Document:

Exhibit 10.25(a)

 

CONFIDENTIAL

 

SEPARATION AGREEMENT AND RELEASE OF CLAIMS

 

This SEPARATION AGREEMENT AND RELEASE OF CLAIMS
(the “Agreement”) is entered into as of the 30th day of September, 2002, by and
between PHARMACOPEIA, INC., a
Delaware corporation (the “Company”), and MICHAEL
R. STAPLETON, PH.D. (the “Employee”).

 

BACKGROUND

 

WHEREAS, the
Employee has served as Executive Vice President and Chief Operating Officer of
Accelrys Inc. (“Acclerys”) pursuant to the terms of an Employment Agreement
dated as of May 1, 2001 (the “Employment Agreement”); and

 

WHEREAS, the parties
have agreed that the Employee’s employment arrangement with the Company and
Accelrys shall cease effective as of December 31, 2002 (the “Termination” or
“Termination Date”) and, in connection therewith, the Employee shall resign as
Executive Vice President and Chief Operating Officer of Accelrys effective as
of the date hereof; and

 

WHEREAS, the parties
hereto desire to set forth their respective rights and obligations with respect
to the Termination;

 

NOW, THEREFORE, in consideration of the
covenants and conditions set forth herein and INTENDING
TO BE LEGALLY BOUND HEREBY, the undersigned parties to this
Agreement hereby agree as follows:

 

1.                           Termination;
Performance of Duties.

 

(a)  The parties hereby agree that the employment
arrangement between the Employee and the Company is terminated as of the
Termination Date.  Except as expressly
provided in this Agreement, the Employment Agreement and all rights and
obligations of the Employee and the Company with respect to the Employee’s
employment with the Company, Accelrys and their respective affiliates are duly
and effectively terminated as of the Termination Date.  The Employee acknowledges and agrees that
the Company’s obligations under this Agreement shall replace in their entirety
the Company’s obligations under the Employment Agreement and all other
incentive compensation arrangements for which the Employee is currently
eligible as of the Termination Date. 
The Employee hereby resigns as Executive Vice President and Chief
Operating Officer of Accelrys and resigns from all other executive officer
positions of the Company, Accelrys and their respective affiliates, effective
September 30, 2002.  At the request of
the Company’s Chief Executive Officer, the Employee shall also resign as a
member of the Board of Directors of Accelrys and the Company’s other
affiliates, and in any event shall resign such directorships no later than the
Termination Date.

 

(b)  During the period commencing on the date
hereof and ending on the Termination Date, the Employee agrees to perform such
projects and assignments and to discharge such duties and responsibilities as
are reasonably assigned to him by Dr. Joseph A. Mollica in such period.  Without limiting the generality of the
foregoing, the Employee agrees to use his best efforts to assist the Company
and Accelrys (i) in achieving their respective financial targets for the fourth
quarter and full year 2002, and (ii) in connection with all transitional issues
relating to the Employee’s departure from the Company and Accelrys.

 

 

2.                           Severance;
Forgiveness of Loan; Other Benefits.

 

(a)  As a severance payment and in lieu of any
payments otherwise due under the Employment Agreement, the Company agrees to
pay the Employee an amount equal to his current annual base salary, Two Hundred
Eighty-Five Thousand Dollars ($285,000). 
Eighty-Five Thousand Dollars ($85,000) of this amount, less normally
applicable payroll withholdings, shall be paid to the Employee in cash in a
lump sum as soon as practicable after the Termination Date but no later than
January 15, 2003.  The other Two Hundred
Thousand Dollars ($200,000) of this amount shall be paid to the Employee in
cash in equal semi-monthly installments pursuant to the Company’s normal
payroll schedule, less normally applicable payroll withholdings, commencing on
or about January 15, 2003 and ending on or about December 31, 2003, unless
terminated sooner pursuant to Section 5 hereof.

 

(b)  Notwithstanding the terms of the Employment
Agreement, the Company’s or Accelrys’ Management Incentive Plan or any other
incentive or bonus plan of the Company or Accelrys, or any other agreement or
arrangement to which the Employee is a party or which may apply to the
Employee, the Employee acknowledges and agrees that he shall not be entitled to
any payment under any such Management Incentive Plan (or any such other
incentive or bonus plan) for the year 2002 or otherwise.

 

(c)  Notwithstanding any other terms or
provisions to the contrary of the $200,000 loan provided by the Company to the
Employee as described in Section 3(d) of the Employment Agreement (the “Loan”),
the Company agrees that, subject to the Employee’s compliance with the terms of
this Agreement (including, without limitation, Sections 5, 6, 9, 11 and 12
hereof), effective as of December 31, 2003, it shall forgive all amounts
outstanding under and in respect of the Loan. 
In such event, assuming that the Employee is not in breach of this
Agreement (including, without limitation, Sections 5, 6, 9, 11 and 12 hereof),
as of December 31, 2003, the Loan shall be cancelled and all obligations and
liabilities of the Employee to repay any amounts outstanding under and in
respect of the Loan shall be discharged in full.  The Employee agrees that it shall be an express condition to the
Company’s obligation to forgive any amounts outstanding under or in respect of
the Loan as provided in this Section 2(c) that the Employee (i) pay to the
Company, on or prior to April 20, 2003, sufficient funds to enable the Company
to remit the amount of payroll tax owed in respect of the forgiveness of
indebtedness income and imputed interest income (collectively, “Loan Taxes”)
arising from forgiveness of the $50,000 portion of the Loan scheduled to be forgiven
on May 1, 2003 and (ii) pay to the Company, on or prior to December 20, 2003,
sufficient funds to enable the Company to remit the Loan Taxes arising from
forgiveness of the remaining amounts outstanding under and in respect of the
Loan on December 31, 2003 as provided in this Section 2(c).  The Company agrees that it shall provide the
Employee with an invoice, not later than ten (10) days prior to the applicable
payment date, detailing the amount to be paid to the Company in respect of Loan
Taxes on or prior to such payment date; provided, that the failure of the
Company to provide any such invoice shall not relieve the Employee of his
responsibility to pay the Loan Taxes arising from the forgiveness of the Loan
described in this Section 2(c).  The Employee
further agrees that, in the event he fails to timely pay any amounts to the
Company required in respect of Loan Taxes as provided above, the Company shall
be entitled (without prejudice to any other rights it may have hereunder, under
applicable law or in equity) to set off against amounts (if any) payable by the
Company to the Employee under any provision of this Agreement.

