Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase
Agreement (this “Agreement”) is dated as of October __, 2017, between ArQule, Inc., a Delaware corporation
(the “Company”), and each purchaser identified on the signature pages hereto (each a “Purchaser”
and collectively the “Purchasers”).

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement, the Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

ARTICLE
I. 

DEFINITIONS

 

1.1           Definitions.
In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Agreement”
shall have the meaning ascribed to such term in the Preamble.

 

“Blackout
Period” shall have the meaning ascribed to such term in Section 4.7(l).

 

“Board
of Directors” means the board of directors of the Company.

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.

 

“Closing”
means the closing of the purchase and sale of the Shares pursuant to Section 2.1.

 

“Closing
Date” means October __, 2017, or such later date as may be mutually agreed by the parties hereto.

 

“Commission”
means the United States Securities and Exchange Commission.

 

“Common
Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.

 

     

     

    

 

“Common
Stock Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any
time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Company”
shall have the meaning ascribed to such term in the Preamble.

 

“Company
Counsel” means Arnold & Porter Kaye Scholer LLP, with offices located at 601 Massachusetts Ave. NW, Washington, D.C.
20001.

 

“DGCL”
means the Delaware General Corporation Law.

 

“Environmental
Laws” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(n).

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.

 

“GAAP”
shall have the meaning ascribed to such term in Section 3.1(g).

 

“Hazardous
Materials” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Initial
Exercise Date” means the Closing Date.

 

“Intellectual
Property” shall have the meaning ascribed to such term in Section 3.1(m).

 

“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other material restriction.

 

“Material
Adverse Effect” shall have the meaning ascribed to such term in Section 3.1(a).

 

“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(k).

 

“Money
Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(w).

 

“OFAC”
shall have the meaning ascribed to such term in Section 3.1(v).

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

    	 	-2-	 

     

    

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Prospectus”
shall have the meaning ascribed to such term in Section 4.7(a).

 

“Purchaser”
shall have the meaning ascribed to such term in the Preamble.

 

“Registrable
Securities” shall have the meaning ascribed to such term in Section 4.7(a).

 

“Regulation
FD” means Regulation FD promulgated by the Commission pursuant to the Exchange Act, as such Regulation may be amended
or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the
same purpose and effect as such Regulation.

 

“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(d).

 

“Resale
Registration Statement” shall have the meaning ascribed to such term in Section 4.7(a).

 

“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(g).

 

“Securities”
means the Shares and the Warrant Shares.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Shares”
means the shares of Common Stock of the Company purchased hereunder in such amount as specified below such Purchaser’s name
on the signature page of this Agreement and next to the heading “Shares”.

 

“Share
Price” means $1.135 per Share.

 

“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

 

“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and the Warrant Shares and purchased
hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.

 

“Suspension”
shall have the meaning ascribed to such term in Section 4.7(f).

 

    	 	-3-	 

     

    

 

“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the Nasdaq Global Market (or any successor to any of the foregoing).

 

“Transaction
Documents” means this Agreement and any other documents or agreements executed in connection with the transactions contemplated
hereunder.

 

“Transfer
Agent” means American Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address
of 6201 15th Avenue, Brooklyn, New York 11219, and any successor transfer agent of the Company.

 

“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.1
hereof, which Warrants shall be exercisable beginning from the Initial Exercise Date and have a term of exercise equal to four
(4) years from the Initial Exercise Date.

 

“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

 

ARTICLE
II. 

PURCHASE AND SALE

 

2.1           Purchase
and Sale; Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to
sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $15,800,000 of Shares and Warrants
at a price equal to the Share Price. Each Purchaser’s Subscription Amount and number of Shares and Warrant Shares purchased
shall be set forth on the signature page hereto executed by such Purchaser. The Company shall deliver to each Purchaser its respective
Shares and Warrants as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items
set forth in Section 2.2 at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the
Closing, as the case may be, shall occur at the offices of the Company Counsel or such other location as the parties shall mutually
agree.

 

2.2           Deliveries.

 

		(a)	On or prior to the Closing Date the Company shall deliver
or cause to be delivered to each Purchaser the following:

 

		(i)	this Agreement duly executed by the Company;

 

		(ii)	a copy of the irrevocable instructions to the Transfer
Agent instructing the Transfer Agent to deliver, on an expedited basis, to such Purchaser, either in book entry form in the Direct
Registration System or in the form of a stock certificate, as indicated by such Purchaser, the number of Shares set forth on the
Purchaser’s signature page to this Agreement;

 

    	 	-4-	 

     

    

 

		(iii)	a Warrant, registered in the name of the Purchaser, to
purchase the number of shares of Common Stock set forth on the Purchaser’s signature page to this Agreement, with an exercise
price equal to $1.75 per share, subject to adjustment therein;

 

		(iv)	an opinion of the Company’s legal counsel reasonably
satisfactory to counsel to the Purchasers, dated as of the Closing Date; and

 

		(v)	a certificate by an officer of the Company certifying that
the closing conditions in Section 2.3(a) have been met.

 

		(b)	On or prior to the Closing Date, each Purchaser shall deliver
or cause to be delivered to the Company the following:

 

		(i)	this Agreement duly executed by such Purchaser; and

 

		(ii)	funds equal to such Purchaser’s Subscription Amount
by wire transfer to the account specified in writing by the Company or as otherwise directed by the Company for delivery to the
account of the Company to be delivered promptly upon Closing, not to exceed 2 Business Days following the date of this Agreement.

 

2.3           Closing
Conditions.

 

		(a)	The obligations of the Company hereunder in connection
with the Closing are subject to the following conditions being met:

 

		(i)	the accuracy in all material respects on the Closing Date
of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they
shall be accurate as of such date);

 

		(ii)	all obligations, covenants and agreements of each Purchaser
required to be performed at or prior to the Closing Date shall have been performed or waived; and

 

		(iii)	the delivery by each Purchaser of the items set forth in
Section 2.2(b) of this Agreement.

