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Exhibit 10.9
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of July 9, 1996 by and between ArQule, Inc.,
a Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxxxxx, Xx.
("Executive").
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 as of
July 9, 1996 (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
Chief Financial Officer and Treasurer and a Vice President of Company. In such
positions, Executive shall have such duties and authority as shall be designated
from time to time by the Chief Executive Officer or the Board of Directors of
the Company (the "Board"). Executive hereby agrees to undertake the duties and
responsibilities inherent in such position and such other duties and
responsibilities as the Chief Executive Officer or the Board 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.
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 $150,000 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.
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4.2. ADDITIONAL COMPENSATION.
4.2.1. INCENTIVE STOCK OPTIONS. As further compensation for his
services hereunder, the Company shall, on the date hereof, grant to Executive an
incentive stock option (the "Incentive Stock Option") to purchase 100,000 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
"Equity Incentive 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 Incentive Stock Options granted to
Executive under this Section 4.2.1 will be treated as "incentive stock options"
under Section 422 of the Internal Revenue Code of 1986, as amended.
4.2.2. OPTIONS UNDER SHORT-TERM STOCK INCENTIVE PLAN. In addition to
the Incentive Stock Option granted under Section 4.2.1 above, the Company shall
grant to Executive additional incentive stock options (the "Short-Term Plan
Stock Options") to purchase shares of the Company's Common Stock, pursuant to
the Company's Short-Term Stock Incentive Plan (the "Short-Term Plan"), upon the
achievement by Executive of certain individual performance goals and/or the
achievement by the Company of certain performance goals as set forth in the
Short- Term Plan. In accordance with the terms and conditions set forth in the
Short-Term Plan, the Compensation Committee of the Board will determine (i) the
performance goals to be achieved by Executive and by the Company in connection
with the granting of the Short-Term Plan Stock Options, (ii) the number of
Short-Term Plan Stock Options granted to Executive and (iii) the number of
shares to be purchased by Executive under the Short-Term Plan Stock Options
granted. The Short-Term Plan Stock Options granted to Executive under this
Section 4.2.2 will be treated as "incentive stock options" under Section 422 of
the Internal Revenue Code of 1986, as amended and otherwise according to the
terms of the form of Option Certificate attached hereto as EXHIBIT A.
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 and pension, profit sharing, and deferred compensation 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 with reasonable compensation made to the Executive as determined by
the Board of Directors in good faith.
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.
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4.5. 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.
5. TERMINATION.
5.1. 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 and resulting in a conviction under the laws of the United States or any
state thereof, (iv) any other act or omission which is materially injurious to
the financial condition or business reputation of the Company or any of its
affiliates, or (v) 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 portion of the Base Salary accrued
and payable 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 5.1 shall be determined by the
Board in its sole discretion in accordance with the policies and practices of
the Company.
5.2. 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 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 portion of
the Base Salary accrued and payable 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 applicable to Executive on the date of termination) through the
date on which Executive is first entitled to receive payment of disability
benefits in lieu of the portion of Base Salary accrued and payable under the
Company's employee benefit plans as then
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in effect. 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. 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 portion of the Base Salary
accrued and payable 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 5.3 shall be determined by the Board in its
sole discretion in accordance with the policies and practices of the Company.
5.4. 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 at any time up
through the first anniversary of the Effective Date, including without
limitation by reason of Executive's failure to achieve stated goals or
milestones, (a) the Company shall pay Executive a lump sum amount equal to the
portion of the Base Salary accrued and payable 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 applicable to Executive on the date of termination)
through the earlier of (i) the conclusion of a period of six (6) months from the
date of such termination or (ii) the date Executive commences other employment
and (b) any Incentive Stock Options or Short-Term Plan Stock Options which have
been granted to Executive under this Agreement and which would have otherwise
vested within the six (6) month period from the date of such termination shall
become immediately exercisable. If Executive's employment is terminated by the
Company without Cause at any time after the first anniversary of the Effective
Date, 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 portion of the Base Salary accrued and payable 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 5.4 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 portion of the Base Salary accrued and payable
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
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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.
6.1. RESTRICTIONS. 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:
6.1.1. 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 or its affiliates, 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
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.
6.1.2. 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.
6.1.3. Executive will not directly or indirectly (a) induce any
employee of the Company or its affiliates to engage in any activity in which
Executive is prohibited from engaging by clause 6.1.1 above or to terminate his
or her employment with the Company or its affiliates, or (b) employ or offer
employment to any person who was employed by the Company or its affiliates in a
directly competitive field unless such person shall have ceased to be employed
by the Company or its affiliates for a period of at least one (1) year.
6.2. INTERPRETATION. 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
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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 AND OTHER AGREEMENTS.
7.1. 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 and any of its affiliates, 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, 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
labelled 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 or its affiliates.
7.2. OTHER AGREEMENTS. Executive hereby represents that he is not
bound by the terms of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret or confidential or proprietary
information, which information would reasonably be anticipated to relate to the
business of the Company, in the course of his employment with the Company or to
refrain from competing, directly or indirectly, with the business of such
previous employer or any other party. Executive further represents that his
performance of all the terms of this Agreement and as an employee of the Company
does not and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by him in confidence or in trust prior
to his employment with the Company.
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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, at its expense, without
posting any bond, shall be entitled to seek 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 the
President 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 Executive,
and if to 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.
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,
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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.
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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.
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.
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/ XXXX XXXXXX
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Name: XXXX XXXXXX
Title: PRESIDENT
XXXXX X. XXXXXXXXXX, XX.
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/s/ Xxxxx X. Xxxxxxxxxx
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EXHIBIT A
Form of Incentive Stock Option
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