Document:

Exhibit 10.2

 

ARQULE, INC. AMENDED
AND RESTATED 1994 EQUITY INCENTIVE PLAN

 

FORM OF  STOCK UNIT
AGREEMENT

 

This
Stock Unit Agreement (this “Agreement”), dated as of
            ,
20     (“Grant Date”) is made by and between ArQule, Inc.,
a Delaware Corporation (the “Company”), and
                                                              
(“Participant”).

 

1.             Operative
Documents.

 

As stated herein, terms of this Agreement may be subject
to, make reference to, or incorporate, certain provisions of the following
documents (collectively, the “Operative Documents”):

 

(a)       ArQule, Inc.
Amended and Restated 1994 Equity Incentive Plan (the “Plan”);

(b)       [additional
documents will be added, as necessary]

 

Capitalized terms used herein without definition
shall have the respective meanings given to them in, as the case may be, the
relevant Operative Document.

 

2.             Grant of Stock
Units.

 

The
Company hereby awards to Participant a maximum of
                                      
Stock Units. The award of the Stock Units is made pursuant and subject to the
terms and conditions of the Plan, and nothing herein shall be deemed to
supersede such terms and conditions. 
Upon execution of this Agreement, the Company shall cause the Stock Units
to be recorded in a separate account maintained on the books of the
Company.  The term “Stock Units” shall
include any additional units issued to the Participant on account of the Stock
Units awarded hereunder by reason of stock dividends, stock splits or
recapitalizations (whether by way of mergers, consolidations, combinations or
exchanges of shares or the like).  Each
Stock Unit shall, upon vesting, entitle the Participant to receipt of one share
of the Company’s Common Stock as referred to in the Plan.

 

3.             Vesting
Schedule; Forfeiture.

 

(a)       The interest of Participant
in the Stock Units shall vest as set forth below:

 

(b)       If Participant ceases to be
an employee of the Company for any reason, all Stock Units that have not yet
vested shall be forfeited upon such termination of employment and Participant
shall thereafter have no further rights or interest in such Stock Units.

 

 

4.             Restrictions.

 

Unless
permitted under the terms of the Plan, Stock Units granted hereunder may not be
sold, pledged or otherwise transferred and may not be subject to lien,
garnishment, attachment or other legal process.

 

5.             Taxes.

 

Participant
shall be liable for any and all taxes, including any withholding tax obligation
arising out of the vesting of Stock Units hereunder.  Participant may elect to satisfy such withholding
tax obligation by having the Company retain shares of Common Stock underlying
vested Stock Units having a fair market value equal to the Company’s minimum
withholding obligation.

 

6.             Miscellaneous.

 

(a)           Unless and until the Stock Units awarded hereunder
have vested, the Participant will have no right of a shareholder with respect
to the shares of Common Stock underlying the Stock Units including no right to
vote or to receive any dividends paid with respect to such shares of Common
Stock.

 

(b)           The parties agree to execute such further
instruments and to take such actions as may reasonably be necessary to carry
out the intent of this Agreement.

 

(c)           Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon delivery to
Participant at his address then on file with the Company.

 

(d)           Neither the Plan nor this Agreement nor any
provisions under either shall be construed so as to grant Participant any right
to remain in the employ of the Company.

 

(e)           This Agreement and the Amendment constitute the
entire agreement of the parties with respect to the subject matter hereof.

 

IN WITNESS WHEREOF, the undersigned have executed this
Agreement effective as of the Grant Date set forth above.

 

	
   

  	
  ARQULE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Participant]

  

 

2Exhibit 10.3

 

FORM OF RESTRICTED STOCK AGREEMENT

 

Restricted
Stock Agreement (“Agreement”) between ArQule, Inc. (the “Company”) and the
ArQule employee named in Exhibit A hereto (the “Grantee”) dated February     ,
2006.

 

1.  Grant; Plan Incorporated by Reference.

 

(a) 
The shares of common stock, $0.01 par value, of ArQule, Inc. listed on Exhibit A
to this Agreement (the “Restricted Stock”) are hereby issued pursuant to the
terms of the ArQule, Inc. Amended and Restated 1994 Equity Incentive Plan
(the “Plan”) and constitute an Award under Section 9 of the Plan.  Upon execution of this Agreement, the Company
will cause the shares of Restricted Stock to be issued, in electronic form
(with the restrictions contained herein electronically noted) in the Grantee’s
name.

 

(b) 
Grantee agrees and acknowledges that this Agreement shall constitute, for
purposes of Section 151(f) of the Delaware General Corporation Law,
notice of the restrictions set forth herein with respect to the Restricted
Stock.

