Exhibit 10.1


 


Amendment to Employment Agreement


 


This Amendment to Employment Agreement (“Amendment”) is
entered into by and between ArQule, Inc., a Delaware corporation (the “Company”)
with its principal offices at 19 Presidential Way, Woburn, Massachusetts 01801,
and Peter Lawrence (“Executive”) whose current principal residential address is
29 Fairfield Street, Unit 4-5, Boston, MA 02116. The purpose of this Amendment
is to amend the Employment Agreement dated as of April 13, 2006 between the
Company and Executive (the “Agreement”). This Amendment shall be effective as
of October 4, 2007.


 


WHEREAS, the Company desires to continue to employ and
retain Executive in a senior executive capacity and to enter into this
Amendment embodying certain changes to the terms of such employment from that
which was set forth in the Agreement;


 


WHEREAS, Executive desires to accept such continued
employment and enter into such Amendment;


 


NOW THEREFORE, in consideration of $1.00, the receipt and
sufficiency of which is hereby acknowledged by Executive, the Company and
Executive hereby agree as follows:


 


1.                                       Definitions. All capitalized terms not specifically defined
in this Amendment shall have the same meaning herein as in the Agreement
(including as in any plans or other documents incorporated by reference into
the Agreement).


 


2.                                       Title; Duties. During the Employment Term, Executive shall
serve as Chief Operating Officer, reporting to the Chief Executive Officer (“CEO”)
of the Company. Executive hereby agrees to undertake the duties and
responsibilities inherent in such position and such other duties and
responsibilities consistent with such position as the CEO shall from time to
time reasonably assign to Executive. Anything in Section 2 of the Agreement
which is inconsistent with the terms of this Section shall be of no further
effect, subject to the terms of Section 3 below.


 


3.                                       Deemed Termination. Notwithstanding anything in the
Agreement to the contrary, a “termination without Cause” shall not be deemed to
occur pursuant to Section 5.1.2 of the Agreement upon Executive assuming the
duties and responsibilities of the Chief Operating Officer ("COO") of
the Company. In addition, a “termination without Cause” shall not be deemed to
occur pursuant to Section 5.1.2 of the Agreement in the event that the Board,
in its sole discretion, reassigns Executive to Executive’s former position of
Executive Vice President, Chief Business and Legal Officer, General Counsel and
Secretary (“CBO”), reporting directly to the Chief Executive Officer, or (ii)
the Board, in its sole discretion, without changing Executive's COO title,
reduces or diminishes Executive's responsibilities below the level of
responsibilities for the Chief Operating Officer position as in existence on
the Effective Date of this Amendment, provided that in all cases (including
with respect to section (ii) of this paragraph) a “termination without Cause”
shall be deemed to occur pursuant to Section 5.1.2 of the Agreement in the
event that the Board reduces or diminishes Executive’s titles or
responsibilities below those of the CBO position that Executive held prior to
the Effective Date of this Amendment. 
For purposes of clarity, except as expressly provided in this Section, a
"termination without Cause" shall be deemed to occur pursuant to
Section 5.1.2. of the Agreement in the event that any of the events occur as
set forth in Section 5.1.2 (a) – (e) of the Agreement.


 

















 


4.                                       Existing Stock Options. Over the course of his employment
with the Company, Executive has been granted certain stock options (“Options”),
as set forth in the attached Exhibit A, to purchase shares of the Company’s
Common Stock pursuant to the Company’s Amended and Restated 1994 Equity
Incentive Plan (the “Plan”). It is expressly agreed that Executive has three
months from the Termination Date to exercise the Options.


 


5.                                       New Stock Option Grant. Subject to approval by the Board of
Directors, Executive will be granted a stock option (the “New Option”) to
purchase 100,000 shares of the Company’s Common Stock, pursuant to the Plan and
in accordance with the terms, and subject to a vesting schedule pursuant to
which twenty-five percent of the shares shall vest annually commencing on the
first anniversary of the date of this Amendment, and other conditions, set forth
in the form of Option Certificate attached hereto as Exhibit B. The exercise price of the New Option will be
set at the closing price of Common Stock of the Company on the date of grant


 


6.                                       409A Compliance. Notwithstanding anything in the Agreement
to the contrary, to the extent Executive is a “Specified Employee” as defined
in Section 409A(a)(2)(B) of the Internal Revenue Code on the Termination Date,
and in the event that Executive is entitled to payment of the Severance Package
upon termination of employment, payment of the Severance Package shall be
delayed for six months from the Termination Date or, if earlier, the death of
Executive, except that the accelerated vesting of the Execution Stock Option as
provided in Section 5.1.1(b) of the Agreement shall not be delayed six months.


 


7.                                       Waivers and Further Agreements. Any waiver of any terms or
conditions of this Amendment 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
waiver, 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 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 Amendment.


 


8.                                       Amendments. This Amendment may not be amended, nor shall any
waiver, change, modification, consent or discharge be effected except by an
instrument in writing executed by both Parties.


 


9.                                       Severability. In the event that any one or more of the
provisions contained herein shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of this Agreement, and
all other provisions shall remain in full force and effect. If any provision 


 

















 


of this Agreement is held to be excessively broad, it
shall be reformed and construed by limiting and reducing it so as to be
enforceable to the maximum extent permitted by law.


 


10.                                 Counterparts. This Amendment maybe 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.


 


11.                                 Section Headings. The headings contained in this Amendment
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Amendment.


 


12.                                 Governing Law. This Amendment 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.


 


13.                                 Entire Understanding. This Amendment constitutes the entire
understanding and agreement between the Parties regarding the subject matter
hereof and supersedes all prior agreements, written or oral, with respect to
the subject matter hereof, except that, other than as explicitly modified by
the terms of this Amendment, the Agreement shall remain in full force and
effect in accordance with its provisions. This Amendment shall be incorporated
into the Agreement as an additional provision thereto.


 


IN WITNESS WHEREOF, the Parties have executed or
caused to be executed this Amendment as of the date set forth above.


 


 


	
  ARQULE, INC.

  	
   

  	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Stephen
  A. Hill

  	
   

  	
   

  	
  By:

  	
  /s/ Peter S.
  Lawrence

  
	
  Name: 

  	
  Stephen A.
  Hill

  	
   

  	
  Name:

  	
  Peter
  Lawrence

  
	
  Title:

  	
  President
  and Chief Executive Officer