1
Exhibit 10.2
AGREEMENT
This Agreement is made and entered into as of the 11th day of
September, 1998, by and between Xxxx X. Xxxxxx (hereinafter referred to as "Xx.
Xxxxxx") residing at 0 Xxxxxxx Xxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx, and ArQule,
Inc. (hereinafter referred to as "ArQule" or the "Company"), a Delaware
corporation having a principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxxxxx.
1. DEFINITIONS. As used in this Agreement, any reference to
"ArQule" shall at all times unless otherwise specified include, and this
Agreement shall cover, ArQule, Inc., its predecessors and successors, all of its
past, present and future shareholders, directors, officers, employees,
investors, representatives, attorneys, agents, and assigns, in their respective
capacities as such and all of its affiliates, subsidiaries, parent or
controlling corporations, and their affiliates and subsidiaries; and any
reference to "Xx. Xxxxxx" shall at all times unless otherwise specified include
his attorneys, heirs, administrators, representatives, executors, legatees,
successors, agents and assigns.
2. EMPLOYMENT. Xx. Xxxxxx shall resign as President and Chief
Executive Officer effective on such date as the Board of Directors of the
Company may request. Subsequent to such resignation, Xx. Xxxxxx shall remain an
employee of ArQule at his current salary and benefit level until his resignation
as an employee is requested by the Board which shall be no earlier than January
11, 1999; provided however, the Board of Directors may terminate Xx. Xxxxxx at
any time for Cause as such term is defined in Xx. Xxxxxx'x employment agreement
with ArQule dated May 31, 1996 (the "Employment Agreement"); provided further
that Xx. Xxxxxx shall not be obligated to remain as an employee of ArQule after
January 11, 1999. Such period of time prior to Xx. Xxxxxx'x resignation or
termination is to be referred to as the "Transition Period". In accordance with
ArQule's current practice, as part of Xx. Xxxxxx'x current salary, Xx. Xxxxxx
may receive certain bonuses which the Compensation Committee of the Company
determines he has earned by the achievement of certain corporate and individual
objectives in the 1998 Incentive Plan. During the Transition Period, Xx. Xxxxxx
shall report to the Board of Directors and shall undertake the duties and
responsibilities requested of him by the Board of Directors. Upon termination of
Xx. Xxxxxx'x employment hereunder, the Company shall (i) pay Xx. Xxxxxx a lump
sum amount equal to twelve months of Xx. Xxxxxx'x base salary (less usual taxes
and withholding) less an amount equal to Xx. Xxxxxx'x daily base salary rate
multiplied by the number of days between Xx. Xxxxxx'x resignation as President
and Chief Executive Officer and the end of the Transition Period and (ii)
provide Xx. Xxxxxx with the benefits currently received by him in accordance
with the terms of such benefit plans for a period of twelve months or until Xx.
Xxxxxx commences other employment. ArQule and Xx. Xxxxxx hereby agree that if a
new President and Chief Executive Officer has not been hired by ArQule by
January 11, 1999, both parties have the option to negotiate the continuation of
Xx. Xxxxxx'x services.
3. BOARD OF DIRECTORS. During the Transition Period, Xx. Xxxxxx
will remain a member of the Board of Directors. Upon termination of the
Transition Period, Xx. Xxxxxx will remain on the Board of Directors, although he
agrees to resign immediately if requested to do so by a majority of the Board of
Directors. If Xx. Xxxxxx remains a director of the Company after
2
the Company's 1999 Annual Meeting of Stockholders, then Xx. Xxxxxx shall receive
the standard compensation and benefits paid to other non-employee directors.
4. STOCK OPTIONS: Xx. Xxxxxx has 235,103 options exercisable at
$0.80 per share which have vested as of August 13, 1998. Xx. Xxxxxx may exercise
those options subject to the terms under which they were granted, including the
requirement that the options be exercised within three months of the termination
of Xx. Xxxxxx'x employment.
As of August 13, 1998 Xx. Xxxxxx will have 193,717 unvested
options exercisable at $0.80 per share. These options will vest according to the
schedule set forth in Exhibit A, which shall not be later than the end of the
Transition Period. New stock option certificates representing the incentive
stock options and the nonstatutory stock options as set forth in Exhibit A
attached hereto to purchase a total of 193,717 shares of the Company's Common
Stock, with the vesting schedules in accordance with Exhibit A, will be promptly
issued to Xx. Xxxxxx following the execution of this Agreement. Xx. Xxxxxx may
exercise those options subject to the terms under which they were granted,
including the requirement that the options be exercised within three months of
the termination of Xx. Xxxxxx'x employment.
