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Employment Agreement - Pharmacopeia Inc. and Joseph A. Mollica

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                  This employment agreement (the "Agreement") is made and
entered into as of the 26th day of February, 2001, by and between Pharmacopeia,
Inc., (hereinafter the "Company"), and Joseph A. Mollica, Ph.D. (hereinafter
"Dr. Mollica").


                  WHEREAS, Dr. Mollica has been employed by the Company as Chief
Executive Officer of Pharmacopeia, Inc. ("Chief Executive Officer"), most
recently under the terms of a three year agreement dated December 16, 1997;

                  WHEREAS, the Company desires to continue to employ Dr. Mollica
to render services during the term of this Agreement in the capacity of Chief
Executive Officer on the terms set forth in this Agreement;

                  WHEREAS, Dr. Mollica desires to render services during the
term of this Agreement in the capacity of Chief Executive Officer 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.       The Company agrees to employ Dr. Mollica as
Chief Executive Officer upon the terms and conditions set forth in this

                           b.       Dr. Mollica's duties, powers and
responsibilities as Chief Executive Officer 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"). Dr. Mollica agrees to perform and
discharge such duties well and faithfully and to be subject to the supervision
and direction of the Board.

                           c.       The position of Chief Executive Officer is a
full-time position. Dr. Mollica agrees to devote his full time effort,
attention, and energies to this position. Dr. Mollica will not render any
professional services or engage in any activity which might be competitive with,
adverse to the best interest of, or create the appearance of a conflict of
interest with the Company. The Company acknowledges that Dr. Mollica currently
serves on the following boards: Nexell Therapeutics, Genecor International,
Impath, and Neurocrine Biosciences, Inc. Prior to serving on any additional
board of directors, Dr. Mollica shall obtain the written permission of the
Board, which shall not be unreasonably withheld. Dr. Mollica agrees to abide by
the policies, and rules and regulations of the Company as they may be amended
from time to time.


                  2.       TERM.

                           a.       The employment of Dr. Mollica as Chief
Executive Officer under this Agreement is for an initial term of three years
beginning February 2, 2001.

                           b.       Unless earlier terminated under the
provisions of this Agreement, this Agreement will renew automatically for
successive one year periods at the conclusion of the initial term and any
succeeding renewal terms (collectively, the "Term"), unless either party
notifies the other in writing, at least one year in advance, of its intention
not to renew the Agreement at the expiration of the initial or renewal term.

                  3.       COMPENSATION.

                           a.       For his services under this Agreement as
Chief Executive Officer, Dr. Mollica will be paid by the Company an initial base
salary of Four Hundred Eighty-five Thousand Dollars ($485,000) per year ("Base
Salary"). The Base Salary will be paid in equal installments, less normally
applicable payroll deductions, in accordance with the Company's regular payroll
schedule. Dr. Mollica's compensation will be reviewed on or before February 28
of each year to determine whether his compensation level shall be adjusted in a
matter commensurate with his performance in the prior year of service.

                           b.       Dr. Mollica shall participate in the
Company's Bonus Program for Senior Management, which may provide an annual bonus
target of fifty (50) percent of Dr. Mollica's Base Salary, as determined in
accordance with the Company's existing compensation policy, or such other amount
as the Board shall establish. Such amounts payable to Dr. Mollica under the
bonus program shall be referred to herein as the "Incentive Bonus." Incentive
Bonuses will be paid on March 1 of each year, provided Dr. Mollica is employed
or is receiving severance payments on that date.

                           c.       From time to time, Dr. Mollica may be
granted the option to purchase Company stock under the terms of the Company's
1994 Incentive Stock Option Plan, or similar employee stock option plans in
effect from time to time. Such stock option grants shall be subject to the terms
of the applicable stock option plan(s) then in effect.

DEATH. Dr. Mollica's employment as Chief Executive Officer may be terminated at
any time by action of the Board for any reason. In the event of termination of
his employment, the Company shall have no liability to Dr. Mollica as Chief
Executive Officer for compensation or benefits except as specified in this
Section 4 or as required by the Company's benefits policy.