 

		(b)	The respective obligations of the Purchasers hereunder
in connection with the Closing are subject to the following conditions being met:

 

		(i)	the accuracy in all material respects on the Closing Date
of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they
shall be accurate as of such date);

 

    	 	-5-	 

     

    

 

		(ii)	all obligations, covenants and agreements of the Company
required to be performed or waived at or prior to the Closing Date shall have been performed;

 

		(iii)	the delivery by the Company of the items set forth in Section
2.2(a) of this Agreement;

 

		(iv)	no Material Adverse Effect with respect to the Company
since the date hereof shall have occurred;

 

		(v)	no voluntary or involuntary Proceeding for the reorganization,
bankruptcy, dissolution or winding up of the Company shall have occurred; and

 

		(vi)	from the date hereof to the Closing Date, trading in the
Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market, and, at any time
prior to the Closing Date trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited,
or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have
occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its
effect on any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable
to purchase the Shares at the Closing.

 

ARTICLE
III. 

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations
and Warranties of the Company. The Company hereby makes the following representations and warranties to each Purchaser as of
the date hereof and the Closing Date:

 

(a)         Organization
and Qualification. The Company is an entity duly incorporated, validly existing and in good standing under the laws of the
state of Delaware, with the requisite corporate power and authority to own and use its properties and assets and to carry on its
business as currently conducted. The Company is not in violation nor default of any of the provisions of its certificate or articles
of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is
in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be,
could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability
of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition
(financial or otherwise) of the Company or (iii) a material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to
revoke, limit or curtail such power and authority or qualification.

 

    	 	-6-	 

     

    

 

(b)         Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith (including, without limitation, for purposes of Section 203 of the DGCL) other than in connection
with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery
will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited
by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited
by applicable law.

 

(c)          No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets
of the Company, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse
of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other
understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) subject
to the Required Approvals, conflict with or result in a violation of Section 203 of the DGCL or any other law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject
(including, without limitation, federal and state securities laws and regulations), or by which any property or asset of the Company
is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.

 

    	 	-7-	 

     

    

 

(d)         Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
application(s) to the applicable Trading Market for the listing of the Shares and Warrant Shares for trading thereon in the time
and manner required thereby and (ii) such filings as are required to be made under applicable federal and state securities laws
(collectively, the “Required Approvals”).

 

(e)          Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The
Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this
Agreement.

 

(f)          Capitalization.
The Company has not issued any capital stock since its most recently filed SEC Report under the Exchange Act, other than pursuant
to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s employee stock purchase plans, the issuance of shares of Common Stock pursuant to
the Company’s at-the-market sales agreement, and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding
as of the date of the most recently filed periodic report under the Exchange Act, except as disclosed in the most recently filed
SEC Report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated by the Transaction Documents. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(g)         SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) thereof, for the
two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred
to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit
adjustments.

 

    	 	-8-	 

     

    

 

(h)         Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has
been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the Commission and (C) non-cash accounting measures that
have effect of reducing shareholder equity, (iii) the Company has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before
the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by
this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected
to occur or exist with respect to the Company or its businesses, prospects, properties, operations, assets or financial condition
that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least one Business Day prior to the date that this representation is made.

 

(i)          Compliance.
The Company is not: (i) in default under or in violation of (and no event has occurred that has not been waived that, with notice
or lapse of time or both, would result in a default by the Company), nor has the Company received notice of a claim that it is
in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived),
(ii) in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) or has been
in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign,
federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

 

    	 	-9-	 

     

    

 

(j)          Application
of Takeover Protections. The Company has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement), or other
similar anti-takeover provision pursuant to its charter documents or the laws of its state of incorporation that is or could become
applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights
pursuant to the Transaction Documents.

 

(k)         Environmental
Laws. The Company (i) is in compliance with all federal, state, local and foreign laws relating to pollution or protection
of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including
laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well
as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”);
(ii) has received all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its businesses;
and (iii) is in compliance with all terms and conditions of any such permit, license or approval except where in each of clauses
(i), (ii) and (iii), the failure to so comply could not be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

(l)          Regulatory
Permits. The Company possess all certificates, authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct its businesses as described in the SEC Reports, except where the failure to
possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”),
and the Company has not received any notice of Proceedings relating to the revocation or modification of any Material Permit.

 

(m)        Title
to Assets. The Company has good and marketable title to all real property owned by it and good and marketable title in all
personal property owned by it that is material to the business of the Company, in each case free and clear of all Liens, except
for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed
to be made of such property by the Company and (ii) Liens for the payment of federal, state or other taxes, for which appropriate
reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties.
Any real property and facilities held under lease by the Company is held by it under valid, subsisting and enforceable leases
with which the Company is in compliance.

 

    	 	-10-	 

     

    

 

(n)         Intellectual
Property. The Company owns or possesses adequate rights to use all patents, patent applications, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, trademark registrations, service marks, service mark registrations, trade names, mask work
rights and other intellectual property necessary to carry on the business now operated by it or proposed to be operated by it as
described in the SEC Reports (collectively, “Intellectual Property”), except where the lack of such ownership
or rights to use would not have a Material Adverse Effect. The Company has not received a notice (written or otherwise) that any
of the Intellectual Property has expired, terminated or been abandoned, or is essential for the Company’s business and is
expected to expire or terminate or be abandoned within one (1) year from the date of this Agreement. Except as disclosed in the
SEC Reports, or as would not, individually or in the aggregate have a Material Adverse Effect, to the best of the Company’s
knowledge, (i) there is no infringement by third parties engaged in commercial activity of any Intellectual Property of the Company
relating to the Company’s business and (ii) there are no non-commercial activities being performed by any third parties which,
upon commercialization thereof, could reasonably be expected to infringe on the Intellectual Property of the Company. The Company
has taken all reasonable actions necessary to perfect its ownership of and interest in the Intellectual Property.

 

(o)         Sarbanes-Oxley;
Internal Accounting Controls. The Company is in material compliance with any and all applicable requirements of the Sarbanes-Oxley
Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof, as of the Closing Date. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general
or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity
with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company
as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation
Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the
certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation
Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined
in the Exchange Act) of the Company that have materially affected, or is reasonably likely to materially affect, the internal control
over financial reporting of the Company.

 

    	 	-11-	 

     

    

 

(p)         Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any
information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed
in the Resale Registration Statement. The Company understands and confirms that the Purchaser will rely on the foregoing representation
in effecting transactions in securities of the Company. The Company acknowledges and agrees that Purchaser makes or has made no
representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section
3.2 hereof.

 

(q)         Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.

 

(r)          Shell
Company. The Company has never been a shell company (as defined in Rule 405 under the Securities Act).

 

(s)          No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions
of any Trading Market on which any of the securities of the Company are listed or designated.

