AMENDMENT NO. 2 TO RESEARCH & DEVELOPMENT AND LICENSE AGREEMENT

Exhibit 99.3

AMENDMENT NO. 2 TO RESEARCH & DEVELOPMENT AND LICENSE AGREEMENT

     This Amendment No. 2 to Research & Development and License Agreement is dated as of December 24, 1996 by and between Xxxxxx Laboratories, an Illinois corporation having a principal place of business at 000 Xxxxxx Xxxx Xxxx, Xxxxxx Xxxx, Xxxxxxxx (“Xxxxxx”) and ArQule, Inc., a Delaware corporation having a principal place of business at 000 Xxxxxx Xxxxxx, Xxxxx 00, Xxxxxxx, Xxxxxxxxxxxxx (“ArQule”).

RECITALS

     WHEREAS, Xxxxxx and ArQule have entered into that certain Research & Development and License Agreement, dated as of June 16, 1995, as amended by Amendment No. 1 on August 13, 1996 (as so amended, the “License Agreement”), pursuant to which ArQule agreed, Inter alia, to provide Xxxxxx with certain ArQule core Compounds and Xxxxxx Derivative Compounds (these and other capitalized terms used herein without definition shall have the respective meanings provided in the License Agreement) for screening in consideration of the payment of Xxxxxx to ArQule of certain technology access license fees, milestone and royalty payments and research funding payments on the terms and subject to the conditions set forth in the License Agreement; and

     WHEREAS, ArQule and Xxxxxx desire to further amend the License Agreement to extend the Research Term thereof and to provide for additional financial terms in connection therewith.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows::

1.  The License Agreement is hereby amended as follows:

     1.1. Section 2.4(b) of the License Agreement is hereby deleted in its entirely and replaced wit the following:

[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. OMITTED TEXT IS INDICATED BY A “*”.

"(b) Additional technology access fees of * Dollars ($*) for each extension of the Research Term by Xxxxxx pursuant to Section 2.3; provided, that, the additional technology access fee for the Initial Contract Extension Period (as hereinafter defined) shall be a total of * Dollars ($*) payable in two equal installments of * Dollars ($*), with the first such installment payable on or before December 31, 1996 and the second such installment payable on or before January 31, 1998; and"

     1.2. A new Section 2.4(d) of the License Agreement is hereby added as follows:

"(d) Notwithstanding the fact that he Initial Contract Extension Period lasts for twenty-one (21) months, Xxxxxx’x research and development funding obligation for the entire Initial Contract Extension Period pursuant to Section 2.4(c) shall be a total of * Dollars ($*), payable in two installments of * Dollars ($*) each as provided in Section 2.4(c).”

     1.3. The first sentence of Section 5.1 of the License Agreement is hereby deleted in its entirety and replaced with the following:

“During the Array Transfer Period, ArQule shall deliver to Xxxxxx ArQule Core Compounds within ArQule Arrays as follows: (i) during the initial Contract Year, ArQule shall deliver to Xxxxxx at least * ArQule Core compounds within ArQule Arrays having not less than * different Chemical Themes, (ii) during the second Contract year, Arquele shall deliver to Xxxxxx at least * ArQule Core Compounds within ArQule Arrays having not less than * different Chemical Themes (with a minimum of * ArQule Core Compound and a maximum of * ArQule Core Compounds for each Chemical Theme) and (iii) during the period commencing on the first day of the third Contract year and continuing until March 16, 1999 (such period being referred to herein as the “Initial Contract Extension Period”), ArQule shall deliver to Xxxxxx at least * ArQule Core Compounds within Arrays having not less than * different Chemical Themes (with a minimum of * ArQule Core Compounds and a maximum of * ArQule Core Compounds for each Chemical Theme).”

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2.  Miscellaneous

     2.1. Governing Law. This Amendment shall be governed in all respects by the laws of the State of Illinois without giving effect to principles of conflicts of law thereunder.

     2.2. Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, permitted assigns, heirs, executors and administrators of the parties hereto.

     2.3. License Agreement. Except as specifically provide herein, the License Agreement as previously executed ad amended by Amendment No. 1 shall remain in full force and effect.

     2.4. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties have duly executed this Agreement No. 2 as of the date first above written.

		XXXXXX LABORATORIES
		By:   Name: Title:		A. pernet Vice President Research & Development
		ARQULE, INC.
		By:		Xxxx X. Xxxxxx President

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