 

(c) 
Capitalized terms used and not otherwise defined in this Agreement will have
the meanings ascribed to them in the Plan. 
The Compensation, Nominating and Governance Committee of the Board of
Directors of ArQule, Inc. (the “Committee”) administers the Plan and its
determinations regarding the interpretation and operation of the Plan are final
and binding.  A copy of the Plan, the
Plan Prospectus and the Prospectus Supplement are available on the ArQule
Intranet site.

 

2.  Schedule for Vesting of Rights.  Subject to Section 8 below, the schedule
for vesting of rights (i.e., the date upon which the restrictions on the
Grantee’s Restricted Stock will lapse) is set forth in Exhibit A.

 

3.  Rights as a Stockholder or Employee.

 

The
Grantee will have all the rights of a shareholder with respect to the
Restricted Stock except as provided in Section 4 below.  Accordingly, the Grantee will have the right
during the Restricted Period to vote the Restricted Stock and to receive any
dividends paid with respect to the Restricted Stock.  All such rights shall cease upon forfeiture
of the Restricted Stock.

 

4.  Award not Transferable.

 

(a) 
For purposes of this Agreement, “Restricted Period” shall mean, with respect to
any shares of Restricted Stock, the period of time between the date of this
Agreement and the date on which rights in such shares of Restricted Stock
become vested in accordance with Section 2 above, or are forfeited.

 

 

(b) 
During the Restricted Period, neither the Restricted Stock nor any rights
relating to such shares may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of by the Grantee.

 

(c) 
The Company shall not be required (i) to transfer on its books any shares
of Restricted Stock which have been sold or transferred in violation of any of
the provisions of this Agreement, or (ii) to treat as owner of such shares
or to accord the right to vote or to pay dividends to anyone to whom such
shares have been so transferred.

 

5.  Termination of Restrictions.  In the event that the Restricted Period shall
terminate with respect to the Restricted Stock and the Restricted Stock shall
not have been previously forfeited to the Company, the Company will remove the
restrictions on the shares and will deliver (in either electronic or
certificated form) such unrestricted shares to the Grantee or his or her legal
representative.

 

6.  Section 83(b) Election.  If the Grantee timely files an election
pursuant to Section 83(b) of the Code in respect of the Restricted
Stock, the Grantee shall promptly deliver to the Company a copy of the
election.

 

7.  Taxes. 
Any obligation of the Company to deliver shares upon the termination of
the Restricted Period with respect to the Restricted Stock, and any obligation
to deliver any dividends on those shares, will be subject to the satisfaction
of all applicable federal, state and local tax withholding requirements.  Unless otherwise determined by the Committee,
withholding requirements shall, at Grantee’s election, be satisfied with
respect to shares of Restricted Stock (i) for which no Section 83(b) election
is made, by (A) the Company’s retention of shares, with a Fair Market
Value equal to the Company’s required withholding obligation, otherwise
issuable to the Grantee as the result of the termination of the Restricted Period,
or (B) by the Company’s withholding, through payroll, of the required
amounts from payments otherwise due to the Grantee and (ii) for which a Section 83(b) election
is made, by the Company’s withholding, through payroll, of the required amounts
from payments otherwise due to the Grantee.

 

Unless
otherwise determined by the Committee, withholding requirements with respect to
any dividend paid on shares of Restricted Stock during the Restricted Period
shall be satisfied (i) in the case of a cash dividend, by withholding from
such cash, and (ii) in the case of a stock dividend, by withholding shares
from such dividend with a Fair Market Value equal to the Company’s required
withholding obligation.

 

The
Grantee hereby authorizes and agrees to all such tax withholding.  For purposes of this Section 7, shares
that are withheld to satisfy any applicable withholding obligation shall be
valued at their Fair Market Value on the date the withholding obligation arises
and in no event shall the aggregate Fair Market Value of the shares withheld
exceed the amount of taxes required to be withheld.

 

8.  Forfeiture.  Notwithstanding anything to the contrary in
this Agreement, if the Grantee does not satisfy the conditions set forth in Exhibit A
regarding employment with the Company, all 

 

2

 

shares
of Restricted Stock subject to the provisions of this Agreement will be
forfeited by the Grantee, and neither the Grantee nor any successors, heirs,
assigns or personal representatives of the Grantee shall thereafter have any
further rights or interest in such shares. 
Ownership of any Restricted Stock forfeited pursuant to this Section 8
shall revert to the Company.

 

9.  Subject to the Plan.  The Restricted Stock and this Agreement are
subject to the terms and conditions of the Plan, which are incorporated herein
by reference and made a part hereof, but the terms of the Plan shall not be
considered an enlargement of any benefits under this Agreement.  In addition, the Restricted Stock and this
Agreement are subject to any rules and regulations promulgated by the
Committee in accordance with its authority under the Plan.

 

IN
WITNESS WHEREOF, the undersigned have executed this Agreement effective on the
date first set forth above.

 

 

	
  GRANTEE

  	
   

  	
  ARQULE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

3

 

EXHIBIT A

 

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