 

(d)  The Company will continue to provide the
Employee with assistance in obtaining his pending Green Card and all other
visas required for his employment in the United States.  Such assistance will include the
reimbursement of the Employee’s expenses incurred in connection with

 

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securing such visas, which
expenses must be approved by the Company in advance as a condition to
reimbursement.

 

(e)  The Company will reimburse the Employee for
his reasonable expenses incurred in connection with the preparation of his 2002
United States income tax returns.

 

(f)  The Employee shall be eligible to
participate, at the Company’s expense, in the Company’s Executive Outplacement
Assistance program administered through Right Associates for a period of one
year after the Termination Date.

 

3.                           Stock
Options.  The parties
acknowledge that, pursuant to certain Stock Option Agreements, the Employee has
been granted incentive stock options to purchase shares of common stock of the
Company.  So long as the Employee is not
in breach of this Agreement and as such remains employed by the Company and Accelrys
through the Termination Date, 84,699 of these options will be vested and
exercisable.  The Employee’s options
shall remain subject to the terms of, and shall be exercisable during the
period(s) specified in, the Stock Option Agreements under which such options
were granted.

 

4.                           Benefits.  The Employee will continue to be eligible to
participate in the Company’s group health plans as offered to active employees
under the provisions of COBRA.  The
Company will pay the applicable COBRA premiums until the earlier of (i) the end
of the twelve (12) month period following the Termination Date described in
Section 2(a) or (ii) the date upon which the Employee is covered by health
benefit plans of a successor employer or under any governmental health benefits
programs of the United Kingdom or any other jurisdiction.  As of that date, the Employee may continue
coverage under COBRA at his own cost. 
The benefits described in this Section 4(a) are available only during
the time that the Employee is not eligible for health coverage through another
employer or governmental program. 
Should the Employee obtain such other health benefits coverage, the
Employee shall immediately notify the Company. 
Further, the Company will take all action necessary for the Employee to
continue, for a period of one (1) year after the Termination Date, the life
insurance coverage currently provided to the Employee through the Company, and
the Company shall pay the premiums in respect of such life insurance through
the first anniversary of the Termination Date.

 

5.                           Non-Competition.  The Employee shall not, for a period of
twelve (12) months commencing on the Termination Date, directly or indirectly,
(a) be employed by, engaged in or participate in the ownership, management,
operation or control of, or act in any advisory or other capacity 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 the foregoing, the Employee may make solely passive
investments in any Competing Entity the common stock of which is “publicly
held” and of which the Employee shall not own or control, directly or
indirectly, in the aggregate securities which constitute 5% or more of the voting
rights or equity ownership of such Competing Entity; (b) solicit or divert any
business or any customer from the Company or any of its subsidiaries or
affiliates from time to time or assist any person, firm or corporation in doing
so or attempting to do so; (c) cause or seek to cause any person, firm or
corporation to refrain from dealing or doing business with the Company or any
of its subsidiaries or affiliates from time to time or assist any person, firm
or corporation in doing so; or (d) solicit for employment, or advise or
recommend to any other person that they 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 or any of its subsidiaries or affiliates
from time to time.  The Company’s
obligation to make payments pursuant to Section 2(a), to forgive the Loan as
provided in Section 2(c) and to make the COBRA premium payments described in
Section 4 above, shall

 

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terminate in the event that,
and at such time as, the Employee is in breach of his obligation not to
compete, divert business or solicit customers or employees as set forth in this
Section 5.

 

For purposes
of this Section 5, the term “Competing Entity” shall mean any entity which is
presently or hereafter engaged in the business of providing to third parties
products or services for pre-clinical drug discovery or chemical development
which (i) include the outlicensing of small molecule libraries, the undertaking
of drug candidate screening, and/or related drug optimization activities, (ii)
utilize combinatorial chemistry or high-throughput screening technologies in
offering pre-clinical drug discovery services, (iii) engage in the development,
marketing or sale of software programs which use molecular simulation or
analysis to predict chemical or biological activities, or (iv) engage in the
development, marketing or sale of software programs that store, manage or
analyze chemical or biological information. 
For purposes of this Section 5, the term “Territory” shall mean North
America, Europe and Japan. 
Notwithstanding anything in the above to the contrary, the Employee may
engage in the activities set forth in Section 5(a) hereof with the prior written
consent of the Company, which consent shall not be unreasonably withheld.  In determining whether a specific activity
by the Employee for a Competing Entity shall be permitted, the Company will
consider, among other things, the nature and scope of (x) the duties to be
performed by the Employee, and (ii) the business activities of the Competing
Entity or contemplated by such Competing Entity at the time of the Employee’s
proposed engagement by such entity.

