shall
be deemed disabled for purposes of this Agreement either (i) if Employee is
deemed disabled for purposes of any long-term disability insurance policy paid
for by the Company and at the time in effect, or (ii) if in the exercise of the
Company’s reasonable judgment, due to accident, mental or physical illness, or
any other reason, Employee cannot perform Employee’s duties.  In the event the Company shall terminate
Employee due to disability, as described above, Employee shall be entitled

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to receive only those benefits provided under the Company’s
Long Term Disability Plan, and Employee’s stock options and other incentive
compensation grants will be treated under the applicable Disability section of
the 2004 Stock Incentive Plan (as amended, the “2004 Plan”) or
any other stock option or incentive compensation plan of the Company under
which they were granted.

(f)                                   Death.  In the event of the death of Employee, this
Agreement shall automatically terminate and any obligation to continue to pay
compensation and benefits shall cease as of the date of Employee’s death,
except for the payment of all accrued, but unpaid, base salary and any other
unpaid expenses or expense reimbursements prior to the date of
death.  In the event of Employee’s death,
Employee’s stock options and other incentive compensation grants shall be
treated under the applicable Death section of the 2004 Plan or any other stock
option or incentive compensation plan of the Company under which they were
granted.

(g)                                Change In
Control Termination.

(i)                                    Benefits.  In the event Employee’s employment under this
Agreement is terminated by the Company involuntarily without Cause or Employee terminates
Employee’s employment with the Company for Good Reason (as defined in Section 1(c) above), in
either case at any time during the period commencing two (2) months before and
ending twelve (12) months after the occurrence of a Change in Control, the
Company shall:

(A)          pay Employee all
compensation and benefits accrued, but unpaid, up to the effective date of termination
of Employee’s employment;

(B)          pay Employee, within
thirty (30) days after the effective date of termination of Employee’s employment,
a lump sum amount equal to twelve (12) months Employee’s base salary in effect
as of the effective date of Employee’s termination of employment;

(C)          pay
Employee, within thirty (30) days after the effective date of termination of
Employee’s employment, a lump sum amount equal to one hundred percent (100%)
of Employee’s target incentive bonus;

(D)          maintain Employee’s group medical
coverage until the earlier of (A) the end of a period of twelve (12) months
following the effective date of termination, or (B) such time as comparable
medical coverage is obtained by Employee. 

Anything
contained in this Section to the contrary notwithstanding, Employee shall not
be entitled to any of the benefits set forth in this Section 1(g)(i) if
Employee either resigns and terminates such employment voluntarily (other than
for Good Reason, as described above) or is terminated by the Company for Cause.

For
purposes of Section 1(g) hereof, the term “Company” shall include any
Acquiring Company (as defined below), and all obligations of the Company under
such Section shall be assumed by any Acquiring Company.

(ii)                                 Stock
Options.  In the event
Employee’s employment under this Agreement is terminated by the Company
involuntarily without Cause or Employee terminates his employment with the
Company for Good Reason, in either case at any time during the period
commencing two (2) months before and ending twelve (12) months after the
occurrence of a Change in Control:

(A)          notwithstanding
anything to the contrary contained in the 2004 Plan or any other stock option
or incentive compensation plan of the Company, any unvested stock

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options or other incentive securities which were
granted to Employee during the term of this Agreement under the 2004 Plan or
any such other stock option or incentive compensation plan shall immediately
vest on the date of such termination of Employee’s employment, the expiration
date of the exercise period for such options or other securities shall be the
earlier of (1) one (1) year following the date of termination, or (2) the
expiration of the term of the option, and the Company shall take all actions
necessary or advisable to give effect to this Section 1(g)(ii)(A); and

(B)          all
vested options or other incentive securities held by Employee which were issued
pursuant to the 2004 Plan or any such other plan shall be exercisable pursuant
to the terms of the stock option agreement or other agreement(s) under which
the options or other incentive securities were granted, and the Company shall
take all actions necessary or advisable to give effect to this Section
1(g)(ii)(B).

Anything
contained in this Section to the contrary notwithstanding, Employee shall not
be entitled to any of the benefits set forth in this Section 1(g)(ii) if
Employee either resigns and terminates such employment voluntarily (other than
for Good Reason, as described above) or is terminated by the Company for Cause.

