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Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of December 8, 1998 (the "Execution
Date") by and between ArQule, Inc., a Delaware corporation (the "Company") with
its principal offices at 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, and
Xxxxxxx X. Xxxx, M.D. ("Executive") whose current principal residential address
is Xxxxxxxxxx 0, 0000 Xxxxxxxxx, Xxxxx Xxxx XX, Xxxxxxxxxxx.
WHEREAS, the Company desires to employ Executive in a senior executive
capacity and to enter into an Agreement embodying the terms of such employment
(the "Agreement"); and
WHEREAS, Executive desires to accept such employment and enter into
such an Agreement;
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ
Executive, and Executive hereby accepts employment with the Company, upon the
terms and subject to the conditions set forth in this Agreement, for a period
commencing on a mutually acceptable date (the "Effective Date") and continuing
until terminated in accordance with the provisions of Section 5 (the "Employment
Term").
2. TITLE; DUTIES. During the Employment Term, Executive shall
serve as the President and Chief Executive Officer of the Company. In such
position, Executive shall have such duties and authority as shall be designated
from time to time by the Board of Directors of the Company (the "Board") or its
designee and shall, if elected, serve as a director of the Company. The Employee
hereby agrees to undertake the duties and responsibilities inherent in such
position and such other duties and responsibilities as the Board or its designee
shall from time to time reasonably assign to him.
3. NO CONFLICT. During the Employment Term, Executive shall
devote substantially all of his business time and best efforts to the
performance of his duties hereunder and shall not, directly or indirectly,
engage in any other business, profession or occupation for compensation or
otherwise which would conflict with the rendition of such duties without the
prior written consent of the Board, which consent shall not unreasonably be
withheld, delayed or conditioned. Executive represents and warrants that
SCHEDULE A attached hereto states all current business relationships, including,
but not limited to, consulting agreements, confidentiality agreements and
non-competition agreements that Executive is currently a party to.
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4. COMPENSATION AND BENEFITS.
4.1. BASE SALARY. During the Employment Term, the Company
shall pay Executive for his services hereunder a base salary (the "Base Salary")
at the initial annual rate of $300,000, payable in regular installments in
accordance with the Company's usual payment practices and subject to annual
review and adjustment by the Board in its sole discretion.
4.2. ADDITIONAL COMPENSATION.
4.2.1. STOCK OPTION. As further compensation for
his services hereunder, the Company shall grant to Executive, on or after the
Effective Date, a stock option (the "Stock Option") to purchase 320,000 shares
of the Company's Common Stock, $0.01 par value per share (the "Common Stock"),
pursuant to the Company's Amended and Restated 1994 Equity Incentive Plan (the
"Plan") and in accordance with the terms, and subject to the vesting schedule
and other conditions, set forth in the form of Option Certificate attached
hereto as EXHIBIT A. The method of determining the exercise price of such Stock
Option is set forth in EXHIBIT B. Notwithstanding the foregoing, in the event of
a Change of Control of the Company (as defined herein), the Stock Option shall
become immediately exercisable as to fifty percent of any option shares not yet
vested, in addition to any option shares already vested, without regard to the
vesting schedule on the form of Option Certificate. In the event that
Executive's employment hereunder is subsequently terminated by the Company
without Cause (as defined in Section 5.2) within one year of a Change of Control
of the Company, the Stock Option shall become immediately exercisable as to all
option shares without regard to the vesting schedule set forth on the form of
Option Certificate.
For purposes of this Section 4.2.1, any one of the following events
shall be considered a Change of Control:
(i) the acquisition by any "person" (as such
term is defined in Section 3(a)(9) of the Securities Exchange Act of
1934) of any amount of the Company's Common Stock so that it holds or
controls fifty percent (50%) or more of the Company's Common Stock;
(ii) a merger or consolidation after which fifty
percent (50%) or more of the voting stock of the surviving corporation
is held by persons who were not stockholders of the Company immediately
prior to such merger or combination; or
(iii) the election by the stockholders of the
Company of twenty percent (20%) or more of the directors of the Company
other than pursuant to nomination by the Company's management.
4.2.2. MILESTONE BONUS. As further compensation for
his services hereunder, the Company shall pay Executive an annual bonus (the
"Bonus") of up to $100,000, upon the achievement of certain milestones, and in
accordance with a vesting schedule, to be determined by the Board within ninety
(90) days from the Execution Date and as set forth on
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EXHIBIT C attached hereto (as may from time to time be amended by the Board).