 

The Employee
acknowledges and agrees that the covenants set forth in this Section are
reasonable and necessary in all respects for the protection of the Company’s
and Accelrys’ legitimate business interests (including, without limitation, the
Company’s and Accelrys’ 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).  The Employee acknowledges and agrees that,
in the event that he breaches any of the covenants set forth in this Section,
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 5 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/or 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
necessary) to render such covenants reasonable, valid and enforceable in all
respects.

 

6.                           Non-Disparagement.  The Employee expressly agrees that he will
not make any knowingly false, disparaging or derogatory comments, in public or
in private, about the Company or Accelrys or any of their respective
subsidiaries or affiliates (collectively, the “Company Entities”), about the
business affairs or financial condition of any of the Company Entities, or
about any employee, director or officer of any of the Company Entities.  The Company agrees that the officers and
directors of the Company Entities shall not make any knowingly false,
disparaging or derogatory comments concerning the Employee to third parties.

 

7.                           Releases
of Claims.  Subject to and
conditioned upon the full performance by the other party of its or his
obligations under this Agreement:

 

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(a)                                  In
exchange for the benefits received under this Agreement, to which he may not
otherwise be entitled, the Employee, his attorneys, heirs, executors,
administrators, successors and assigns (collectively, the “Employee Parties”)
hereby agrees not to pursue or further any action, cause of action, right,
suit, debt, compensation, expense, liability, contract, controversy, agreement,
promise, damage judgment, demand or claim whatsoever, at law or in equity, whether
known or unknown, which the Employee or any of the other Employee Parties ever
had, now has or hereafter can, shall or may have for, upon or by any reason of
any matter, cause or thing (collectively, “Employee Claims”) whatsoever,
occurring up to and including the date the Employee executes this Agreement,
against the Company and Accelrys, their respective successors, assigns,
partners, representatives and affiliates and all of their respective employees,
agents, officers and directors (collectively, the “Company Parties”) and hereby
releases, acquits and forever absolutely discharges the Company Parties and
each of them of and from all of the foregoing, except with respect to the
obligations of the Company set forth in this Agreement, including but not limited
to the Stock Option Agreements referenced in Section 3.  Such Employee Claims include, but are not
limited to, all claims for breach of contract, wrongful discharge, impairment
of economic opportunity, intentional infliction of emotional harm, defamation
or other torts, or claims under any applicable federal, state or local law,
including any and all federal, state and local employment and
anti-discrimination laws, including without limitation the Age Discrimination
in Employment Act, the Older Workers Benefit Protection Act, Title VII of the
Civil Rights Act of 1964, the California Labor and Civil Code, the California
Fair Employment and Housing Law, the New Jersey Law Against Discrimination and
the New Jersey Conscientious Employee Protection Act.  Notwithstanding anything herein to the contrary, such Employee
Claims will under no circumstances include any action, cause of action, right,
suit, debt, compensation, expense, liability, contract, controversy, agreement,
promise, damage judgment, demand or claim relating to, arising under or arising
in connection with any breach by the Company of this Agreement.

 

(b)                                 The
Company, for itself and any subsidiary (including, without limitation,
Accelrys) or affiliate, as well as its and their respective predecessors,
successors, assigns, trustees and creditors, hereby agrees not to pursue or
further any action, cause of action, right, suit, debt, compensation, expense,
liability, contract, controversy, agreement, promise, damage judgment, demand
or claim whatsoever, at law or in equity, whether known or unknown, which the
Company and any of such other parties ever had, now has or hereafter can, shall
or may have for, upon or by any reason of any matter, cause or thing
(collectively, “Company Claims”) whatsoever, occurring up to and including the
date Employee executes this Agreement against Employee and the other Employee
Parties and hereby releases, acquits and forever absolutely discharges Employee
and the other Employee Parties and each of them of and from all of the
foregoing, except with respect to the obligations of Employee set forth in this
Agreement and under any and all confidentiality, non-disclosure and similar
agreements entered into by the Employee prior to the date hereof with the
Company, Accelrys or any of their respective affiliates.  Notwithstanding anything herein to the
contrary, such Company Claims will under no circumstances include any action,
cause of action, right, suit, debt, compensation, expense, liability, contract,
controversy, agreement, promise, damage judgment, demand or claim relating to,
arising under or arising in connection with any breach by the Employee of this
Agreement.

 

8.                                      Unknown
Claims.  Both the Employee and
the Company understand that the release of claims described in Section 7 above
covers claims which they know about and those they may not know about.  The parties waive all rights under Section
1542 of the California Civil Code, which the parties have read and understand,
and which provides as follows:

 

SECTION 1542.
A general release does not extend to claims which 

the creditor does not know or suspect to exist in his favor at the time

 

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of executing
the release, which if known by him must have materially

affected his settlement with debtor.

 

The parties
acknowledge that they are assuming the risk that the facts may turn out to be
different from what they believe them to be and the parties agree that this
release shall be in all respects effective and not subject to termination or
rescission because of such mistaken belief.