(iii)          Definition Of “Change in
Control.”  The definition
of “Change in Control” set forth in the 2004 Plan is incorporated, and
made a part hereof, by reference.

(iv)          Definition Of “Acquiring
Company.”  For purposes of
Section 1(g) of this Agreement, an “Acquiring Company” shall mean the
resulting or surviving corporation, or the company issuing cash or securities
(or its ultimate parent company), in a merger, sale, asset purchase, or
assignment of all or substantially all of the Company’s assets, consolidation
or share exchange involving the Company, or the successor corporation to the
Company (whether in any such transaction or otherwise).

2.                                     GENERAL
RELEASE.  Notwithstanding anything in
this Agreement to the contrary, no payments shall be made or benefits provided
by the Company under Section 1 unless Employee executes and does not
revoke a general release
in favor of the Company and its affiliates, and its and their respective
officers, employees and directors.  A
form of general release is attached hereto as Exhibit A.

3.                                     SECTION 409A.  This Agreement is intended to meet the
requirements of the short-term deferral exemption under section 409A of the
Code.  However, if required by section
409A and if Employee is a “specified employee” of a publicly traded corporation
under section 409A of the Code, payment of any amount under this Agreement
shall be delayed for a period of six (6) months after separation from service,
as required by section 409A of the Code. 
The accumulated postponed amount shall be paid in a lump sum payment
within ten (10) days after the end of the six (6)-month period.  If Employee dies during the postponement
period prior to payment of the postponed amount, the amounts withheld on
account of section 409A shall be paid to the personal representative of
Employee’s estate within sixty (60) days after the date of Employee’s
death.  The determination of “specified
employees” shall be made by the Compensation Committee of the Board of
Directors of the Company in accordance with section 409A of the Code and the
regulations issued thereunder.

4.                                     NON-COMPETITION;
NON-SOLICITATION.

(a)                                 Restrictions.  Employee shall not, during the course of
Employee’s employment with the Company or for a period of twelve (12) months
thereafter, directly or indirectly:

(i)            be employed by, engaged in or participate in the ownership,
management, operation or control of, or act in any advisory or other capacity
(including as an individual,

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principal,
agent employee, consultant or otherwise) for, any Competing Entity which
conducts its business within the Territory (as the terms Competing Entity and
Territory are hereinafter defined); provided, however, that notwithstanding any
of the foregoing, Employee may make solely passive investments in any Competing
Entity the common stock of which is “publicly -held” and of which Employee
shall not own or control, directly or indirectly, in the aggregate securities
which constitute 5% or more of the voting power of such Competing Entity;

(ii)           solicit or divert any business or any customer or known
prospective customer from the Company or assist any person or entity in doing
so or attempting to do so;

(iii)          cause or seek to cause any person or entity to refrain from
dealing or doing business with the Company or assist any person or entity in
doing so; or

(iv)          solicit for employment, or advise or recommend to any other
person or entity that he, she or it employ or solicit for employment or
retention as an employee or consultant, any person who is an employee of, or
exclusive consultant to, the Company.

(b)                                 Effect On
The Company’s Obligations.  The Company’s
obligation to make payments and provide the other benefits pursuant to Section
1 above shall terminate in the event that, and at such time as, Employee is in
breach of Employee’s obligations set forth in Section 4(a) above.

(c)                                 Definitions.  For purposes of this Section 4:

(i)            “Competing Entity” means any entity which is
presently or hereafter principally engaged in any business of the type or
character engaged in or proposed to be engaged in by the Company from time to
time during Employee’s term of employment under this Agreement, including
without limitation, any business engaged in the discovery and development of
human therapeutic products for any of the same targets and for indications as
products the Company had in development or was marketing at any time during
Employee’s term of employment under this Agreement.

(ii)           “Territory” means North America, Europe and Japan.

Notwithstanding
anything in the above to the contrary, Employee may engage in the activities
set forth in Section 4(a) hereof with the prior written consent of the Company,
which consent shall not be unreasonably withheld.  Further, in determining whether a specific
activity by Employee for a Competing Entity shall be permitted, the Company
will consider, among other things, the nature and scope of (i) the duties to be
performed by Employee and (ii) the business activities of the Competing Entity at the time of
Employee’s proposed engagement by such entity.