Any Bonus due to Executive will be paid to the Executive during the first
quarter of each calendar year.
4.3. EXECUTIVE BENEFITS. During the Employment Term and
subject to any contributions therefor generally required of senior executives of
the Company, Executive shall be entitled to receive such employee benefits
(including fringe benefits, 401(k) plan participation, and life, health,
accident and disability insurance) which the Company may, in its sole and
absolute discretion, make available generally to its senior executives, or for
personnel similarly situated; PROVIDED, HOWEVER, that it is hereby acknowledged
and agreed that any such employee benefit plans may be altered, modified or
terminated by the Company at any time in its sole discretion without recourse by
Executive. In addition, Executive shall be entitled to have up to $200,000 of
life insurance, payable to such beneficiaries as Executive may from time to time
direct, paid for by the Company.
4.4. VACATION. Executive shall be entitled to three weeks
(15 working days) of paid vacation per annum during the Employment Term, to be
taken at such time or times as shall be mutually convenient for the Company and
Executive. Unused vacation time will be allocated pursuant to the Company's
existing policies and practices.
4.5. EXPENSES.
4.5.1. RELOCATION. The Company shall reimburse
Executive for (i) reasonable relocation expenses incurred by Executive in
connection with his acceptance of employment hereunder, including moving
expenses and travel expenses incurred by Executive in travelling to his new
location of employment, up to a maximum of $75,000 in the aggregate and (ii) any
taxes payable by Executive (including any tax on the gross-up) as a result of
the reimbursement by the Company of Executive's relocation expenses under this
Section 4.5.1. The Company shall undertake to assist and pay for any legal and
other costs associated with any immigration matters connected to Executive's
relocation to the United States.
4.5.2. BUSINESS EXPENSES AND PERQUISITES. Executive
shall be entitled to reimbursement by the Company during the Employment Term for
reasonable travel, entertainment and other business expenses incurred by
Executive in the performance of his duties hereunder in accordance with such
policies as the Company may from time to time have in effect.
4.5.3 ROCHE BONUS AND WARRANT FULFILLMENT. The
Company acknowledges that Executive is entitled to a bonus from his current
employer, Roche________ ("Roche"), of 100,000 Swiss Francs to be paid in March
1999. The Company also acknowledges that Executive is entitled to warrants of
the value of 100,000 Swiss francs to be granted in March 1999. If Executive is
denied any amount of such bonus or warrants solely due to his execution of this
Agreement, the Company shall pay Executive the entire amount of such bonus and
fair market value of warrants on April 5, 1999, less any amount of bonus
actually paid and excluding any warrants actually granted by Roche; provided,
however, such payment shall not exceed
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$100,000. This payment shall be made in currency of the United States at the
applicable conversion rate in effect at the time of such payment.
5. TERMINATION.
5.1. WITHOUT CAUSE BY THE COMPANY. The Executive's
employment hereunder may be terminated by the Company at any time without Cause
upon not less than sixty (60) days prior written notice from the Company to
Executive. If Executive's employment is terminated by the Company without Cause,
including without limitation by reason of Executive's failure to achieve stated
goals or milestones, the Company shall pay Executive a lump sum amount equal to
the Base Salary plus any benefits to which Executive is entitled under Section
4.3 of this Agreement (to the extent permitted by the then-current terms of the
applicable benefit plans and subject to any employee contribution requirements
applicable to Executive on the date of termination) through the conclusion of a
period of one year from the date of such termination. The payment to Executive
of any other benefits following the termination of Executive's employment
pursuant to this Section 5.1 shall be determined by the Board in its sole
discretion in accordance with the policies and practices of the Company.
5.2. FOR CAUSE BY THE COMPANY. Notwithstanding any other
provision of this Agreement, Executive's employment hereunder may be terminated
by the Company at any time for Cause. For purposes of this Agreement, "Cause"
shall mean (i) Executive's willful failure to perform his duties hereunder
(other than as a result of total or partial incapacity due to physical or mental
illness) for thirty (30) days after a written demand for performance is
delivered to Executive on behalf of the Company which specifically identifies
the manner in which it is alleged that Executive has not substantially performed
his duties, (ii) Executive's dishonesty in the performance of his duties
hereunder, (iii) an act or acts on Executive's part involving moral turpitude or
constituting a felony under the laws of the United States or any state thereof,
or (iv) Executive's material breach of his obligations under Section 6 and 7
hereof, which breach shall remain uncured by Executive for thirty (30) days
following receipt of notice from the Company specifying such breach. If
Executive's employment is terminated by the Company for Cause, the Company shall
pay Executive a lump sum amount equal to the Base Salary through the last day of
his actual employment by the Company. The payment to Executive of any other
benefits following the termination of Executive's employment pursuant to this
Section 5.2 shall be determined by the Board in its sole discretion in
accordance with the policies and practices of the Company.