 

9.                           Agreement
Not to Sue.  The parties promise
never to file a lawsuit asserting any of the claims that are released in
Section 7 above.  If either does so, and
the action is found to be barred in whole or part by this Agreement, the party
asserting the claim found to be barred by this Agreement agrees to pay the
reasonable attorneys’ fees and costs, or the portions thereof, incurred by the
party released hereby in defending against the claim(s) which are barred by
this Agreement.

 

10.                    Further
Acknowledgements.  The Employee acknowledges that (a) by this Agreement,
the Company has advised him in writing that he should consult with an attorney
prior to executing this Agreement, (b) he has had the opportunity to read,
review and consider all of the provisions of this Agreement, (c) he understands
its provisions and its final and binding effect on him, and (d) he is entering
into this Agreement freely, voluntarily and without duress or coercion.  The Employee further acknowledges that (i)
he understands that he has twenty-one (21) days from the date of distribution
of this Agreement to review and consider its provisions and (ii) he has an
additional seven (7) days following his execution of this Agreement to revoke
this Agreement and this Agreement shall not become effective or enforceable
until the revocation period has expired.

 

11.                    Company
Property.  The Employee warrants
that, except as provided below, he has returned to the Company, or will return
to the Company on or before the Termination Date, all property belonging to the
Company, which is in his possession or under his control, including without
limitation, all credit cards, computers, telecommunications equipment, keys and
all documents and files of any nature whatsoever, including any and all copies
of same.  Notwithstanding the foregoing,
the Employee shall be entitled to retain his office computer, home office
equipment and cellular telephone, provided, that the Employee understands that
the Company will not, after the Termination Date, be required to maintain any
DSL or other telephone or computer-based internet connection service, any
internet service provider (ISP) service or any cellular telephone service in
connection with these retained items or otherwise; and provided, further, that
the Company information contained in or on this equipment will remain the
property of the Company and be subject to the terms of this Agreement.

 

12.                    Confidentiality.  The parties hereto agree that the terms and conditions
of this Agreement are confidential and further agree that they shall not
divulge the terms of this Agreement to third parties generally, except as
required by applicable law or to enforce this Agreement or to defend against a
claim related thereto and except that the Company may reveal such terms to its
accountants, legal counsel and directors. 
In addition to and not in limitation of the parties’ respective
obligations under Section 6 above, (a) the Employee agrees not to make any
statement to any third party (other than the Employee’s accountants and
attorneys) regarding the Company or its affiliates, other than in connection
with an employment opportunity or as may be required by applicable law or to
enforce this Agreement or to defend against a claim related thereto, and (b)
the Company agrees not to make any statement to any third party regarding the
Employee other than the fact that the Employee was an employee of the Company
during the relevant time period, except as may be required by applicable law or
to enforce this Agreement or to defend against a claim related thereto.  Notwithstanding the foregoing, the Employee
and the Company agree that the Company shall be entitled to provide
employment-related references concerning the Employee, and

 

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that any such references shall
not be deemed a violation of this Agreement. 
In the event this covenant of confidentiality is breached, the Company
and the Employee will have and may pursue legal remedies for any damage arising
from a breach of this provision.  Prior
to any press release or other public disclosure relating to the contents of
this Agreement, the Company shall confer with the Employee on the contents of
any such disclosure.  Notwithstanding
the foregoing, the Company shall be under no obligation to reach agreement with
the Employee on the contents of any such public announcement or disclosure
required by applicable law, rule or regulation, including, but not limited to,
any public announcement or disclosure required by federal or state securities
laws, rules or regulations.

 

13.                    Acknowledgement
of Consideration.  The Employee
acknowledges that the only consideration that he has received for executing
this Agreement is the consideration recited above, and that no other promise,
inducement, threat, agreement or understanding of any kind or description has
been made with or to the Employee by the Company to cause him to agree to the
terms hereof.

 

14.                    Governing
Law; Jurisdiction.  The parties
acknowledge and agree that because the Company’s headquarters is located in New
Jersey, this Agreement will be finalized in New Jersey and a substantial
portion of this Agreement is to be performed in New Jersey, the substantive
laws of the State of New Jersey will govern the enforcement of this Agreement,
without regard to its choice of law rules. 
The parties further agree and consent to the jurisdiction of the federal
and state courts in New Jersey over any action to enforce this Agreement.

 

15.                    Entire Agreement,
Etc.  This Agreement represents
the entire understanding between the parties, and there are no agreements or
understandings which have not been set forth herein.  This Agreement supersedes any prior understanding, agreement,
practice or contract, oral or written, between the Employee and the Company
relating to the Employee’s employment or compensation.  This Agreement may not be modified except by
written instrument signed by all parties. 
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but which together shall constitute one and the same
instrument.  This Agreement shall be
binding upon the parties’ heirs, executors, administrators, successors, and
assigns.

 

IN WITNESS
WHEREOF, and INTENDING TO BE LEGALLY BOUND HEREBY, the undersigned have
executed this Separation Agreement and Release of Claims as of the date first
written above.

 

	
   

  	
  PHARMACOPEIA, INC.

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Joseph
  A. Mollica, Ph.D.

  	
   

  
	
   

  	
   

  	
  Joseph A.
  Mollica, Ph.D.

  	 

	
   

  	
   

  	
  Chairman of
  the Board, President

  and Chief Executive Officer

  	 

	
   

  	
   

  	 

	
  Agreed and
  Accepted as of

  the Date First Written Above:

  	
   

  	 

	
   

  	
   

  	 

	
  /s/ Michael
  R. Stapleton, Ph.D.