(d)                                 Acknowledgement.  Employee acknowledges and agrees that the
covenants set forth in this Section 4 are reasonable and necessary in all
respects for the protection of the Company’s legitimate business interests
(including, without limitation, the Company’s confidential, proprietary
information and trade secrets and client good-will, which represents a
significant portion of the Company’s net worth and in which the Company has a
property interest).  Employee
acknowledges and agrees that, in the event that Employee breaches any of the
covenants set forth in this Section 4, the Company shall be irreparably harmed and shall not have
an adequate remedy at law; and, therefore, in the event of such a breach, the
Company shall be entitled to injunctive relief, in addition to (and not
exclusive of) any other remedies (including monetary damages) to which the
Company may be entitled under law.  If
any covenant set forth in this Section 4 is deemed invalid or unenforceable for
any reason, it is the parties’ intention that such covenants be equitably
reformed or modified to the extent necessary (and only to such extent) to
render it valid and enforceable in all respects.  In the event that the time period and

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geographic scope referenced above is deemed unreasonable,
overbroad, or otherwise invalid, it is the parties’ intention that the
enforcing court shall reduce or modify the time period and/or geographic scope
to the extent necessary (and only to such extent) to render such covenants
reasonable, valid and enforceable in all respects.

5.                                     ARBITRATION.  Any and all disputes between the parties
(except actions to enforce the provisions of Section 4 of this Agreement)
arising under or relating to this Agreement or any other dispute arising
between the parties, including claims arising under any employment
discrimination laws, may be adjudicated and resolved exclusively through
binding arbitration before the American Arbitration Association pursuant to the
American Arbitration Association’s then-in-effect National Rules for the
Resolution of Employment Disputes (hereinafter, “Rules”).  The initiation and conduct of any arbitration
hereunder shall be in accordance with the Rules and, unless expressly required
by law, each side shall bear its own costs and counsel fees in such
arbitration.  Any arbitration hereunder
shall be conducted in Princeton, New Jersey or at such other location as
mutually agreed by the parties.  Any
arbitration award shall be final and binding on the parties.  The arbitrator shall have no authority to
depart from, modify, or add to the written terms of this Agreement.  The arbitration provisions of this Section 5
shall be interpreted according to, and governed by, the Federal Arbitration
Act, 9 U.S.C. § 1 et seq., and any action pursuant to such Act to
enforce any rights hereunder shall be brought exclusively in any United States
District Court in the State of New Jersey. 
The parties consent to the jurisdiction of (and the laying of venue in)
any such court.

6.                                     NOTICES.  For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:

(a)                                 If to the Company, to:

Pharmacopeia,
Inc.

3000
Eastpark Blvd.

Cranbury, NJ  08512

Attn.:  General Counsel

(b)                                 If to Employee, to:

S. David
Kimball, Ph.D.

or to such other address as a party hereto shall designate
to the other party by like notice, provided that notice of a change of address
shall be effective only upon receipt thereof.

7.                                     WITHHOLDING TAXES.  All payments under this Agreement shall be
made subject to applicable tax withholding, and the Company shall withhold from
any payments under this Agreement all federal, state and local taxes as the
Company is required to withhold pursuant to any law or governmental rule or
regulation.  Except as specifically
provided otherwise in this Agreement, Employee shall bear all expense of, and
be solely responsible for, all federal, state and local taxes due with respect
to any payment received under this Agreement.

8.                                     WAIVER.  The waiver by the Company or Employee of any
breach of any provision of this Agreement shall not operate or be construed as
a waiver of any subsequent breach by Employee or the Company, as applicable,
of any provision of
this Agreement.

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9.             SEVERABILITY.  The parties have carefully reviewed the
provisions of this Agreement and agree that they are fair and equitable.  However, in light of the possibility of
differing interpretations of law and changes of circumstances, the parties
agree that in the event that any section, paragraph or term of this Agreement
shall be determined to be invalid or unenforceable by any competent authority
or tribunal for any reason, the remainder of this Agreement shall be unaffected
thereby and shall remain in full force and effect.  Moreover, if any of the provisions of this
Agreement is determined by a court of competent jurisdiction to be excessively
broad as to duration, activity, geographic application or subject, it shall be
construed by limiting or reducing it to the extent legally permitted so as to
be enforceable to the extent compatible with then applicable law.

