Sample Business Contracts

Employment Agreement - Pharmacopeia Inc. and Joseph A. Mollica

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                                         December 16, 1997

Dr. Joseph A. Mollica
101 College Road East
Princeton Forrestal Center
Princeton, NJ  08540

Dear Joe:

          As you know, the letter agreement between you and Pharmacopeia, Inc.
(the "Company") dated January 12, 1994 (the "1994 Letter") provided for a term
of employment of three years.  Now that such term has expired, the purpose of
this letter is to set forth the principal terms of your continued employment
with the Company.  Upon acceptance by you this letter shall constitute a binding
agreement between you and the Company effective as of November 1, 1997.

Position:              Chairman of the Board of Directors and Chief
--------               Executive Officer.
Compensation:          Your annual compensation is $365,000 per year (pre-tax),
------------           payable in equal monthly installments, subject to review
                       by the Board of Directors in February of each year (the
                       "Base Salary").

Expenses:              Expenses incurred on the Company's behalf will be
--------               reimbursed in accordance with the Company's expense
                       reimbursement policy.

Bonus:                 A bonus target of thirty-five percent (35%) of the
-----                  Base Salary as determined in accordance with the
                       Company's existing compensation policy, or such other
                       amount as the Board shall establish for its Chief
                       Executive Officer pursuant to the Company's Bonus Program
                       for Senior Management. Bonuses will be paid on February
                       15 of each year provided you are employed by the Company
                       or are receiving severance payments on such date.

Dr. Joseph A. Mollica
December 16, 1997
Page 2

Equity:                The shares of Common Stock that you were entitled
------                 to purchase under the terms of the 1994 Letter (the
                       "Common Stock") will continue to vest under the terms
                       provided in the 1994 Letter; provided that, in addition
                       to such terms, in the event that you terminate your
                       employment for Good Reason (as defined below), the shares
                       of Common Stock shall continue to vest at the rate set
                       forth in the 1994 Letter during the period that the
                       Company is obligated to continue to pay your salary as
                       set forth below.

Benefits:              You will be entitled to receive the Company's standard  
--------               medical, dental, disability and life insurance benefits
                       for you and your family. You will be entitled to
                       participate in all compensation and benefit programs
                       established for senior management.

Vacation:              You will be entitled to take accrued vacation in
--------               accordance with the Company's standard vacation policy.

Term of Employment:    Your employment term will be three years from the date
------------------     hereof (the "Period of Employment") subject to extension
                       by mutual agreement of you and the Company, provided,
                       however, that the Company will give you not less than six
                       months' notice of (i) involuntary termination of your
                       employment (except for termination for Cause) following
                       the Period of Employment or (ii) the Company's intention
                       not to extend the Period of Employment.

Severance:             In the event your employment is terminated by the
---------              Company without Cause during the Period of Employment,
                       or in the event that during the Period of Employment you
                       terminate your employment by the Company for Good Reason,
                       the Company will continue to pay your Base Salary plus
                       bonus and continue to provide benefits at the Company's
                       expense as set forth above until fifteen months after the
                       date of such termination, provided that the Company's
                       obligation to continue to pay such salary shall cease as
                       of the date you commence full-time employment with
                       another business entity.

                       For the purposes of this agreement, "Cause" shall mean
                       the occurrence of any of the following: (a) any
                       intentional action or intentional failure to act by you
                       which was performed in bad faith and to the material
                       detriment of the Company; (b) you refuse to follow the
                       reasonable directives of the Board of Directors; or (c)
                       you are convicted of a felony crime involving

Dr. Joseph A. Mollica
December 16, 1997
Page 3

                       moral turpitude; provided that in the event that any of
                       the foregoing events is capable of being cured, the
                       Company shall provide written notice to you describing
                       the nature of such event and you shall thereafter have
                       fifteen (15) days to cure such event. For the purposes of
                       this agreement, "Good Reason" shall mean the occurrence
                       of any of the following: (a) your being removed as Chief
                       Executive Officer, or Chairman of the Board of Directors,
                       of the Company; or (b) a reduction of ten percent (10%)
                       or more of the Base Salary, unless made simultaneously
                       with a similar reduction of the base salaries of all the
                       Company's executive officers. In the event your
                       employment is terminated by the Company with Cause, or is
                       terminated by you without Good Reason, you shall not be
                       entitled to any severance compensation as set forth

Change in Control:     In the event that the Company is acquired by way of
-----------------      merger, sale of assets, or acquisition of more than
                       fifty percent (50%) of the outstanding voting securities
                       of the Company by a single entity during the Period of
                       Employment (the "Acquisition")

                       (i)  if the acquiror makes an offer to purchase all
                            existing shares of the Company, you will be entitled
                            to tender all shares of Common Stock owned by you,
                            provided that the consideration paid in respect of
                            shares which were at the time subject to the
                            Company's repurchase option shall be placed in
                            escrow and shall be released to you ratably over the
                            balance of the Period of Employment, with unreleased
                            shares (or consideration paid in respect thereof)
                            being subject to forfeiture only in the event that
                            you voluntarily terminate your employment without
                            Good Reason, or your employment is terminated with
                            Cause by the Company or by the acquiror, before the
                            expiration of the Period of Employment; and

                       (ii) if (A) prior to or contemporaneously with
                            consummation of an Acquisition, the corporation
                            acquiring the Company's assets or into which the
                            Company is merged fails to assume and thereafter
                            perform the obligations of the Company under this
                            Agreement or (B) at any time after an Acquisition
                            and during the Period of Employment your employment
                            shall be involuntarily terminated without Cause,
                            then in either such case (1) you shall be entitled
                            to an immediate payment by the

Dr. Joseph A. Mollica
December 16, 1997
Page 4

                            Company of all severance benefits as described
                            herein and (2) any right of the Company to
                            repurchase shares of the Common Stock shall be

Death:                 In the event of your death, your Base Salary through
-----                  the month of your death will be paid to your estate.

Indemnification:       The Company agrees to indemnify you to the fullest
---------------        extent permitted by Delaware law, including mandatory
                       advancement of costs allowed by law.

Board Authorization:   The terms of this letter agreement have been approved
-------------------    by the Board of Directors of the Company and will be
                       set forth in a duly adopted resolution of the Board of
                       Directors contained in the minute book of the Company.

Governing Law:         This Agreement shall be construed under and governed
-------------          by the laws of the State of New Jersey.

     If the foregoing accurately reflects our agreement, please so indicate by
signing where indicated below and returning the enclosed duplicate copy of this
letter to me.


                                         Samuel D. Colella
                                         On behalf of the Board of Directors of
                                         Pharmacopeia, Inc.

The foregoing is agreed and accepted.

/s/ Joseph A. Mollica
Dr. Joseph A. Mollica

    December 16, 1997