  	
   

  	 

	
  Michael R.
  Stapleton, Ph.D.

  	
   

  	 

					

 

7Exhibit
10.28

 

EMPLOYMENT AGREEMENT OF MARK J. EMKJER

 

This EMPLOYMENT
AGREEMENT (the “Agreement”) is made and entered into as of the 3rd
day of December, 2002, by and between PHARMACOPEIA,
INC., a Delaware corporation (hereinafter, the “Company”), and Mark J. Emkjer, an individual (hereinafter,
“Employee”).

 

RECITALS

 

WHEREAS,
the Company desires to employ Employee to render services in the capacity of
Executive Vice President of the Company and President of Accelrys Inc., a
wholly owned subsidiary of the Company (“Accelrys”), on the terms set forth in
this Agreement; and

 

WHEREAS,
Employee desires to render services in the capacity of Executive Vice President
of the Company and President of Accelrys on the terms 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.   EMPLOYMENT.

 

(a)  Title; Location.  The Company hereby employs Employee as
Executive Vice President of the Company and President of Accelrys upon the
terms and conditions set forth in this Agreement, and Employee hereby accepts
such employment.  Employee will be based
in San Diego, California and will report initially to Joseph A. Mollica, Ph.D.,
Chairman of the Board, President and Chief Executive Officer of the Company;
provided, that if Dr. Mollica is no longer employed by the Company, Employee
will report to the then current Chief Executive Officer of the Company.

 

(b)  Duties and Responsibilities.  Employee’s duties, powers and responsibilities
in such capacity shall be those which are customary for such position, as may
be determined from time to time by the Board of Directors of the Company (the
“Board”) and the Chief Executive Officer of the Company.  Employee agrees to perform and discharge
such duties well and faithfully and to be subject to the supervision and
direction of the Board and of the Chief Executive Officer of the Company.

 

(c)  No Conflicts.  Employee’s position under this Agreement is
a full-time position.  Employee agrees to
devote Employee’s full business time, effort, attention and energies to this
position.  Employee will not render any
professional services or engage in any activity that might be competitive with,
adverse to the best interest of, or create the appearance of a conflict of
interest with, the Company.  Employee
agrees to abide by the policies, rules and regulations of the Company as they
may be amended from time to time.

 

(d)  No Other Agreement.  Employee represents and warrants the he/she
is not bound by any employment, consulting, noncompetition, confidentiality,
finders, marketing or other agreement or arrangement that would, or might
reasonably be expected to, prohibit or restrict Employee in any manner from
performing his/her duties and obligations hereunder.

 

2.   TERM.  Employee’s employment hereunder shall
commence on December 9, 2002 and shall continue until terminated in accordance
with Section 4 of this Agreement.

 

 

3.   COMPENSATION.  As compensation for Employee’s services
under this Agreement:

 

(a)  Starting Bonus.  As soon as practicable,
but in no event later than thirty (30) days, after the commencement of
Employee’s employment hereunder as provided in Section 2 above, the Company
will pay Employee a starting bonus of Seventy-Five Thousand Dollars
($75,000.00) in cash.

 

(b)  Base Salary.  The Company will pay Employee an initial
base salary of Three Hundred Twenty-Five Thousand Dollars ($325,000.00) per
year (“Base Salary”), to be paid semi-monthly in equal installments at the rate
of Thirteen Thousand Five Hundred Forty-One Dollars and Sixty-Seven Cents
($13,541.67), less normally applicable payroll deductions.  Employee’s Base Salary will be subject to
annual review and adjustment by the Board or a duly appointed committee
thereof, in either case in its sole discretion.

 

(c)  Incentive Bonus.  Employee shall participate in the Company’s
management incentive plan, which currently provides for an annual bonus payable
based on the financial performance of, and attainment of certain strategic milestones
by, the Company and on the performance of the participating employee.  If payable, such annual bonus would be
calculated as a target percentage of Employee’s then current Base Salary.  The Company and Employee agree that
Employee’s initial bonus target percentage will be eighty-four and sixty-two
hundredths percent (84.62%).  Such
amounts payable to Employee under this plan or any other bonus program shall be
referred to herein as the “Incentive Bonus.” 
The Incentive Bonus for any year will be paid on or about March 31 of
the following year, provided Employee is employed by or receiving severance
payments from the Company or its successor on that date.

 

The Company and Employee
agree that, based on Employee’s initial Base Salary and bonus target percentage
set forth above, Employee’s target bonus for the year 2003 will be up to Two
Hundred Seventy-Five Thousand Dollars ($275,000.00).  Irrespective of whether the Company attains its financial and/or
strategic goals for 2003, and (except as provided below) irrespective of
Employee’s individual performance for such year, the Company will be obligated
to pay to Employee a guaranteed bonus for the year 2003 of not less than One
Hundred Thirty-Seven Thousand Five Hundred Dollars ($137,500.00); provided, that
the Company shall not be obligated to pay such bonus if, on or prior to
December 31, 2003, (i) Employee’s employment is terminated by the Company for
Cause (as defined in Section 4(a) below) or (ii) Employee voluntarily
terminates his employment with the Company without Good Reason (as defined in
Section 4(c) below).