10.          SUCCESSORS
AND ASSIGNS.  This Agreement shall
bind and inure to the benefit of the successors and assigns of the Company and
the heirs, executors or personal representatives of Employee.  This Agreement may not be assigned by
Employee.  This Agreement may be assigned
to any successor in interest to the Company (including by way of merger,
consolidation or reorganization, or by way of any assignment of all or
substantially all of the Company’s assets, business or properties), and
Employee hereby consents to such assignment.

11.          ENTIRE
AGREEMENT; AMENDMENTS.  This
Agreement, the Letter Agreement and the applicable bylaws and policies of the Company,
constitute the entire Agreement between the parties hereto and there are no
other understandings, agreements or representations, expressed or implied.  This Agreement supersedes any and all prior
or contemporaneous agreements, oral or written, concerning Employee’s
employment and compensation.  This
Agreement may be amended only in writing signed by Employee and the Chief
Executive Officer or the General Counsel of the Company.

12.          COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

13.          GOVERNING LAW; FORUM SELECTION.  This Agreement shall be governed by and
construed in accordance with the laws (other than conflicts of laws principles)
of the State of New Jersey applicable to contracts executed in and to be
performed entirely within such State. 
The parties consent to jurisdiction and laying of venue in the state and
federal courts of New Jersey for purposes of resolving disputes under this
Agreement.

14.          COMPLIANCE
WITH LAW.  This Agreement
is intended to comply with the requirements of section 409A of the Code, and
specifically, with the short term deferral exemption of section 409A, and shall
in all respects be administered in accordance with section 409A.  Notwithstanding anything in the Agreement to
the contrary, distributions may only be made under the Agreement upon an event
and in a manner permitted by section 409A of the Code or an applicable
exemption.  All payments to be made upon
a termination of employment under this Agreement may only be made upon a “separation
from service” under section 409A.  For
purposes of section 409A of the Code, the right to a series of payments under this
Agreement shall be treated as a right to a series of separate payments.  All reimbursements and in-kind benefits
provided under this Agreement shall be made or provided in accordance with the
requirements of section 409A of the Code, including, where applicable, the
requirement that (a) any reimbursement shall be for expenses incurred during
Employee’s lifetime (or during a shorter period of time specified in this
Agreement), (b) the amount of expenses eligible for reimbursement, or in-kind
benefits provided, during a calendar year may not affect the expenses eligible
for reimbursement, or in-kind benefits to be provided, in any other calendar
year, (c) the reimbursement of an eligible expense will be made on or before
the last day of the calendar year following the year in which the expense is
incurred, and (d) the right to reimbursement or in-kind benefits is not subject
to liquidation or exchange for another benefit.

 8
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set
forth above.

	
  

  	
  PHARMACOPEIA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ STEPHEN C. COSTALAS

  	
   

  
	
   

  	
   

  	
   

  	
  Stephen C. Costalas, Esq.

  	
   

  
	
   

  	
   

  	
   

  	
  Executive Vice President,

  	
   

  
	
   

  	
   

  	
   

  	
  General Counsel and Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ S. DAVID KIMBALL

  	
   

  
	
   

  	
   

  	
   

  	
  S. David Kimball, Ph.D.

  	
   

  

 

 9

 