                           a.       INVOLUNTARY TERMINATION WITHOUT CAUSE. If

Dr. Mollica's employment as Chief Executive Officer is terminated involuntarily
by the Board, without cause, during the Term, the Company shall:

                           (1)      Pay Dr. Mollica all compensation and
                                    benefits accrued, but unpaid, up to the date
                                    of his termination. Dr. Mollica's Incentive


                                    for the calendar year in which his
                                    employment is terminated shall be paid on a
                                    pro rata basis, based on the percentage of
                                    target bonuses set by the Company's Board of

                           (2)      Continue to pay Dr. Mollica each month, for
                                    a period of up to twenty-four (24) months,
                                    an amount equal to one twelfth of his annual
                                    Base Salary in effect as of the date of
                                    termination. These payments shall continue
                                    until the date Dr. Mollica accepts
                                    comparable employment (defined as receiving
                                    total compensation equal to at least
                                    seventy-five (75) percent of his final total
                                    compensation from the Company), whether as
                                    an employee, consultant, partner,
                                    independent contractor or in any other
                                    capacity with another business entity. Dr.
                                    Mollica shall continue to be eligible for
                                    pro rata Incentive Bonuses for the period
                                    during which he is receiving payments under
                                    this Section 4(a)(2). The Company will
                                    maintain Dr. Mollica's group medical
                                    coverage during the period he is receiving
                                    payments under this Section 4(a)(2).

                           (3)      Any unvested stock options which were
                                    granted to Dr. Mollica prior to the date of
                                    this Agreement shall immediately vest upon
                                    the date of termination of his employment
                                    with the Company. The expiration date of the
                                    exercise period for such options shall be
                                    the earlier of: i) thirty (30) days
                                    following the date of the final payment made
                                    pursuant to Section 4(a)(2), or ii) the
                                    tenth (10th) anniversary of the date of
                                    grant. All vested options shall be
                                    exercisable pursuant to the terms of the
                                    stock option agreement(s) under which the
                                    options were granted.

                           b.       TERMINATION BY DR. MOLLICA FOR GOOD REASON.
In the event Dr. Mollica terminates this Agreement with at least ninety (90)
days' written notice and for "Good Reason" as defined below during the Term, he
shall be entitled to receive the benefits provided in Section 4(a) above. For
purposes of this Section 4(b), "Good Reason" shall mean the occurrence of any of
the following events: i) Dr. Mollica's removal as Chief Executive Officer of the
Company; ii) if, as a result of the Company's relocation, Dr. Mollica is
required to relocate his residence outside the New Jersey area; iii) a reduction
of more than fifteen (15) percent of Dr. Mollica's base salary, unless made
simultaneously with a similar reduction of the base salaries of all the
Company's executive officers; iv) the sale, consolidation, change in control,
merger or affiliation of the Company that materially changes Dr. Mollica's
duties, title or responsibility.

                           c.       TERMINATION FOR CAUSE. If Dr. Mollica's
employment is terminated as Chief Executive Officer for "Cause" as defined below
during the Term, the Company shall pay Dr. Mollica all accrued, but unpaid,
compensation and benefits which are then due and owing as of the date of his
termination. He shall not be entitled to receive a pro rata Incentive Bonus for
the calendar year in which the termination occurs, or any of the amounts
specified in Section 4(a). The Company shall have the right to setoff any
amounts due to Dr,


Mollica by any amounts owed by Dr. Mollica to the Company at the time Dr.
Mollica's employment terminates and he hereby authorizes the Company to make
this setoff.