 

(t)          Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company (i) has made or filed all United States federal, state and local income and all foreign income
and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes
and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports
and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods
subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

 

(u)         Foreign
Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of
the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials
or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully
any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation
of law, or (iv) violated in any material respect any provision of FCPA; except in the case of each of clauses (i) through (iv),
such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

    	 	-12-	 

     

    

 

(v)         Accountants.
To the knowledge and belief of the Company, the Company’s accounting firm (i) is a registered public accounting firm as required
by the Exchange Act and (ii) has expressed, in the Company’s most recent Form 10-K, its opinion with respect to the financial
statements to be included in the Company’s Annual Report for the fiscal year ended December 31, 2014.

 

(w)        Regulation
M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company.

 

(x)          Office
of Foreign Assets Control. Neither the Company, nor to the Company's knowledge, any director, officer, agent, employee or affiliate
of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”).

 

(y)         Money
Laundering. The operations of the Company are and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company
with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

3.2           Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof, as of the Closing Date to the Company as follows (unless as of a specific date therein):

 

(a)         Organization;
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise
to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by such Purchaser
of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited
liability company or similar actions, instructions or legal agreements, as applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by the lesser of applicable law or Purchaser’s net Subscription
Amount.

 

    	 	-13-	 

     

    

 

(b)         Understandings
or Arrangements. Such Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect
arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation
and warranty not limiting such Purchaser’s right to sell the Securities otherwise in compliance with applicable federal
and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)         Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, it will be either (i)
an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or
(ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

 

(d)         Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

(e)         Access
to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it
has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company
and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate
its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment, including,
without limitation, such Purchaser’s review and discussion of the disclosure set forth in the SEC Reports, press releases
or publications related to litigation of the Company.

 

    	 	-14-	 

     

    

 

(f)          Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not,
nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any
purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that
such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting
forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall
only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives,
including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such
Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained in this Section 3.2(f)
shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability
of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

 

(g)         Purchaser
Acknowledgements. In connection with the purchase and sale of the Securities, each Purchaser understands and acknowledges
to the Company that:

 

		(i)	the offering and sale of the Securities has not been reviewed
or approved by the Trading Market or the Commission by reason of the parties’ intention that the offering be exempt from
registration under the Securities Act by virtue of the provisions of Section 4(a)(2) of the Securities Act;

 

		(ii)	the Company did not offer the Securities to such Purchaser
by way of general solicitation or general advertising;

 

		(iii)	the issuance of the Securities has not been qualified under
any state securities laws in reliance upon exemptions therefrom;

 

		(iv)	the Securities have not been registered under the Securities
Act and must be held indefinitely until they are subsequently registered under the Securities Act or such sale is permitted pursuant
to an available exemption from such registration requirement; and

 

		(v)	the certificate representing the Shares shall bear a legend
in substantially the following form (a “Restrictive Legend”):

 

    	 	-15-	 

     

    

 

“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS, (II) IN COMPLIANCE WITH RULE 144 OR ANY OTHER EXEMPTION AVAILABLE UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR (III) UPON THE DELIVERY TO ARQULE, INC. (THE “COMPANY”) OF AN OPINION
OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/ OR COMPLIANCE IS NOT REQUIRED. NOTWITHSTANDING
THE FOREGOING, THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE LOAN OR FINANCING ARRANGEMENT SECURED BY THESE SECURITIES.”

 

The Company acknowledges and agrees that
in the event that the Restrictive Legend has ceased to be applicable to the Shares held by such Purchaser, the Company shall provide
such Purchaser, at his, her or its written request, new certificates for such Shares not bearing the legend with respect to which
the restriction has ceased and terminated. The Company further acknowledges and agrees that the representations contained in this
Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties
contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document
or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated
hereby.

 

ARTICLE
IV. 

OTHER AGREEMENTS OF THE PARTIES

 

4.1           Furnishing
of Information. Until the earliest of the time that no Purchaser owns Securities, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act.

 

4.2           Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide the Purchaser or its agents
or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto the
Purchaser shall have executed a written agreement with the Company regarding the confidentiality and use of such information. The
Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities
of the Company.

 

4.3           Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for general corporate purposes
and shall not use such proceeds in violation of FCPA or OFAC regulations.

 

4.4           Reservation
of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available
at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company
to issue Warrant Shares pursuant to this Agreement.

 

    	 	-16-	 

     

    

 

4.5           Listing
of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on
the Trading Market on which it is currently listed, and concurrently with the Closing, as the case may be, the Company shall apply
to list or quote all of the Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the Shares
and Warrant Shares on such Trading Market.

 

4.6           Certain
Transactions. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate,
agent, employee or other Person acting on its behalf or pursuant to any understanding with it will execute any Short Sales of any
of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that
such Purchaser’s Warrants have been exercised or expired, such that the Purchaser would have a net-short position in the
Company (after taking into account shares underlying the Warrants). Notwithstanding the foregoing, in the case of a Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions
of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by
the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

 

4.7           Registration
Rights.

 

		(a)	Within 60 days after the date hereof (the “Registration
Date”), the Company shall prepare and file with the Commission a registration statement on Form S-3 (or such other form
if, at such time, the Company is not eligible to utilize such Form S-3) covering the resale of all of the Registrable Securities
from time to time on a continuous basis pursuant to Rule 415 of the Securities Act (the “Resale Registration Statement”
including the base prospectus contained therein, the “Prospectus”). For purposes of this Section 4.7, “Registrable
Securities” shall mean the Shares and the shares underlying the Warrants, and any shares of Common Stock issuable with
respect to the Shares by way of a stock dividend, stock split or other distribution, or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization; provided that such Registrable Securities shall cease to be Registrable
Securities when (i) a registration statement covering such securities has been declared effective by the Commission and such securities
have been disposed of pursuant to such effective registration statement, (ii) such securities have been sold under circumstances
in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act were
met, (iii) such securities are otherwise transferred and such securities may be resold without subsequent registration under the
Securities Act, or (iv) such securities shall have ceased to be outstanding.

