Sample Business Contracts


Disengagement Agreement and Release - Pharmacopeia Inc. and Saaid Zarrabian


                       DISENGAGEMENT AGREEMENT AND RELEASE


                  This Disengagement Agreement and Release (the "Agreement") is
entered into as of the 11th day of September, 2000, by and between PHARMACOPEIA,
INC., a Delaware corporation (the "Company"), and SAAID ZARRABIAN (the
"Employee").
                                   BACKGROUND

                  WHEREAS, Employee has served as Chief Operating Officer of
Molecular Simulations, Inc. ("MSI") pursuant to the terms of an Employment
Agreement dated November 30, 1995, as amended October 1, 1997 (the "Employment
Agreement"); and

                  WHEREAS, the Company acquired MSI on June 12, 1998 (the
"Acquisition Date") and assumed the obligations of MSI under the Employment
Agreement; and

                  WHEREAS, Employee has served as a Chief Operating Officer of
the Company since November, 1999; and

                  WHEREAS, the parties have agreed that Employee's employment
arrangement with the Company shall cease effective as of December 31, 2000 (the
"Termination" or "Termination Date") and in connection therewith Employee shall
resign as Chief Operating Officer of the Company effective October 1, 2000; 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:


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         1.       TERMINATION. The parties hereby agree that the employment
arrangement between 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 Employee and the Company with respect to
Employee's employment with the Company, MSI and their respective affiliates are
duly and effectively terminated as of the Termination Date. 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 Employee
is currently eligible as of the Termination Date. Employee hereby resigns as
Chief Operating Officer of the Company and resigns from all other executive
officer positions of the Company, MSI and their respective affiliates, effective
October 1, 2000. Employee agrees to cooperate with the Company, to report to the
office as reasonably necessary to assist on transitional issues and to perform
such other projects as assigned by Joe Mollica, through the Termination Date. At
the request of the Company's Chief Executive Officer, Employee shall also resign
as a member of the Board of Directors of MSI and the Company's other affiliates,
and in any event shall resign such directorships no later than the Termination
Date.

         2.       SEVERANCE AND OTHER PAYMENTS.

                  (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, Three Hundred
Thirty-six Thousand Dollars ($336,000). This amount shall be paid in equal
biweekly installments pursuant to the Company's normal payroll


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schedule, less normally applicable payroll tax withholdings, commencing on or
before January 31, 2001, unless terminated sooner pursuant to Section 5 hereof.

                  (b)      In addition to the severance payments described in
Section 2(a) above, so long as the employee is not in breech of this agreement,
and as such stays employed through the termination date, Employee shall be
entitled to receive that percentage of his annual Company performance-based
target bonus as is set by the Company's Board of Directors based upon
achievement against established Pharmacopeia 2000 Corporate Objectives (as
defined in Schedule A attached). The amount shall be payable in a lump sum, less
normally applicable payroll tax withholdings, on or about March 1, 2001.

         3.       STOCK OPTIONS. The parties acknowledge that pursuant to
certain Stock Option Agreements, Employee has been granted incentive stock
options to purchase a total of 274,502 shares of common stock of Pharmacopeia,
Inc. As of August 23, 2000, 196,792 of these options are vested, of which 40,000
have been exercised so long as the employee is not in breech of this agreement
and as such stays employed through the termination period, an additional 17,916
options will vest. Employee's options shall be exercisable during the period
specified in the applicable option agreements and shall remain subject to the
terms of those agreements.

         4.       BENEFITS. 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 premiums until the earlier of (i)
the end of the twelve (12) month period following the Termination Date, or (ii)
the date upon which Employee is covered by a successor employer's comparable
benefit plans. As of that date, Employee may continue coverage under COBRA at
his own cost. The benefits described in this section are available


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only during the time that Employee is not eligible for comparable health
coverage through another employer. Should Employee obtain such coverage, it is
Employee's obligation to immediately notify Company.

         5.       NON-COMPETITION. The Employee shall not, for a one (1) year
period 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 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 2 above shall terminate in the event that,
and at such time as, Employee is in breach of his obligation not to compete 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


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<PAGE>


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, 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 (i) the duties to be performed by Employee, and (ii) the business
activities of the Competing Entity at the time of Employee's proposed engagement
by such entity.

                  Employee acknowledges and agrees that the covenants set forth
in this Section are reasonable and necessary in all respects for the protection
of Company's legitimate business interests (including without limitation
Company's confidential, proprietary information and trade secrets and client
good-will, which represents a significant portion of Company's net worth and in
which Company has a property interest). Employee acknowledges and agrees that,
in the event that he breaches any of the covenants set forth in this Section,
Company shall be irreparably harmed and shall not have an adequate remedy at
law, and, therefore, in the event of such a breach, Company shall be entitled to
injunctive relief, in addition to (and not exclusive of) any other remedies
(including monetary damages) to which Company may be entitled under law.


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<PAGE>


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
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.       RELEASES. Subject to and conditioned upon the full performance
by each of the parties of its obligations under this Agreement:

                  (a)      In exchange for the benefits received under this
Agreement, to which he may not otherwise be entitled, Employee 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 Employee 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 Employee
signs this Agreement, against the Company, its successors, assigns, partners,
representatives and affiliates and all of their respective employees, agents,
officers and directors (the "Company Parties") and hereby releases, acquits and
forever absolutely discharges the Company Parties 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 stock option agreements referenced
in paragraph 3. Such Employee Claims include, but are not limited to, all claims
for breach of contract, wrongful discharge,


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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 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
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 signs this Agreement against
Employee and hereby releases, acquits and forever absolutely discharges Employee
of and from all of the foregoing, except with respect to the obligations of
Employee set forth in this Agreement. Notwithstanding anything herein to the
contrary, such Company Claims will under no circumstances include any action,
cause of action, right, suit, debt, compensation, expense,


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<PAGE>


liability, contract, controversy, agreement, promise, damage judgment, demand or
claim relating to, arising under or arising in connection with any breach by
Employee of this Agreement.

         7.       UNKNOWN CLAIMS. Both Employee and 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 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.

         8.       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.

         9.       FURTHER ACKNOWLEDGMENTS. Employee further 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


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of the provisions of this Agreement, (c) he understands its provisions and its
final and binding effect on him, (d) he is entering into this Agreement freely,
voluntarily, and without duress or coercion, and (e) he understands that he has
twenty-one (21) days from the date of distribution of this Agreement to review
and consider its provisions and 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.

         10.      COMPANY PROPERTY. Employee warrants that 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.

         11.      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, Employee agrees not to
make any statement to any third party (other than 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 the Company
agrees not to make any statement to any third party regarding Employee other
than as may be required by applicable law or to enforce this Agreement or to
defend against a claim related thereto other than the fact that Employee was an


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<PAGE>


employee of the Company during the relevant time period. In the event this
covenant of confidentiality is breached, the Company and 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 Employee on the
contents of any such disclosure. Notwithstanding the foregoing, the Company
shall be under no obligation to reach agreement with 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.

         12.      ACKNOWLEDGMENT OF CONSIDERATION. 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
Employee by the Company to cause him to agree to the terms of this Agreement.

         13.      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.

         14.      ENTIRE AGREEMENT, ETC. This Agreement represents the entire
understanding between the parties, and there are no agreements or understandings
which have


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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 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 Disengagement Agreement as of the date first
written above.

                                  PHARMACOPEIA, INC.

                                  By:  /s/ Joseph A. Mollica

                                     /s/ Saiid Zarrabian                  (L.S.)
                                     -------------------------------------
                                     SAIID ZARRABIAN

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