5. LOAN FORGIVENESS. Xx. Xxxxxx owes the Company a loan principal
amount of $166,667 plus interest. As additional consideration, the Company shall
forgive $166,667 plus any accrued interest on January 11, 2000; provided,
however, Xx. Xxxxxx shall pay to the Company the loan principal amount of
$166,667, plus interest, if (i) prior to January 11, 2000, Xx. Xxxxxx breaches
this Agreement or the Employment Agreement or (ii) no later than January 8,
2000, Xx. Xxxxxx has not delivered to ArQule a check for the withholding taxes
due on the forgiveness of $166,667 plus interest in an amount set forth in a
notice sent by the Company to Xx. Xxxxxx no later than January 1, 2000. In order
to promptly notify Xx. Xxxxxx pursuant to this section, Xx. Xxxxxx further
agrees to notify ArQule if prior to January 11, 2000 he changes his residence.
6. REFERENCE. The Company will provide Xx. Xxxxxx with a positive
verbal and/or written reference upon specific request.
7. MUTUAL GENERAL RELEASE. Effective as of the end of the
Transition Period, Xx. Xxxxxx and the Company fully, forever, irrevocably and
unconditionally release, remise, and discharge each other from any and all
manner of claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, dues, sums of money, costs, losses, accounts, reckonings,
covenants, contracts, controversies, agreements, promises, leases, doings,
omissions, damages, executions, obligations, liabilities, and expenses
(including attorneys' fees and costs), of every kind and nature whatsoever,
whether known or unknown, either at law, in equity, or mixed, which each ever
had, nor has, or can, shall, or may have against the other, by reason of, on
account of, or arising out of any matter or thing which has happened, developed,
or occurred before the termination of the Transition Period (collectively
referred to as "Claims") including, but not in limitation of the foregoing
general terms, any Claims, asserted or unasserted, arising from his employment
with or separation from ArQule, and specifically including any Claims under any
federal or state labor, employment or discrimination laws, including but not
limited to, Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act of 1967, as amended, the Fair Labor Standards
Act of 1938, as amended, the Americans with
2
3
Disabilities Act of 1992, Chapter 151B of the Massachusetts General Laws,
Sections 24A-24J of Chapter 149 of the Massachusetts General Laws, the
Massachusetts Civil Rights Act, the Massachusetts Equal Rights Law, or at common
law, except that this release shall not apply to any Claims with respect to the
obligations or agreements of the parties under this Agreement and except that
this release also shall not apply to any Claims by Xx. Xxxxxx for
indemnification pursuant to the Company's Amended and Restated Certificate of
Incorporation or its By-Laws, a copy of which is attached to this Agreement. It
is expressly agreed and understood that this release is a General Release,
subject to the exceptions stated above. In addition, and not in limitation of
the foregoing, effective as of the end of the Transition Period, Xx. Xxxxxx
forever releases and discharges ArQule from any liability or obligation to
reinstate or reemploy him in any capacity.
8. ANNOUNCEMENT. The Company, after notice and an opportunity to
review by Xx. Xxxxxx, will announce that Xx. Xxxxxx is stepping down from duties
as President and Chief Executive Officer to pursue other opportunities. Xx.
Xxxxxx will also be given an opportunity to review the announcement to be made
upon the appointment of his successor.
9. COMPANY PROPERTY. At the end of the Transition Period, Xx.
Xxxxxx will immediately return to ArQule all documents; reports; files;
memoranda; records; software; credit cards; door and file keys; computer access
codes; disks and instructional manuals; and any and all other Company property
that Xx. Xxxxxx received, prepared or helped prepare in connection with his
employment with ArQule, and Xx. Xxxxxx will not retain any copies, duplicates,
reproductions, or excerpts thereof, nor will he show or give any of the above
which at any time was in his possession to any third party who is not an ArQule
employee or consultant hired or employed by ArQule.
10. NONDISPARAGEMENT. The parties, as defined above, agree not to
make any negative or disparaging remarks about each other to any other party,
including staff, executives, Board of Directors or industry or business
contacts.
11. (a) NONDISCLOSURE OF CONFIDENTIAL OR PROPRIETARY INFORMATION.
Xx. Xxxxxx continues to be bound by any and all agreements he has signed
protecting the Company's confidential and proprietary information and agrees
that all information, whether or not in writing, of a private, secret or
confidential nature concerning the Company's business or financial affairs that
is entitled to protection as confidential or proprietary information under
applicable law (collectively, "Proprietary Information") shall be the exclusive
property of the Company. By way of illustration but not limitation, Proprietary
Information may include inventions, products, processes, methods, techniques,
formulas, projects, plans, financial data, computer programs, research and
development activities of the Company, product and marketing plans. Xx. Xxxxxx
further agrees that he shall not publish, disclose or otherwise make available
to any third party, other than employees of the Company, any Proprietary
Information except as expressly authorized in writing by the Company. Xx. Xxxxxx
may make such disclosures as required by law so long as he gives the Company
reasonable notice and the opportunity to oppose the disclosure. Xx. Xxxxxx
expressly agrees not to use such Proprietary Information for his own benefit or
for the benefit of any other person or business entity.