 

    	 	-17-	 

     

    

 

		(b)	Not less than five (5) Business Days prior to the initial
filing of the Resale Registration Statement and not less than three (3) Business Days prior to the filing of any related prospectus
or any amendment or supplement thereto, the Company shall (i) furnish to the Purchasers copies of all such documents proposed
to be filed, which documents will be subject to the review and reasonable comments of the Purchasers, and (ii) cause its officers
and directors, counsel and independent registered public accountants to respond to any inquiries from the Purchasers and their
advisors. The Company shall permit one counsel designated by the Purchasers to review such Resale Registration Statement, related
prospectus, and any amendment or supplement thereto (as well as all requests for acceleration or effectiveness thereof) within
the time periods referenced above and shall use reasonable best efforts to reflect in such documents any comments as such counsel
may reasonably propose and will not request acceleration of the Resale Registration Statement without prior notice to such counsel.

 

		(c)	Upon filing the Resale Registration Statement, the Company
shall use its reasonable best efforts to cause such Resale Registration Statement to be declared effective by the Commission as
soon as practicable thereafter, including the filing of amendments and post-effective amendments and supplements to such Resale
Registration Statement, but in any event no later than 90 days following the Closing Date (or 120 days following the Closing Date
if the Resale Registration Statement will be subject to review by the Staff of the Commission), and in any event within three
Business Days following a communication from the Staff of the Commission that it has no further comments to the Resale Registration
Statement or will not review the Resale Registration Statement (as applicable, the “Effectiveness Date”). The
Company shall otherwise comply with all rules and regulations of the Commission and other governmental and regulatory authorities
applicable to the registration of such Registrable Securities and the effectiveness of the Resale Registration Statement.

 

		(d)	If: (i) the Resale Registration Statement is not filed
with the Commission on or prior to the Registration Date, (ii) the Resale Registration Statement is not declared effective by
the Commission (or otherwise does not become effective) on or prior to the Effectiveness Date or (iii) after the date the Resale
Registration Statement is declared effective by the Commission, (a) such Resale Registration Statement ceases for any reason (including
without limitation by reason of a stop order, or the Company's failure to update the Resale Registration Statement), to remain
continuously effective as to all Registrable Securities included in such Resale Registration Statement or (b) a Blackout Period
is imposed for a time period in excess of 15 consecutive or 25 aggregate Business Days during any 12-month period (any such failure
or breach in clauses (i) through (iii) above being referred to as an “Event,” and the date on which such Event
occurs being referred to as an “Event Date”), then in addition to any other rights the Purchasers may have
hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable
Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Purchaser an
amount in cash, as liquidated damages and not as a penalty, equal to 1% of the aggregate purchase price paid by such Purchaser
(“Event Payments”) pursuant to this Agreement for any unregistered Registrable Securities then held by such
Purchaser (not to exceed 6% in total). Notwithstanding the foregoing, in the event that the Company’s failure to file or
obtain the effectiveness of such Resale Registration Statement proximately results from the failure of any Purchaser to provide
the Company with information reasonably requested by the Company and necessary to complete the Resale Registration Statement in
accordance with the requirements of the Securities Act, then no such Purchaser causing the failure described above shall be entitled
to Event Payments relating to the failure caused by such Purchaser.

 

    	 	-18-	 

     

    

 

		(e)	The Company shall maintain such Resale Registration Statement
and shall comply with its other obligations under this Section 4.7 until the earlier to occur of (i) such time as the Purchasers
own no Registrable Securities and (ii) such time as the Registrable Securities may be resold by the Purchasers pursuant to Rule
144 of the Securities Act without the requirement for the Company to be in compliance with the current public information required
under such Rule and without volume or manner-of-sale restrictions.

 

		(f)	The Company shall promptly notify the Purchasers of the
effectiveness of the Resale Registration Statement and each post-effective amendment thereto. Additionally, the Company will promptly
notify the Purchasers upon the occurrence of any of the following events in respect of the Resale Registration Statement or related
prospectus: (i) receipt of any request for additional information by the Commission or any other governmental entity during the
period of effectiveness of the Resale Registration Statement or amendments or supplements to the Resale Registration Statement
or any related prospectus; (ii) the issuance by the Commission or any other governmental entity of any stop order suspending the
effectiveness of the Resale Registration Statement or the initiation of any Proceedings for that purpose and the Company will
promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest
possible moment if such stop order should be issued; (iii) receipt of any notification with respect to the suspension of the qualification
or exemption from qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any Proceeding
for such purpose; (iv) the happening of any event that, in the reasonable determination of the Company and its counsel, makes
any statement made in the Resale Registration Statement or related prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the making of any changes in the Resale Registration Statement,
related prospectus or documents so that (or the Company otherwise becomes aware of any statement included in the Resale Registration
Statement, related prospectus or document that is untrue in any material respect or that requires the making of any changes in
the Resale Registration Statement, related prospectus or document so that), in the case of the Resale Registration Statement,
it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of the related prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Company’s
reasonable determination that a post-effective amendment to the Resale Registration Statement would be appropriate (in which event
the Company will promptly make available to the Purchasers any such supplement or amendment to the Resale Registration Statement
and, as applicable, the related prospectus). In the event of any suspension of Purchasers’ ability to sell Shares pursuant
to the Resale Registration Statement as a result of the foregoing (a “Suspension”), the Company will use its
best efforts to cause the use of the prospectus so suspended to be resumed as soon as reasonably practicable after notice of a
Suspension to the Purchasers and such Suspension shall be subject to the liquidated damages provisions set forth in Section 4.7(d)
above.

 

    	 	-19-	 

     

    

 

		(g)	The Company shall furnish to the Purchasers with respect
to the Registrable Securities registered under the Resale Registration Statement such number of copies of the Prospectus (including
preliminary and supplemental prospectuses and prospectus amendments) as the Purchaser may reasonably request, in order to facilitate
the public sale or other disposition of all or any of the Registrable Securities by the Purchaser.

 

		(h)	The Company shall file documents required of the Company
for normal blue sky clearance in states as shall be reasonably appropriate in the opinion of the Company and its legal counsel;
provided, however, that the Company shall not be required to qualify to do business or consent to general service of process in
any jurisdiction in which it would not otherwise be required to qualify but for this Section 4.7(h).

 

		(i)	All expenses incident to the Company’s compliance
with this Section 4.7, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities
laws, printing expenses, filing expenses, and fees and disbursements of the Company’s counsel and independent registered
public accountants will be borne by the Company.

 

		(j)	The Company shall, at the reasonable request of any Purchaser,
prepare and file with the Commission such amendments (including post-effective amendments) and supplements to the Resale Registration
Statement and any prospectus used in connection with the Resale Registration Statement as may be necessary in order to make reasonable
changes to the plan of distribution set forth in such Resale Registration Statement.