 

(d)  Stock Options.  On, or as soon as practicable after, the
date hereof, the Company will grant Employee the option to purchase Two Hundred
Fifty Thousand (250,000) shares of the Company’s common stock (the “Option”),
at a per share exercise price equal to the closing price of the Company’s
common stock on the NASDAQ Stock Market on the date of grant.  Twenty-five percent (25%) of the Option will
vest on the first anniversary of the date of grant.  Thereafter, one forty-eighth (1/48) of the Option will vest each
month, commencing with the first month following the first anniversary of this
Agreement.  The Option will be granted
pursuant to, and will be subject to all of the terms and conditions of, the
Company’s 1994 Incentive Stock Option Plan and a stock option agreement in the
Company’s customary form to be entered into by the Company and Employee.

 

2

 

4.   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 4 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 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 4(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;

 

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

 

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

 

The existence of any of the foregoing events or
conditions shall be determined by the Company in the exercise of its reasonable
judgment.

 

(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 4(g) hereof (concerning termination in connection with a Change of
Control (as defined in such Section 4(g)), if Employee’s employment is
terminated involuntarily by the Company without Cause pursuant to this Section
4(b), the Company shall:

 

3

 

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

 

(ii)  continue to pay Employee each month an
amount equal to one twelfth (1/12) of Employee’s annual Base Salary in effect
as of the effective date of termination, for a period of twelve (12) months or
until the occurrence of any circumstance or event that would constitute Cause
under Section 4(a) above;

 

(iii)  if such termination is after December 31,
2003, pay Employee an amount in cash equal to the amount obtained by
multiplying (x) Employee’s target bonus percentage in effect as of the
effective date of termination (expressed as a decimal) times Employee’s annual
Base Salary in effect as of such date of termination, by (y) a fraction of
which (I) the numerator is the number of full months for which Employee was
employed during the year of termination and (II) the denominator is twelve
(12), such amount to be payable in equal monthly installments during the period
Employee is receiving payments under clause (ii) of this Section 4(b); and

 

(iv)  maintain Employee’s group medical coverage
during the period Employee is receiving payments under clause (ii) of this
Section 4(b).

 

The payments in clauses (ii) and (iii) above shall
continue until twelve (12) months from the date of termination.

 

(c)  Termination by Employee for Good Reason.  Employee may terminate his/her employment
under this Agreement for Good Reason 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.  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 4(g) hereof (concerning termination
in connection with a Change of 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/her employment with the Company for Good Reason pursuant to
this Section 4(c) and in the event of such termination, the Company shall:

 

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

 

(ii)  continue to pay Employee each month an
amount equal to one twelfth (1/12) of Employee’s annual Base Salary in effect
as of the effective date of termination, for a period of twelve (12) months or
until the occurrence of any circumstance or event that would constitute Cause
under Section 4(a) above;

 

(iii)  if such termination is after December 31,
2003, pay Employee an amount in cash equal to the amount obtained by
multiplying (x) Employee’s target bonus percentage in effect as of the
effective date of termination (expressed as a decimal) times Employee’s annual
Base Salary in effect as of such date of termination, by (y) a fraction of
which (I) the numerator is the number of full months for which Employee was

 

4

 

employed during the year of termination and (II) the
denominator is twelve (12), such amount to be payable in equal monthly
installments during the period Employee is receiving payments under clause (ii)
of this Section 4(c); and

 

(iv)  maintain Employee’s group medical coverage
during the period Employee is receiving payments under clause (ii) of this
Section 4(c).

 

The payments in clauses (ii) and (iii) above shall
continue until twelve (12) months from the date of termination.

 

For purposes of this Agreement, Good Reason means any
one or more of the following events or conditions:

 

(A)  the Company’s breach of any of the material
terms of this Agreement;

 

(B)  the Company’s requiring Employee, without
his/her consent, to relocate from his/her residence or to commute more than
fifty (50) miles from the offices of Accelrys at which he was principally
employed on December 9, 2002;

 

(C)  a material diminution in Employee’s title,
duties or responsibilities or conditions of his/her employment from those in
effect on December 9, 2002; or

 

(D)  a reduction in Employee’s annual Base Salary
as in effect on December 9, 2002 or as the same may be increased from time to
time after such date and prior to the delivery of such notice (other than such
a reduction applicable generally to other senior executives of the Company).

 

(d)  Termination by Employee without Good
Reason (Voluntary Resignation).  Employee may voluntarily resign his position and terminate his
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, but 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 to receive
the benefits set forth in Section 4(b) (i.e., as if Employee were terminated by
the Company without Cause), reduced by the amount of any disability plan or
insurance benefit paid.

 

(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

 

5

 

date of death, except for the payment of all accrued,
but unpaid, Base Salary and any other unpaid expenses or expense reimbursement
prior to the date of death.

 

(g)  Change of Control Termination.

 

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

 

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

 

(B) pay Employee a lump
sum in cash equal to one (1) times Employee’s annual Base Salary in effect as
of the effective date of termination;

 

(C) if such termination
is after December 31, 2003, pay Employee a lump sum in cash equal to the amount
obtained by multiplying (x) Employee’s target bonus percentage in effect as of
the effective date of termination (expressed as a decimal) times Employee’s
annual Base Salary in effect as of such date of termination, by (y) a fraction
of which (I) the numerator is the number of full months for which Employee was
employed during the year of termination and (II) the denominator is twelve
(12); and

 

(D) maintain Employee’s
group medical coverage for a period of twelve (12) months after the effective
date of termination.