5.3. DISABILITY. Executive's employment hereunder may be
terminated by the Company at any time in the event of the Disability of the
Executive. For purposes of this Agreement, "Disability" shall mean the inability
of Executive to perform substantially his duties hereunder due to physical or
mental disablement which continues for a period of six (6) consecutive months
during the Employment Term, as determined by an independent
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qualified physician mutually acceptable to the Company and Executive (or his
personal representative) or, if the Company and Executive (or such
representative) are unable to agree on an independent qualified physician, as
determined by a panel of three physicians, one designated by the Company, one
designated by Executive (or his personal representative) and one designated by
the two physicians so designated. If Executive's employment is terminated by the
Company for Disability, the Company shall pay Executive an amount equal to the
Base Salary plus any benefits to which Executive is entitled under Section 4.3
of this Agreement (to the extent permitted by the then-current terms of the
applicable benefit plans and subject to any employee contribution requirements
applicable to Executive on the date of termination) through the date on which
Executive is first eligible to receive payment of disability benefits in lieu of
Base Salary under the Company's employee benefit plans as then in effect. The
payment to Executive of any other benefits following the termination of
Executive's employment pursuant to this Section 5.3 shall be determined by the
Board in its sole discretion in accordance with the policies and practices of
the Company.
5.4. DEATH. Executive's employment hereunder shall
automatically terminate in the event of the Executive's death. If Executive's
employment is terminated by the death of Executive, the Company shall pay to
Executive's estate or legal representative an amount equal to the Base Salary at
the rate in effect at the time of Executive's death through the last day of the
month in which his death occurs. The payment to Executive of any other benefits
following the termination of Executive's employment pursuant to this Section 5.4
shall be determined by the Board in its sole discretion in accordance with the
policies and practices of the Company.
5.5. TERMINATION BY EXECUTIVE. Executive's employment
hereunder may be terminated by Executive at any time upon not less than sixty
(60) days prior written notice from Executive to the Company. If Executive
terminates his employment with the Company pursuant to this Section 5.5, the
Company shall pay Executive an amount equal to the Base Salary through the last
day of his actual employment by the Company.
5.6. NOTICE OF TERMINATION. Any purported termination of
employment by the Company or by Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 9
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of employment under the provision so
indicated.
5.7. SURVIVAL. The provisions of Sections 6 and 7 shall
survive the termination of this Agreement.
6. NON-COMPETITION. Executive acknowledges and recognizes the
highly competitive nature of the businesses of the Company and accordingly
agrees that during the Employment Term and for a period of one (1) year after
expiration or termination of Executive's employment hereunder:
6.1. Executive will not engage in any activity which is
competitive with any business which is now, or is at any time during the
Employment Term, conducted by the Company, including without limitation becoming
an employee, investor (except for passive investments of not more than one
percent (1%) of the outstanding shares of, or any other equity
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interest in, a company or entity listed or traded on a national securities
exchange or in an over-the-counter securities market), officer, agent, partner
or director of, or other participant in, any firm, person or other entity in any
geographic area which is engaged in any activities in the field of combinatorial
chemistry. Notwithstanding any provision of this Agreement to the contrary, upon
the occurrence of any breach of this Section 6.1, if Executive is employed by
the Company, the Company may immediately terminate the employment of Executive
for Cause in accordance with the notice provisions contained in Sections 5.6 and
9, and, whether or not Executive is employed by the Company, the Company shall
immediately cease to have any obligations to make payments to Executive under
this Agreement.
6.2. Executive will not directly or indirectly assist
others in engaging in any of the activities in which Executive is prohibited to
engage by clause 6.1 above.
6.3. Executive will not directly or indirectly (a) induce
any employee of the Company to engage in any activity in which Executive is
prohibited from engaging by clause 6.1 above or to terminate his or her
employment with the Company, or (b) employ or offer employment to any person who
was employed by the Company unless such person shall have ceased to be employed
by the Company for a period of at least one (1) year.