 

    	 	-20-	 

     

    

 

		(k)	Notwithstanding anything herein to the contrary, the Purchasers’
rights under this Section 4.7 shall be automatically assignable by the Purchasers to any permitted transferee of all or any portion
of such Registrable Securities, to the extent of the Registrable Securities so transferred, if: (i) the Purchaser agrees in writing
with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable
time after such assignment, (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to such registration rights
are being transferred or assigned, and (iii) at or before the time the Company receives the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing to be bound by the provisions of Section 4.7 of this Agreement.
In the event that a Purchaser transfers all or any portion of its Registrable Securities pursuant to this Section 4.7(k), the
Company shall have ten (10) Business Days following the receipt of such notice to file any amendments or supplements necessary
to keep the Resale Registration Statement current and effective pursuant to Rule 415. Upon any such assignment, all of the transferring
Purchaser’s rights under this Agreement with respect to such transferred securities shall inure to the benefit of the transferee.

 

		(l)	If at any time following the date hereof the Resale Registration
Statement (or any subsequent registration statement registering the Registrable Securities) is not effective or is not otherwise
available for the sale of the Registrable Securities, the Company shall immediately notify the Purchasers in writing that such
registration statement is not then effective (the “Blackout Period”) and thereafter shall promptly notify such
holder when the registration statement is effective again and available. Neither the Company nor any other Person acting on its
behalf will provide a Purchaser or its agents or counsel with any information that it believes constitutes or might constitute
material, non-public information including, without limitation, the contemplated filing and timing of filing of a registration
statement.

 

    	 	-21-	 

     

    

 

		(m)	The Restrictive Legend shall be removed, and the Company
shall issue a certificate without such legend to the holder of the Securities upon which it is stamped or issue to such holder
by electronic delivery at the applicable balance account of The Depository Trust Company (“DTC”), if: (i) such
Securities are registered for resale under the Securities Act, (ii) in connection with a sale, assignment or other transfer, such
holder provides the Company with an opinion of counsel, the form and substance of which opinion shall be reasonably acceptable
to the Company, that the sale, assignment or transfer of the Securities may be made without registration under the applicable
requirements of the Securities Act or (iii) such holder or its broker provides the Company with a broker representation letter
providing to the Company any information the Company deems necessary to determine that such sale is made in compliance with Rule
144 under the Securities Act, including, as may be appropriate, a certification that such holder is not an affiliate of the Company
(as defined in Rule 144) and a certification as to the length of time the applicable Securities have been held. If the Company
shall fail for any reason or for no reason to issue to the holder of the Securities within two Business Days after the holder
has provided reasonable evidence to the Company of the occurrence of any of (i) through (iii) above (the date such evidence is
provided to the Company, the “Removal Date”), a certificate without such legend to the holder or to issue such
Securities to such holder by electronic delivery at the applicable balance account at DTC (as defined below), and if on or after
such Business Day the holder purchases (in an open market transaction or otherwise) common stock to deliver in satisfaction of
a sale by the holder of such Securities that the holder anticipated receiving without legend from the Company, then the Company
shall, within three Business Days promptly honor its obligation to deliver to the holder a certificate or certificates representing
such Securities and pay cash to the holder in an amount equal to the excess (if any) of the holder’s total purchase price
(including brokerage commissions, if any) for the common stock so purchased over the product of (A) such number of Shares, times
(B) the price at which the sell order giving rise to such purchase obligation was executed. Nothing herein shall limit a Purchaser’s
right to pursue any remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock as required
pursuant to the terms hereof.

 

		(n)	Each Purchaser, severally and not jointly with the other
Purchasers, agrees with the Company that such Purchaser will sell any Securities pursuant to either the registration requirements
of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities
are sold pursuant to a Registration Statement, they will be sold only during such time that the Registration Statement is effective
and not withdrawn or suspended, and only as permitted by the Registration Statement and in compliance with the plan of distribution
set forth therein, and acknowledges that the removal of the Restrictive Legend from certificates representing Securities as set
forth in this Section 4.7 is predicated upon the Company’s reliance upon this understanding.

 

    	 	-22-	 

     

    

 

4.8           Further
Assurances. Each party hereto agrees and covenants that at any time and from time to time it shall promptly execute and deliver
to the other party such further instruments and documents and take such further action as the other party may reasonably require
in order to carry out the full intent and purpose of this Agreement.

 

4.9           Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document or any transaction document
executed in connection with any other securities purchase agreement entered into on the date hereof by and between the Company
and any purchaser of securities of the Company (collectively, the “Other SPAs”)) shall be offered or paid to
any Person to amend or consent to a waiver or modification of any provision of this Agreement (or the Other SPAs) unless the same
consideration is also offered to all of the parties to this Agreement or unless such consideration consists of warrants and a corresponding
adjustment to the applicable purchase price under the Other SPAs. For clarification purposes, this provision constitutes a separate
right granted to each applicable purchaser (including each Purchaser) by the Company and negotiated separately by such purchaser,
and is intended for the Company to treat the applicable purchasers (including each Purchaser) as a class and shall not in any way
be construed as such purchasers acting in concert or as a group with respect to the purchase, disposition or voting of the securities
of the Company or otherwise.

 

ARTICLE
V. 

MISCELLANEOUS

 

5.1           Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before October 20, 2017; provided, however, that no such termination will affect the
right of any party to sue for any breach by any other party (or parties).

 

5.2           Fees
and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay (i) all Transfer
Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the
Company and any Exercise Notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers and (ii) all costs and expenses of its counsel in connection with the drafting and
negotiation of this Agreement.

 

5.3           Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

    	 	-23-	 

     

    

 

5.4           Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto
at or prior to 5:30 p.m. (New York City time) on a Business Day, (b) the next Business Day after the date of transmission, if such
notice or communication is delivered via facsimile or email attachment at the facsimile number or email address as set forth on
the signature pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business
Day, (c) the second (2nd) Business Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to
be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.5           Amendments;
Waivers. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by parties seeking amendment, or in the case of a waiver, by the party against whom the waiver
is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. Any amendment effected in accordance with accordance with this Section 5.5 shall be binding only
upon such parties seeking such amendment.