                           Dr. Mollica's employment may be terminated for
"Cause" at any time upon delivery of written notice to Dr. Mollica. "Cause"
means the occurrence of any of the following events: i) any gross failure on the
part of Dr. Mollica (other than by reason of disability as provided in Section
4(d)) to faithfully and professionally carry out his duties or to comply with
any other material provision of this Agreement, which failure continues after
written notice thereof by the Board, provided that the Board 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 such notice has been given on a prior occasion; ii) Dr. Mollica'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 Dr. Mollica intended to
or likely to injure the business of the Company); iii) Dr. Mollica's conviction
for any felony or for any other crime involving moral turpitude, whether or not
relating to his employment; iv) Dr. Mollica's insobriety or use of drugs,
chemicals or controlled substances either (A) in the course of performing his
duties and responsibilities under this Agreement, or (B) otherwise affecting the
ability of Dr. Mollica to perform the same; v) Dr. Mollica's failure to comply
with a lawful written direction of the Board; or vi) any wanton and willful
dereliction of duties by Dr. Mollica. The existence of any of the foregoing
events or conditions shall be determined by the Board in the exercise of its
reasonable judgment.

                           d.       VOLUNTARY RESIGNATION. In the event that Dr.
Mollica shall voluntarily resign as Chief Executive Officer:

                                    (1)      Dr. Mollica shall provide the
                                             Company's Board of Directors with
                                             ninety (90) days' advance written
                                             notice of his intention to resign

                                    (2)      Following the effective date of his
                                             resignation, the Company shall be
                                             relieved of all other obligations
                                             to pay compensation to Dr. Mollica,
                                             except that the Company shall
                                             immediately pay Dr. Mollica all
                                             accrued, but unpaid, Base Salary
                                             and any other unpaid expenses or
                                             expense reimbursement. Dr. Mollica
                                             shall be entitled to receive a pro
                                             rata Incentive Bonus for the
                                             calendar year in which his
                                             resignation becomes effective.

                           e.       DISABILITY. If Dr. Mollica becomes disabled
for more than one hundred eighty (180) days in any twelve (12) month period, the
Company shall have the right to terminate his employment without further
liability upon written notice to Dr. Mollica. Dr. Mollica shall be deemed
disabled for purposes of this Agreement either (i) if he 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, he cannot perform his duties as Chief


Executive Officer. In the event the Company shall terminate Dr. Mollica due to
disability, as described above, Dr. Mollica shall be entitled to receive the
benefits set forth in Section 4(a), reduced by the amount of any disability plan
or insurance benefit paid to him.

                           f.       DEATH. In the event of the death of Dr.
                                    Mollica, this Agreement shall automatically
terminate and any obligation to continue to pay compensation and benefits shall
cease as of the date of his death.

                           g.       CERTAIN ADDITIONAL PAYMENTS. If any of the
benefits or payments under this Agreement, or under any other agreement with or
plan of the Company (in the aggregate, the "Total Payments"), will be subject to
the tax (the "Excise Tax") imposed by Section 4999 of the Internal Revenue Code,
the Company shall pay Dr. Mollica in cash an additional amount (the "Gross-Up
Payment") such that the net amount retained by Dr. Mollica after deduction of
any Excise Tax upon the Total Payments and any federal, state and local income
tax and Excise Tax upon the Gross-Up Payment provided for by this Section 4(g)
shall be equal to the Total Payments. Such payments shall be made by the Company
to Dr. Mollica as soon as practical following a determination that any of the
Total Payments will be subject to the Excise Tax, but in no event beyond thirty
(30) days from such date.

                           All determinations required to be made under this
Section 4(g), including whether any of the Total Payments will be subject to the
Excise Tax and the amounts of such Excise Tax, shall be made by a nationally
recognized accounting firm (the "Accounting Firm") mutually acceptable to the
parties. The Accounting Firm shall provide detailed supporting calculations both
to the Company and to Dr. Mollica within 10 days after a request for such
determinations are made by Dr. Mollica or the Company. Any such determination by
the Accounting Firm shall be binding upon the Company and Dr. Mollica. For
purposes of determining the amount of the Gross-Up Payment, Dr. Mollica shall be
deemed to pay Federal, state and local income taxes at the highest marginal
rates applicable to Dr. Mollica as of the date of the determination.

                  5.       BOARD MEMBERSHIP. As Chief Executive Officer, Dr.
Mollica shall at all times be nominated by the Board to serve on the Company's
Board of Directors, subject to election by the stockholders.