EXHIBIT A

General Release

IN CONSIDERATION
OF the terms and conditions contained in the Amended and Restated Severance
Agreement, dated as of the 31st day of August, 2007, (the “Severance
Agreement”) by and between S. David Kimball, Ph.D. (“Employee”) and
Pharmacopeia, Inc. (the “Company”), and for other good and valuable
consideration, the receipt of which is hereby acknowledged, Employee on behalf
of Employee and his or her heirs, executors, administrators, and assigns,
releases and discharges the Company and its subsidiaries, divisions, affiliates
and parents, and their respective past, current and future officers, directors,
employees, agents, and/or owners, and their respective successors, and assigns
and any other person or entity claimed to be jointly or severally liable with
the Company or any of the aforementioned persons or entities (collectively the “Released
Parties”) from any and all manner of actions and causes of action, suits,
debts, dues, accounts, bonds, covenants, contracts, agreements, judgments,
charges, claims, and demands whatsoever (“Claims”) which Employee and
his heirs, executors, administrators, and assigns have, had, or may hereafter
have, against the Released Parties or any of them arising out of or by reason
of any cause, matter, or thing whatsoever from the beginning of the world to
the date hereof.  This General Release of
Claims includes, without limitation, any and all matters relating to Employee’s
employment by the Company and the cessation thereof, and any and all matters arising
under any federal, state, or local statute, rule, or regulation, or principle
of contract law or common law, including but not limited to, the Family and
Medical Leave Act of 1993, as  amended, 29 U.S.C. §§ 2601 et
seq., Title VII of the Civil Rights Act of 1964, as  amended,
42 U.S.C. §§ 2000 et  seq., the Age Discrimination in Employment
Act of 1967, as  amended, 29 U.S.C. §§ 621 et  seq.
(the “ADEA”), the Americans with Disabilities Act of 1990, as  amended,
42 U.S.C. §§ 12101 et  seq., the Worker Adjustment and Retraining
Notification Act of 1988, as  amended, 29 U.S.C. §§2101 et  seq.,
Employee Retirement Income Security Act of 1974, as  amended, 29
U.S.C. §§ 1001 et  seq. (“ERISA”), the New Jersey Law
Against Discrimination, N.J.S.A. 10:15-1, et seq., the New Jersey Conscientious
Executive Protection Act, N.J.S.A. 34:19-1 to 19-8, the New Jersey Wage and
Hour Act, N.J.S.A. 34-11-56a, et seq., and any other equivalent or similar
federal, state, or local statute; provided, however, that Employee does not release
or discharge the Released Parties from (i) any of the Company’s obligations to
Employee under the Severance Agreement, and (ii) any vested benefits to which
Employee may be entitled under any employee benefit plan or program subject to
ERISA.  It is understood that nothing in
this General Release is to be construed as an admission on behalf of the
Released Parties of any wrongdoing with respect to Employee, any such
wrongdoing being expressly denied.

Employee
represents and warrants that Employee fully understands the terms of this
General Release, that Employee is hereby advised to consult with legal counsel
before signing, and that Employee knowingly and voluntarily, of Employee’s own
free will, without any duress, being fully informed, and after due deliberation,
accepts its terms and signs below as Employee’s own free act.  Except as otherwise provided herein, Employee
understands that as a result of executing this General Release, Employee will
not have the right to assert that the Company or any other of the Released
Parties unlawfully terminated Employee’s employment or violated any of Employee’s
rights in connection with Employee’s employment or otherwise.

Employee further
represents and warrants that Employee has not filed, and will not initiate, or
cause to be initiated on Employee’s behalf any complaint, charge, claim, or
proceeding against any of the Released Parties before any federal, state, or
local agency, court, or other body relating to any claims barred or released in
this General Release thereof, and will not voluntarily participate in such a
proceeding.  However, nothing in this
General Release shall preclude or prevent Employee from filing a claim, which
challenges the validity of this General Release solely with respect to Employee’s
waiver of any losses arising under the ADEA. Employee shall not accept any
relief obtained on Employee’s behalf 

 A-1
 

 

by any government agency,
private party, class, or otherwise with respect to any claims covered by this
General Release.

Employee may take
twenty-one (21) days to consider whether to execute this General Release.  Upon Employee’s execution of this General
Release, Employee will have seven (7) days after such execution in which
Employee may revoke such execution.  In
the event of revocation, Employee must present written notice of such
revocation to the Company’s Chief Executive Officer.  If seven (7) days pass without receipt of
such notice of revocation, this General Release shall become binding and
effective on the eighth (8th) day after the execution hereof (the “Effective
Date”).

INTENDING TO BE
LEGALLY BOUND, Employee hereby sets Employee’s hand below:

	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  
	
  

  	
   

  

 

*              *              *

NOTARIZATION

	
  State of

  	
   

  	
  )

  	
   

  	
   

  
	
   

  
	
  County of

  	
   

  	
  )

  	
   

  	
  ss.

  
						

 

	
  On this
           day of
                          
  in the year           before me,
  the undersigned, personally appeared

  
	
   

  	
  ; personally known to me or proved to me on the basis of satisfactory
  evidence 

  
	
  to be the individual whose name is subscribed to the within instrument,
  and acknowledged to me that he executed the same in his capacity as an
  individual, and that by his signature on the instrument he executed such
  instrument, and that such individual made such appearance before the
  undersigned.

  

 

	
  

  	
   

  
	
  

  	
  Notary Public

  

 

 A-2

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