 

5.6           Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

5.7           Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

5.8           No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

5.9           Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action
or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or Proceeding
is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or Proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof, effective upon receipt.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

    	 	-24-	 

     

    

 

5.10         Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

 

5.11         Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

5.12         Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

5.13         Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has had the opportunity to be represented
by its own separate legal counsel or that of its investment manager in its review and negotiation of the Transaction Documents.
The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company
and not because it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each
provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and
not between the Company and the Purchasers collectively and not between and among the Purchasers.

 

    	 	-25-	 

     

    

 

5.14         Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.

 

5.15         Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement. The term “including” is deemed to mean “including, without limitation.”

 

5.16         WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE
PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

(Signature Pages Follow)

 

    	 	-26-	 

     

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.

 

 

	ARQULE, inc.	 	Address for Notice:
	 	 	 
	By:	 	 	One Wall Street
	 	Name:	 	Burlington, MA 01803
	 	Title:	 	Fax:781-287-8143
	 	 	 
	 	 	With a copy to (which shall not constitute notice):
	 	 	 
	 	 	Richard E. Baltz
	 	 	Arnold & Porter Kaye Scholer LLP
	 	 	
        601 Massachusetts Avenue, N.W.

        Washington, D.C. 20001

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR
PURCHASER FOLLOWS]

 

     

     

    

  

[PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.

 

	Name of Purchaser:	 
	Signature of Authorized Signatory of Purchaser:	 
	Name of Authorized Signatory:	 
	Title of Authorized Signatory:	 
	Email Address of Authorized Signatory:	 
	Facsimile Number of Authorized Signatory:	 

Address for Notice to Purchaser:

	 	 
	 	 
	 	 

 

	Subscription Amount:  	$	 
	Shares:	 
	Warrant Shares:	 
	EIN Number:	 

 

[SIGNATURE PAGES CONTINUE]Exhibit 10.9

TRUST AGREEMENT

This Trust Agreement Relating to Snobar Trust (this "Trust Agreement") is entered into between Snobar Holding, Inc., a Delaware corporation, as "Trustor", and Azizollah Masjedi, an individual, as "Trustee", with an effective date for all purposes of June I, 2013 (the "Effective Date").

ARTICLE I TRUST PROPERTY

Trustor, for the purpose of creating a trust (the "Trust") to hold the assets and property described on Schedule A attached hereto (the "Initial Trust Property") for the benefit of Trustor (which shall be the beneficiary under the Trust), is contemporaneously with the execution of this Trust Agreement transferring and assigning the Initial Trust Property to the Trust, by Stock Power dated as of the Effective Date, to be held in trust in accordance with the terms of this Trust Agreement. The Trustee agrees to hold the Initial Trust Property, and any additional property which may hereafter be transferred to and become a part of the Trust, in accordance with the terms of this Trust Agreement.

ARTICLE II

TRANSFER OF ADDITIONAL PROPERTY TO TRUST

Any person or entity, with the consent of the Trustee, may hereafter transfer and assign other property to the Trust. Such other property may be transferred and assigned to the Trustee by deed, assignment, bequest or devise.

Any such other property transferred to the Trustee shall be subject to all of the provisions of this Trust Agreement, as if such property were originally part of the Trust Estate (as defined in Section 9.3 below).

ARTICLE III

RIGHTS RESERVED DURING EXISTENCE OF TRUSTOR

While the Trustor is in existence, on demand of the Trustor or the Beneficiary, the Trustee shall distribute to the Trustor any or all of the property contained in the Beneficiary. The Beneficiary shall be Snobar Holdings, Inc., a California corporation.

ARTICLE IV TRUSTEE PROVISIONS

4.1       Designation of Trustee.  Initially, Azizollah Masjedi shall act as Trustee of and under this Trust Agreement and the Trust formed pursuant hereto.

4.1.1 Successor Trustees. If Azizollah Masjedi ceases to act or for any other reason, including incapacity, is unable to act as Trustee, then Clark Rutledge shall act as Trustee.

 

 

Exhibit 10.9 -- Page 1

 

4.1.2 Right of Last Acting Trustee to Designate Successor.  The provisions of this Section 4.1.2 shall apply at such time as there is only one Individual Trustee (as defined in Section 9.2 below) acting as Trustee, and there is no other Individual Trustee designated and able to act as a successor to the then acting Individual Trustee (with such sole acting Individual Trustee being the "Last Acting Trustee"), whether or not there is a Corporate Trustee (as defined in Section 9.1 below) designated as a Trustee. The Last Acting Trustee shall have the right, exercisable at any time and from time to time while the Last Acting Trustee is acting, to designate his or her own successor Trustee or Trustees, to act in such order as the Last Acting Trustee shall designate. The designation of one or more successor Trustees shall be made in a duly acknowledged instrument executed by the Last Acting Trustee, the original of which shall be attached to the original of this Trust Agreement and a copy of which shall be delivered to the successor Trustee(s) so designated to act.  If all successor Trustees designated by the Last Acting Trustee cease to act or for any other reason, including incapacity, are unable to act as Trustees, then the remaining provisions of this Article IV shall be followed with respect to the designation of one or more Trustees. The appointment of the successor trustee(s) shall not jeopardize the licenses held by the Trust and/or the Trustor.

4.2 Right of Trustor to Remove or Replace Trustee.  Notwithstanding to the contrary contained in this Trust Agreement, the Trustor shall have the right, at any time and from time to time: (i) to remove any then acting Trustee; and (ii) to designate one or more successor Trustees, to act in place of any then acting Trustee, or to act as a Trustee or Trustees, if any designated or acting Trustee ceases to act or for any other reason, including removal by the Trustor, is unable to act as a Trustee, or if no successor Trustee is then otherwise designated to act.  The removal of any then acting Trustee shall be effective upon the delivery to such Trustee of a duly acknowledged instrument executed by the Trustor, containing a notice to such Trustee that the Trustor has exercised such power of removal. The designation of an alternate Trustee or successor Trustee to the removed Trustee shall be made in a duly acknowledged instrument executed by the Trustor, the original of which shall be attached to the original of this Trust Agreement, and a copy of which shall be delivered to the alternate or successor Trustee.

4.3  Resignation of Trustee.  Any Trustee may resign at any time by delivering written notice thereof to the Trustor. The resigning Trustee shall mail his or her notice of resignation by certified mail to the last-known address of the Trustor, at least thirty (30) calendar days before the Trustee's resignation is to take effect.