 

Anything contained in this Section 4(g)(i) to the
contrary notwithstanding, Employee shall not be entitled to any of the benefits
set forth in this Section 4(g)(i) if:

 

(x)  the Company, including without limitation
any Acquiring Company (as defined below), offers Employee a position which
would not provide Employee with Good Reason to terminate his employment as
provided in clauses (B), (C) or (D) of the definition of Good Reason in Section
4(c) above; or

 

(y)  Employee resigns and terminates such
employment voluntarily (other than for Good Reason) or is terminated by the
Company (including without limitation any Acquiring Company) for Cause.

 

For purposes of Sections 4(g)(i) and (ii) hereof, the
term the “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 (x) Employee’s employment under
this Agreement is terminated by the Company involuntarily without Cause at any
time during the period

 

6

 

commencing two (2) months before and ending eighteen
(18) months after the occurrence of a Change of Control or (y) Employee
terminates his employment with the Company for Good Reason at any time during
the period commencing two (2) months before and ending eighteen (18) months
after the occurrence of a Change of Control:

 

(A)
notwithstanding anything to the contrary contained in the Company’s 1994
Incentive Stock Option Plan (the “1994 Plan”) or any other stock option plan of
the Company, any unvested stock options which were granted to Employee during
the term of this Agreement under the 1994 Plan or any such other stock option
plan shall immediately vest upon the date of termination of Employee’s
employment, the expiration date of the exercise period for such options 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 4(g)(ii)(A); and

 

(B)
all vested options held by Employee which were issued pursuant to the 1994 Plan
or any such other plan shall be exercisable pursuant to the terms of the stock
option agreement(s) under which the options were granted, and the Company shall
take all actions necessary or advisable to give effect to this Section
4(g)(ii)(B).

 

Anything contained in this Section 4(g)(ii) to the
contrary notwithstanding, Employee shall not be entitled to any of the benefits
set forth in this Section 4(g)(ii) if:

 

(x)  the Company, including without limitation
any Acquiring Company, offers Employee a position which would not provide
Employee with Good Reason to terminate his employment as provided in clauses
(B), (C) or (D) of the definition of Good Reason in Section 4(c) above; or

 

(y)  Employee resigns and terminates such
employment voluntarily (other than for Good Reason) or is terminated by the
Company (including without limitation any Acquiring Company) for Cause.

 

(iii)  Definition of “Change of Control.”  For purposes of this Agreement, a “Change of
Control” of the Company shall mean the occurrence of any of the following
events or circumstances:

 

(A) any “person” (within
the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)), including a “group” within the meaning of
such Section 13(d) but excluding the Company and any of its subsidiaries and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary thereof (a “Person”), shall become the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding securities entitled to
vote generally in the election of directors (“Company Voting Securities”); or

 

(B) the consummation of a
merger or consolidation of the Company, or the acceptance by the stockholders
of the Company of shares in a share exchange, where the Persons who

 

7

 

were the beneficial
owners of Company Voting Securities, outstanding immediately prior to such
merger, consolidation or share exchange, do not beneficially own, directly or
indirectly, immediately after such merger, consolidation or share exchange,
securities representing more than fifty percent (50%) of the combined voting
power of the then outstanding Company Voting Securities or voting securities of
the Acquiring Company in such merger, consolidation or share exchange, in
substantially the same proportions as their ownership of the Company Voting
Securities immediately prior to such merger, consolidation or share exchange;
or

 

(C) a complete
liquidation or dissolution of the Company; or

 

(D) a sale, exchange or
other disposition or transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company;
provided, that a Change of Control shall not be deemed to have occurred where
(x) the Company sells, exchanges or otherwise disposes or transfers all or
substantially all of its assets to another corporation which is beneficially
owned, directly or indirectly, immediately following such transaction by the
holders of Company Voting Securities in substantially the same proportions as
their ownership of the Company Voting Securities immediately prior to such
transaction and (y) such corporation expressly assumes this Agreement; or

 

(E) such time as the
Continuing Directors (as defined below) do not constitute at least a majority
of the Board of Directors of the Company (or, if applicable, of a successor to
the Company), where the term “Continuing Director” means at any date a member
of the Board who was (x) a member of the Board on the date of this Agreement or
(y) nominated or elected subsequent to such date by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election (it being understood that no individual whose initial
assumption of office occurred as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board shall be a Continuing Director).

 

(iv)  Definition of “Acquiring Company.”  For purposes of Section 4
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, consolidation or share exchange involving the Company,
or the successor corporation to the Company (whether in any such transaction or
otherwise).

 

(h)  Deductibility of Payments.  It is the intention of
Employee and of the Company that no payments by the Company to or for the
benefit of Employee under this Agreement
or any other agreement or plan, if any, pursuant to which Employee is entitled
to receive payments or benefits shall be nondeductible to the Company by reason
of the operation of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), relating to parachute payments or any like statutory or
regulatory provision.  Accordingly, and
notwithstanding any other provision of this Agreement or any such agreement or
plan, if by reason of the operation of said Section 280G or any like statutory
or regulatory provision, any such payments exceed the amount which can be
deducted by the Company, such payments shall be reduced to the maximum amount
which can be

 

8

 

deducted by the Company.  To the extent that payments exceeding such maximum deductible
amount have been made to or for the benefit of Employee, such excess payments
shall be refunded to the Company with interest thereon at the applicable Federal
rate determined under Section 1274(d) of the Code, compounded annually, or at
such other rate as may be required in order that no such payments shall be
nondeductible to the Company by reason of the operation of said Section 280G or
any like statutory or regulatory provision. 
To the extent that there is more than one method of reducing the
payments to bring them within the limitations of said Sections 280G or any like
statutory or regulatory provision, Employee shall determine which method shall
be followed; provided that if Employee fails to make such determination within
forty-five (45) days after the Company has given notice of the need for such
reduction, the Company may determine the method of such reduction in its sole
discretion.