6.4. It is expressly understood and agreed that (a)
although Executive and the Company consider the restrictions contained in this
Section 6 to be reasonable, if a final judicial determination is made by a court
of competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is unenforceable, this Agreement shall not be
rendered void but shall be deemed to be enforceable to such maximum extent as
such court may judicially determine or indicate to be enforceable and (b) if any
restriction contained in this Agreement is determined to be unenforceable and
such restriction cannot be amended so as to make it enforceable, such finding
shall not affect the enforceability of any of the other restrictions contained
herein.
7. CONFIDENTIALITY. Executive will not at any time (whether
during or after his employment with the Company) disclose or use for his own
benefit or purposes or the benefit or purposes of any other person, firm,
partnership, joint venture, association, corporation or other organization,
entity or enterprise other than the Company, any Confidential Information. As
used herein, the term "Confidential Information" shall mean, without limitation,
all Proprietary Materials (as defined below), any and all information about
inventions, improvements, modifications, discoveries, costs, profits, markets,
sales, products, key personnel, pricing policies, operational methods, concepts,
technical processes and applications, and other business affairs and methods of
the Company and of its affiliates, collaborators, consultants, suppliers, and
customers, as well as any other information not readily available to the public,
including without limitation any information supplied by third parties to the
Company under an obligation of confidence. As used in this Agreement
"Proprietary Materials" shall include, without limitation, the following
materials: any and all reagents, substances, chemical compounds, subcellular
constituents, cells or cell lines, organisms and progeny, and mutants, as well
as any and all derivatives or replications derived from or relating to such
materials. Confidential Information may be contained in various media, including
without limitation patent applications,
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computer programs in object and/or source code, flow charts and other program
documentation, manuals, plans, drawings, designs, technical specifications,
laboratory notebooks, supplier and customer lists, internal financial data, and
other documents and records of the Company, whether or not in written form and
whether or not labeled or identified as confidential or proprietary. Executive
further agrees that (a) upon termination or expiration of his employment
hereunder, Executive will return immediately to the Company any Proprietary
Materials and any materials containing Confidential Information then in
Executive's possession or under Executive's control and (b) he will not retain
or use for his account at any time any trade name, trademark or other
proprietary business designation used or owned in connection with the business
of the Company.
8. SPECIFIC PERFORMANCE. Executive acknowledges and agrees that
the Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 6 or Section 7 would be inadequate and, in recognition of
this fact, Executive agrees that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining orders, temporary or permanent injunctions or
any other equitable remedy which may then be available.
9. NOTICES. Any notice hereunder by either party to the other
shall be given in writing by personal delivery, telex, telecopy or registered
mail, return receipt requested, addressed, if to the Company, to the attention
of Chairman of the Board at the Company's executive offices or to such other
address as the Company may designate in writing at any time or from time to time
to the Executive, and if to the Executive, to his most recent address on file
with the Company. Notice shall be deemed given, if by personal delivery, on the
date of such delivery or, if by telex or telecopy, on the business day following
receipt of answer back or telecopy information or, if by registered mail, on the
date shown on the applicable return receipt.
10. ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other party. The Company shall require
any persons, firm or corporation succeeding to all or substantially all of the
business or assets of the Company whether by purchase, merger or consolidation
to expressly assume and agree to perform this Agreement.
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Company and Executive with respect to the subject matter thereof and
there have been no oral or other agreements of any kind whatsoever as a
condition precedent or inducement to the signing of this Agreement or otherwise
concerning this Agreement or the subject matter hereof.
12. EXPENSES. Each party shall pay its own expenses incident to
the performance or enforcement of this Agreement, including all fees and
expenses of its counsel for all activities of such counsel undertaken pursuant
to this Agreement, except as otherwise herein specifically provided. If any
action at law or equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reimbursement of reasonable
attorney's fees and other costs incurred by such party in connection with such
action, in addition to any other relief to which such party is entitled.
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13. ARBITRATION. In the event any dispute shall arise between the
Company and the Executive with respect to any of the terms and conditions of
this Agreement, then such dispute shall be submitted and finally settled by
arbitration in Boston, Massachusetts under the rules of the American Arbitration
Association. The award rendered by the arbitrator shall be final and binding
upon the parties hereto, and judgment upon the award rendered may be entered by
either party in any court that would ordinarily have jurisdiction over the
parties or the subject matter of the controversy or claim. Each party shall pay
its own expenses incident to such arbitration, including attorneys' fees. The
parties agree not to institute any litigation or proceedings against each other
in connection with this Agreement except as provided in this Section 13.