4.4 Limitation of Liability. No successor Trustee shall be responsible for the acts or omissions of any prior Trustee. Furthermore, any successor Trustee may accept as correct the accounting records of any prior Trustee. No successor Trustee shall have the duty to investigate or review the actions of any prior Trustee, unless the successor Trustee, within sixty (60) days of its appointment, receives a written request to conduct such an investigation from the Trustor.

4.5 Majority Action Required of Trustees. The provisions of this Section 4.5 shall apply only during a time when there are two or more Trustees acting concurrently under this Trust Agreement. Subject to the provisions of Section 7.2 below, only the act of both of the then acting Trustees, if only two Trustees are then acting, or the act of a majority of the then acting Trustees, if there are more than two Trustees then acting, shall be valid and binding on all then acting Trustees, all beneficiaries of the Trust, and all third parties dealing with the Trustees.

 

 

Exhibit 10.9 -- Page 2

 

 

 

4.6 Definition of Trustee. Except where the context should indicate otherwise, the term "Trustee," as used in this Trust Agreement, means any and all Trustees, whether original, alternate or successor, duly acting under this Trust Agreement.

ARTICLE V TERMINATION OF TRUST

This Trust Agreement shall terminate upon the earlier to occur of (i) the withdrawal or distribution of all assets from the Trust, or (ii) the date upon which the Trustor ceases to be in existence, whether by dissolution, liquidation or otherwise. Upon the termination of this Trust Agreement pursuant to the immediately preceding clause (ii), the entire remaining Trust Estate, if any, shall be distributed in accordance with the plan of liquidation or plan of dissolution, as applicable, of the Trustor.

ARTICLE VI POWERS OF TRUSTEE

6.1      Listing of Trustee's Powers. The Trustee shall have the following powers with respect to any and all property held in the Trust, in addition to those powers which may now or in the future be conferred upon the Trustee under the laws of the State of California:

6.1.1   General Investment Directive. To invest and reinvest trust funds in any kind of property (real, personal or mixed) and every kind of investment appropriate under the then-prevailing circumstances, specifically including, but not limited to, corporate obligations of any kind; preferred or common stocks; limited liability company membership interests; shares of investment trusts, investment companies and mutual funds; notes; real estate; bonds; debentures; mortgages; deeds of trust; mortgage participations; market funds and index funds.

Among the circumstances that are appropriate for the Trustee to consider in investing and managing trust assets are the following:

(a)    General economic conditions;

(b)    The possible effect of inflation or deflation;

 

(c)    The expected tax consequences of investment decisions or strategies; overall trust portfolio;

 

(d)    The role that each investment or course of action plays within the capital;

 

(e)    The expected total return from income and the appreciation of

(f)    The need for liquidity, regularity of income and preservation or appreciation of capital; and

(g)    An asset's special relationship or special value, if any, to the purposes of the Trust or to one or more of the beneficiaries of the Trust.

 

 

Exhibit 10.9 -- Page 3

 

 

 

In exercising the Trustee's powers, the Trustee shall exercise care, skill and caution to attain the Trustor's goals under this Trust Agreement. The Trustee shall consider individual investments as part of an overall investment strategy, having risk and return objectives reasonably suited to the purposes of the Trust. The Trustee's investments may include stock in, or any common trust fund administered by, the Trustee. In making and implementing investment decisions, the Trustee shall diversify the investments of the Trust to the extent, under the circumstances it is prudent to do so.

6.1.2     Additional Securities Transactions. To purchase securities on margin, borrow money using securities or any Trust property as collateral, purchase and sell commodities, purchase and sell securities options, sell short, and engage in any transaction involving any combination of these powers.

6.1.3     Income-Producing Property. To continue to hold any income-producing property that the Trustee receives or acquires under the Trust as long as the Trustee deems advisable.

6.1.4     Unproductive Property.To retain, purchase, or acquire unproductive property.

6.1.5     Life Insurance. To retain, purchase, or acquire life insurance policies on the life of any person and to exercise all rights of ownership contained in those policies.

6.1.6       Stock and Securities Powers. To have all rights, powers and privileges of an owner of the securities and other entity ownership interests held in trust, including, but not limited to, the power to vote, give proxies, and pay assessments; to participate in voting trusts, pooling agreements, foreclosures, reorganizations, consolidations, mergers, liquidations, sales, and leases, and in connection with such participation, to deposit securities and other entity ownership interests with, and transfer title thereto, to any protective or other committee as the Trustee may deem advisable; and to exercise or to sell stock subscriptions or conversion rights with respect to any such securities or other entity ownership interests.

6.1.7       Title Holding to Trust Assets. To hold securities, other entity ownership interests and other property in the Trustee's name as Trustee under the Trust or in the name of a nominee. The Trustee may also hold securities and other entity ownership interests that are unregistered in such condition that ownership will pass by delivery.

6.1.8        Business Interests Held in Trust.  To continue to hold and operate, to sell, or to liquidate, at the risk of the Trust Estate, and at the Trustee's discretion, any interest in any business entity that the Trustee receives or acquires under or as part of the Trust, including but not limited to, any sole proprietorship, limited liability company, partnership or capital stock of any corporation. In connection with the powers given the Trustee under this Section 6.1.8, the Trustee shall have the power as Trustee to guarantee any indebtedness incurred by any such business entity, to execute and deliver evidences of such guarantee, and to pledge, hypothecate or otherwise encumber any part or all of the Trust Estate to secure payment of any such indebtedness or guarantee, and to repay such indebtedness or guarantee out of the Trust Estate.

 

 

 

Exhibit 10.9 -- Page 4

  

6.1.9     Licenses and Permits. To apply for and hold in the Trust's name any license or permit needed to operate any business in which the Trust Estate, the Trustor or any affiliate of the Trustor has an interest, including, but not limited to one or more licenses to sell alcoholic beverages.

 

6.1.1 0 Real and Personal Property. To manage, control, grant options on, sell (for cash or on deferred payments, with or without security), convey, exchange, partition, divide, improve, repair and otherwise exploit and develop all real and personal Trust property.

6.1.11  Leases of Trust Property. To lease Trust property for terms within or beyond the term of the Trust and for any purpose, including but not limited to, exploration for and removal of gas, oil, and other minerals; and to enter into community oil leases, pooling, and unitization agreements.