3
4
(b) NON-COMPETITION. Notwithstanding Article 6 of the Employment
Agreement, it is understood that Xx. Xxxxxx will be free to work for any
company, including a pharmaceutical company, whose principal activity is not the
direct sale or licensing of combinatorial chemistry technology or combinatorial
chemistry compounds similar to those sold or licensed by ArQule.
12. LEGAL, FINANCIAL PLANNING, AND EMPLOYMENT SEARCH FEES. ArQule
will reimburse Xx. Xxxxxx up to $10,000 for attorneys' and financial planning
fees relating to the review of this Agreement, compliance with the Employment
Agreement, continuing SEC reporting and governance implications, and for other
professional fees or expenses that Xx. Xxxxxx might incur in connection with the
termination of his employment or the search for new employment.
13. BREACH. The parties agree that in the event one party breaches
any part or parts of this Agreement, legal proceedings may be instituted against
that party for breach of contract and each party may pursue all remedies
available in law and equity.
14. AMENDMENT. This Agreement shall be binding upon the parties,
and may not be released, discharged, abandoned, supplemented, amended, changed,
or modified in any manner, orally or otherwise, except by an instrument in
writing of concurrent or subsequent date, signed by a duly authorized officer or
representative of each of the parties hereto.
15. CONSTRUCTION. The terms of this Agreement are contractual in
nature and not a mere recital. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts. Captions
herein are inserted for convenience, do not constitute a part of this Agreement,
and shall not be admissible for the purpose of proving the intent of the
parties. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and in pleading or proving any provision of this
Agreement it shall not be necessary to produce more than one such counterpart.
16. VALIDITY. Should any provision of this Agreement be declared
or be determined by any court of competent jurisdiction to be illegal or
invalid, the validity of the remaining parts, terms or provisions shall not be
affected thereby and said illegal or invalid part, term or provision shall be
deemed not to be a part of this Agreement.
17. WAIVER. Waiver of any provision of this Agreement, in whole or
in part, in any one instance shall not constitute a waiver of any other
provision in the same instance, nor any waiver of the same provision in another
instance, but each provision shall continue in full force and effect with
respect to any other then-existing or subsequent breach.
18. ENTIRE AGREEMENT. This Agreement and the Employment Agreement
dated May 31, 1996 contain and constitute the entire understanding and agreement
between the parties hereto respecting the subject matter thereof and supersede
and cancel all previous negotiations, agreements, commitments, and writings in
connection herewith except where expressly reaffirmed.
19. REPRESENTATIONS. Xx. Xxxxxx and the Company affirm
that the only consideration for signing this Agreement are the terms stated
herein; that no other promises or agreements of any kind have been made to cause
either to sign this Agreement; and that each fully understands
4
5
the meaning and intent of this instrument. The Company represents that the
individual signing this Agreement has authority to bind the Company.
20. ACKNOWLEDGMENTS. Xx. Xxxxxx states and represents that he has
carefully read this Agreement, knows the contents hereof, freely and voluntarily
assents to all the terms and conditions hereof, has had an opportunity to
consult with and review this Agreement with an attorney of his choice,
understands the final and binding effect of this Agreement, and signs the same
as his own free act with the full intent of releasing ArQule from all claims to
the extent provided in Section 7 above.
Xx. Xxxxxx further states that he understands that the General Release
contained in Section 7 of this Agreement includes a release and waiver of any
rights or claims he has or may have under the Age Discrimination in Employment
Act of 1967, as amended. He acknowledges that he has been advised in writing to
consult with an attorney prior to executing this Agreement, that he has been
given a period of at least twenty-one (21) days within which to consider whether
or not to sign this Agreement, that he has been given a period of at least seven
(7) days following his signing of this Agreement in which to revoke it, and that
the Agreement shall not become effective or enforceable until the seven (7) day
period has expired.
[Remainder of this page is intentionally left blank]
5
6
IN WITNESS WHEREOF, the parties have set their hands and seals to this
Agreement as of the date written above.
/s/ Xxxx X. Xxxxxx
-------------------------------------------
Xxxx X. Xxxxxx
ARQULE, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
---------------------------------------
Xxxxx X. Xxxxxxxxxx, Xx.
Vice President, Chief Financial Officer
6
7
EXHIBIT A
VESTING OF OPTION FOR 193,717 SHARES
VESTING DATE NUMBER OF SHARES CLASSIFICATION
------------ ---------------- --------------
August 14, 1998 28,142 Incentive Stock Options
January 11, 1999 68,717 Incentive Stock Options
January 11, 1999 56,283 Incentive Stock Options
January 11, 1999 40,575 Non-qualifying Stock Options
7