 

(i)  Liquidated Damages.  Employee acknowledges that
any payments and benefits resulting from a termination of Employee’s employment
under Section 4(b), (c) or (g) of this Agreement are in lieu of any and all
claims that Employee may have against the Company or any Acquiring Company
(other than benefits under the Company’s employee benefit plans that by their
terms survive termination of employment, benefits under the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, and rights to indemnification under certain
indemnification arrangements for officers of the Company), and represent
liquidated damages (and not a penalty). 
The Company may request that Employee confirm such acknowledgment in
writing prior to, and as a condition to, receipt of such payments and benefits.

 

5.  VACATION AND HOLIDAY.  Employee shall be entitled to vacation each
year, which initially shall be four week per year and thereafter shall be in
accordance with the Company’s standard vacation policy, and to those holidays
observed by the Company.  As an
essential employee of the Company, Employee shall schedule vacation and holiday
observances so as not to interfere with the performance of Employee’s duties
hereunder.

 

6.  HEALTH
INSURANCE; LIFE INSURANCE; OTHER FRINGE BENEFITS.  Employee shall be entitled to the benefit of
such group medical, accident and long-term disability insurance and other
fringe benefits and tax qualified retirement plans as the Company shall make
available from time to time to its other similarly situated senior employees.

 

7.  PROFESSIONAL
AND BUSINESS EXPENSES. 
Employee will be reimbursed in accordance with the Company’s policy and
procedure for the reasonable costs of properly documented professional and
business related travel expenses required in the course of Employee’s
employment.  The Company will also pay
for appropriate professional dues and memberships, which must be approved in
advance by the Chief Executive Officer.

 

8.  TAXES.  Employee will be responsible for the payment
of any tax liability incurred as a result of this Agreement.  The Company may withhold tax on any payments
or benefits provided to Employee as required by law or regulation.

 

9.  CONFIDENTIAL
INFORMATION.  Except as
reasonably necessary to perform Employee’s duties hereunder, Employee agrees
not to reveal to any other person or entity or use for Employee’s own benefit
any confidential information of or about the Company or its operations, both
during and after Employee’s employment under this Agreement, including without
limitation marketing plans, financial information, key personnel, employees’
capabilities, salaries and benefits, customer lists,

 

9

 

pricing and cost structures, operation methods and any other
information not available to the public, without the Company’s prior written
consent.  Employee also agrees to
execute the Company’s Invention and Non-Disclosure Agreement, which is attached
hereto and made a part hereof.

 

10.  NON-COMPETITION;
NON-SOLICITATION.

 

(a)  Restrictions.  Employee shall not, during the course of
Employee’s employment with the Company and for a period of twelve (12) months
after such termination, 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, 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 4 above shall terminate in
the event that, and at such time as, Employee is in breach of Employee’s
obligations set forth in Section 10(a) above.

 

(c)  Definitions. 
For purposes of this Section 10:

 

(i) “Competing Entity”
means any entity which is presently or hereafter engaged in any business of the
type or character engaged in by the Company or any of its subsidiaries
including, without limitation, (A) the business of providing to third parties
products or services for pre-clinical drug discovery or chemical development
which (x) include the outlicensing of small molecule libraries, the undertaking
of drug candidate screening, and/or related drug optimization activities, or
(y) utilize combinatorial chemistry or high-throughput screening technologies
in offering pre-clinical drug discovery services; (B) the business of
developing, marketing or selling software programs which use molecular
simulation or analysis to predict chemical or biological activities; (C) the
business of developing, marketing or selling software programs that store,
manage or analyze chemical or biological information or (D) any business which
is otherwise competitive with a business conducted by the Company or any of its
subsidiaries; and

 

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

 

10

 

Notwithstanding anything
in the above to the contrary, Employee may engage in the activities set forth
in Section 10(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 (A) the duties to be performed by Employee and
(B) 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 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, 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 10 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
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 necessary) to render such covenants
reasonable, valid and enforceable in all respects.

 

11.  ARBITRATION.  Any and all disputes between the parties
(except actions to enforce the provisions of Section 10 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, shall 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
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.

 

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

 

13.  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

 

11

 

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.

 

14.  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.

 

15.  ENTIRE
AGREEMENT; AMENDMENTS. 
This Agreement, including the recitals (which are a part hereof),
together with the applicable bylaws and policies of the Company, constitutes
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
Executive Vice President, Human Resources of the Company.

 

16.  GOVERNING
LAW.  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.

 

	
  Dated as of this 3rd
  day of December, 2002.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PHARMACOPEIA,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Joseph A. Mollica, Ph.D.

  	
   

  
	
   

  	
   

  	
   

  	
  Joseph A. Mollica, Ph.D.

  
	
   

  	
   

  	
   

  	
  Chairman of the Board, President

  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Mark J. Emkjer

  	
   

  
	
   

  	
   

  	
   

  	
  Mark J. Emkjer

  
	
   

  	
   

  	
   

  	
  18357 Calle Stellina

  Rancho Santa Fe, CA  92091

  

 

12

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