14. WAIVERS AND FURTHER AGREEMENTS. Any waiver of any terms or
conditions of this Agreement shall not operate as a waiver of any other breach
of such terms or conditions or any other term or condition, nor shall any
failure to enforce any provision hereof operate as a waiver of such provision or
of any other provision hereof; provided, however, that no such written wavier,
unless it, by its own terms, explicitly provides to the contrary, shall be
construed to effect a continuing waiver of the provision being waived and no
such waiver in any instance shall constitute a waiver in any other instance or
for any other purpose or impair the right of the party against whom such waiver
is claimed in all other instances or for all other purposes to require full
compliance with such provision. Each of the parties hereto agrees to execute all
such further instruments and documents and to take all such further action as
the other party may reasonably require in order to effectuate the terms and
purposes of this Agreement.
15. AMENDMENTS. This Agreement may not be amended, nor shall any
waiver, change, modification, consent or discharge be effected except by an
instrument in writing executed by or on behalf of the party against whom
enforcement of any waiver, change, modification, consent or discharge is sought.
16. SEVERABILITY. If any provision of this Agreement shall be held
or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflict of any provision with any
constitution or statute or rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions
in question invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute or rule of public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid,
inoperative or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case.
17. COUNTERPARTS. 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 of such counterparts.
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18. SECTION HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
19. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the law (other than the law governing
conflict of law questions) of the Commonwealth of Massachusetts.
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IN WITNESS WHEREOF, the parties have been executed or caused to be executed this
Agreement as of the date first above written.
ARQULE, INC.
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title: Director
XXXXXXX X. XXXX
/s/ Xxxxxxx X. Xxxx
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SCHEDULE A
BUSINESS RELATIONSHIPS
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EXHIBIT A
OPTION CERTIFICATE
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EXHIBIT B
DETERMINATION OF OPTION PRICE
Executive shall have the choice of having either one of the following exercise
prices:
(1) The Fair Market Value of ArQule's Common Stock (as defined below) as of the
Execution Date, in which case the stock options granted to the Executive may not
qualify as "Incentive Stock Options" under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"); or
(2) The Fair Market Value of ArQule's Common Stock (as defined below) as of the
date the Board of Directors grants the stock options to the Executive (by
written consent or at a meeting) which is either on or after the Effective Date,
in which case some of the stock options granted to the Executive may qualify as
"Incentive Stock Options" under Section 422 of the Code, as permitted under the
Code.
The Fair Market Value of ArQule's Common Stock shall be the closing price of the
Common Stock as reported by the Nasdaq National Market on the trading day
immediately prior to the appropriate date discussed above.
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EXHIBIT C
MILESTONE BONUS
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AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 (this "Amendment") to a certain Employment
Agreement dated as of December 8, 1998 (the "Employment Agreement") between
ArQule, Inc., a Delaware corporation (the "Company") and Xxxxxxx X. Xxxx, M.D.
("Executive") is made as of January 22, 1999 (the "Execution Date") between the
Company and Executive. The parties wish to amend the Employment Agreement as set
forth herein and, except as amended hereby, the Employment Agreement remains in
full force and effect according to its terms.
In consideration of the mutual covenants herein contained and for other
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree to amend the Employment Agreement as follows:
1. CAPITALIZED TERMS. Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Employment
Agreement.
2. NON-COMPETITION. Executive agrees to be bound by the
obligations relating to non-competition set forth in Section 6 of the Employment
Agreement as of the Execution Date of this Amendment.
3. CONFIDENTIALITY. As of the Execution Date of this Amendment,
Executive agrees to be bound by the obligations relating to confidentiality set
forth in Section 7 of the Employment Agreement with respect to any Confidential
Information received by Executive as of the Execution Date of this Amendment.
4. MISCELLANEOUS.
(a) COUNTERPARTS. This Amendment may be executed in two or
more counterparts, all of which together shall be regarded as one instrument.
(b) ENTIRE AGREEMENT. The terms and conditions contained in
this Amendment and in the Employment Agreement constitute the entire agreement
between the parties and supersede all previous agreements and understandings,
whether oral or written, between the parties hereto with respect to the subject
matter hereof and thereof. No change, modification, termination or waiver of
this Amendment or of the Employment Agreement or any of their respective
provisions shall be valid unless made in writing and signed by a duly authorized
representative of each party.
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IN WITNESS WHEREOF, the parties have been executed or caused to be
executed this Agreement as of the date first above written.
ARQULE, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
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Name: Xxxxx X. Xxxxxxxxxx, Xx.
Title: Chief Financial Officer
XXXXXXX X. XXXX
/s/ Xxxxxxx X. Xxxx
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