EXHIBIT 10.18
-------------
December 16, 1997
Xx. Xxxxxx X. Xxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx Xxxxxxxxx Center
Xxxxxxxxx, XX 00000
Dear Xxx:
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.
Xx. Xxxxxx X. Xxxxxxx
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
Xx. Xxxxxx X. Xxxxxxx
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
above.
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
Xx. Xxxxxx X. Xxxxxxx
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
extinguished.
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.
Sincerely,
Xxxxxx X. Xxxxxxx
On behalf of the Board of Directors of
Pharmacopeia, Inc.
The foregoing is agreed and accepted.
/s/ Xxxxxx X. Xxxxxxx
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Xx. Xxxxxx X. Xxxxxxx
December 16, 1997
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