                  6.       VACATION AND HOLIDAY. Dr. Mollica shall be entitled
vacation each year, in accordance with the Company's standard vacation policy,
and to those holidays observed by the Company. As an essential employee of the
Company, Dr. Mollica shall schedule his vacation and holiday observances so as
not to interfere with the performance of his duties as Chief Executive Officer.

BENEFITS. Dr. Mollica shall be entitled to the benefit of such group medical,
accident and long-term disability insurance as the Company shall make available
from time to time to its executive employees.

                  8.       SEPARATION BENEFITS INSURANCE. During the Term of
this Agreement and the period during which Dr. Mollica is receiving payments
under Section 4(a)(2), the Company


will reimburse Dr. Mollica for the cost of obtaining term life insurance in an
amount equal to two times his Base Compensation, subject to a maximum annual
reimbursement of Twenty Thousand Dollars ($20,000).

                  9.       PROFESSIONAL EXPENSES. Dr. Mollica 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 his employment. The Company will also pay for
appropriate professional dues and memberships, which must be approved in advance
by the Board.

                  10.      INDEMNIFICATION. The Company agrees to indemnify Dr.
Mollica to the fullest extent permitted by Delaware law, including mandatory
advancement of costs allowed by law.

                  11.      TAXES. Dr. Mollica 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 his as required by law
or regulation.

                  12.      CONFIDENTIAL INFORMATION. Except as reasonably
necessary to perform his duties as Chief Executive Officer, Dr. Mollica agrees
not to reveal to any other person or entity or use for his own benefit any
confidential information of or about Company or its operations, both during and
after his employment under this Agreement, including without limitation
marketing plans, financial information, key personnel, employees' salaries and
benefits, customer lists, pricing and cost structures, operation methods and any
other information not available to the public, without Company's prior written

                  13.      NON-COMPETITION. Dr. Mollica shall not, during the
course of his employment with the Company or for a period of twenty-four (24)
months thereafter, 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, Dr. Mollica may make
solely passive investments in any Competing Entity the common stock of which is
"publicly held" and of which Dr. Mollica 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 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 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.

                  The Company's obligation to make payments pursuant to Section
4 above shall terminate in the event that, and at such time as, Dr. Mollica is
in breach of his obligation not to compete as set forth in this Section 13. For
purposes of this Section, 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. The term "Territory" shall
mean North America, Europe and Japan. Notwithstanding anything in the above to
the contrary, Dr. Mollica may engage in the activities set forth in Section
13(a) hereof with the prior written consent of the Company, which consent shall
not be unreasonably withheld. In determining whether a specific activity by Dr.
Mollica 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
Dr. Mollica, and (ii) the business activities of the Competing Entity at the
time of Dr. Mollica's proposed engagement by such entity.

                  Dr. Mollica 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). Dr. Mollica
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 13
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.

                  14.      ARBITRATION. Any and all disputes between the parties
(except actions to enforce the provisions of Section 13 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 (hereafter "Rules"). The initiation and conduct of any
arbitration hereunder shall be in accordance with the Rules and each side shall
bear its own costs and counsel fees in such arbitration. Any arbitration
hereunder shall be conducted in Princeton, New Jersey, and 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. Section 1 ET SEQ., and
any action pursuant to such Act to enforce any rights hereunder shall be brought
exclusively in the United States District Court for the District of New Jersey.
The parties consent to the jurisdiction of (and the laying of venue in) such

                  15.      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 Dr. Mollica of any provision of the Agreement.

                  16.      SEVERABILITY. 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, and any such section, paragraph, or term shall be deemed
modified to the extent to make it enforceable.

                  17.      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 Dr. Mollica. This Agreement may
not be assigned by Dr. Mollica. This Agreement may be assigned to any successor
in interest to the Company and Dr. Mollica hereby consents to such assignment.

                  18.      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 may amended only in
writing signed by both parties.


                  19.      GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New Jersey.

                  Dated this 26th day of February, 2001.

                                        PHARMACOPEIA, INC.

                                        By:  /s/ Gary E. Costley
                                           Chairman Compensation Committee

                                        /s/ Joseph A. Mollica
                                        Joseph A. Mollica