6.1.12 Trust Debts. To borrow money, and to encumber or hypothecate Trust property by mortgage, deed of trust, pledge, or otherwise, for the debts of the Trust or the joint debts of the Trust and any co-owner of Trust property; while the Trustor is in existence, to guarantee any indebtedness incurred by the Trustor; and in connection with any such guarantee, to execute and deliver promissory notes or other evidences of such indebtedness or guarantee.

6.1.13 Litigation on Behalf of Trust. To commence or defend such litigation in connection with the Trust or any property of the Trust Estate as the Trustee may deem advisable, at the expense of the Trust Estate. The Trustee shall also have the power to compromise, submit to arbitration, abandon, or otherwise adjust any claims or litigation against or in favor of the Trust or the Trust Estate.

6.1.14 Employment of Trust Agents.  To employ investment advisors, attorneys, accountants and any other agents or advisors to assist the Trustee in the administration of the Trust Estate.

6.1.15 Liability Insurance.  To carry insurance of such kinds and in such amounts as the Trustee deems advisable, at the expense of the Trust Estate, to protect the Trust Estate against any damage or loss, and to protect the Trustee personally against any liability arising from actions taken in good faith by the Trustee on behalf of the Trust or the Trust Estate.

6.1.16 Transactions between Trust and Trustee.  To loan or advance the Trustee's own funds to the trust for any Trust purpose, with interest at current rates; to receive security for such loans in the forms of a mortgage, pledge, deed of trust, or other encumbrance of any assets of the Trust; to purchase assets of the Trust at their fair market value as determined by an independent appraisal of those assets; to sell the Trustee's own property to the Trust at a price not in excess of its fair market value as determined by an independent appraisal; and to lease assets to or from the Trust for fair rental value as determined by an independent appraisal.

 

 

Exhibit 10.9 -- Page 5

 

 

6.1.17 Loans to Trust Created by Trustor. To loan funds or assets to any other trust created by the Trustor or by any affiliate of the Trustor, upon such equitable terms and in such amounts as the Trustee deems advisable.

6.1.18 Purchases from Trust Created by Trustor. To purchase, at fair market value, property from any other trust created by the Trustor or by any affiliate of the Trustor.

6.1.19 Pro Rata or Non-Pro Rata Division of Trust Assets. In any case in which the Trustee is required or authorized, pursuant to the provisions of this Trust Agreement, to divide any trust property into parts or shares for the purpose of distribution, or otherwise, the Trustee is authorized, in its discretion, based on fair market values at the time of the division or distribution, to make the division and distribution in identical interests, in kind, including undivided interests in any property, or partly in kind and partly in money, on a pro rata or non- pro rata basis, and for this purpose, to make such sales of the Trust property as the Trustee may deem necessary on such terms and conditions as the Trustee shall determine.

6.1.20 Modification of Trustee Powers. To release or to restrict any power held by the Trustee in connection with the Trust, whether such power is expressly granted in this Trust Agreement or is implied by law. Any release or restriction of any such power shall be made in a written instrument specifying the power to be released or restricted. Any power released by the Trustee shall be extinguished except to the extent this Trust Agreement expressly provides that such power shall pass to another.

6.1.21 Delayed Division or Distribution of Trust. Notwithstanding that, under the terms of the Trust, the Trust may terminate or a distribution or division of Trust property may be required by reason of the dissolution of the Trustor or for any other reason, and subject to any final termination clause contained in this Trust Agreement, the Trustee may defer or delay such termination, distribution or division for a reasonable period of time in order to:

(a)    Receive assets made payable to the Trustee upon or by reason of the Trustor's dissolution;

(b)    Sell assets of the Trust when the Trustee deems such action advisable to accomplish its orderly distribution or other reasonable objectives;

(c)    Complete the orderly administration of the Trust, including the payment of all taxes due upon or by reason of the Trustor's dissolution; or

(d)    Avoid adverse tax consequences which may arise by reason of such action.

6.1.22 Business Relationship with International Production lmpex Corp. To engage in business relationship with the business of International Production Impex Corp. and its business.

6.2      Allocation to Principal and Income.  The determination of all matters with respect to what is principal and income of the Trust Estate, and the apportionment and allocation of receipts and expenses between principal and income, shall be governed by the provisions of the California Uniform Principal and Income Act, as amended from time to time. 

 

 

Exhibit 10.9 -- Page 6

 

 

Any such matter not provided for either in this Trust Agreement or in the California Uniform Principal and Income Act shall be determined by the Trustee, in his or her discretion.

6.3       Waiver of Bond. No bond shall be required of any person acting as Trustee under this Trust Agreement.

6.4       Delegation of Trustee Powers. A Trustee may delegate to any other Trustee or Trustees then acting, or to one or more agents of the delegating Trustee, administrative and ministerial duties relating to the Trust. Pursuant to such delegation, one Trustee acting alone, or a designated agent, shall have the power to handle administrative matters of the Trust, including, without limitation, the power to perform all acts necessary to transfer any real and personal property contained in the Trust and to execute all documents in connection therewith; to open accounts of any type in one or more financial institutions; to authorize the deposit or withdrawal of funds from any or all of such accounts and to sign checks on such accounts; and to enter into Trust safe deposit boxes. No transfer agent, corporation or financial institution dealing with a single Trustee or an agent pursuant to the provisions of this Section 6.4 shall have any responsibility for the performance of the Trust created under this Trust Agreement.

ARTICLE VII REVOCATION AND AMENDMENT

7.1      Revocation by Trustor. The Trustor may revoke this Trust Agreement at any time while the Trustor is in existence, by delivering written notice of revocation to the Trustee. Upon revocation, the Trustee shall promptly distribute to the Trustor all of the property then constituting the Trust Estate.

7.2 Amendment by Trustor. This Trust Agreement may be amended at any time during the Trustor's existence only by a written instrument executed by the Trustor. All amendments to this Trust Agreement shall be delivered to the Trustee, however, the Trustor shall first obtain the consent of the Trustee to any amendment that increases the Trustee's duties or liabilities under this Trust Agreement.

ARTICLE VIII TRUSTEE'S COMPENSATION

Each Trustee shall be entitled to reasonable compensation for ordinary services, for any extraordinary services performed by such Trustee, and for all services rendered in connection with the termination or revocation, in whole or in part, of the Trust.

ARTICLE IX REFERENCES AND DEFINITIONS

All references in this Trust Agreement to the singular number shall be deemed to include the plural number as applicable.

9.1      Corporate Trustee. The term "Corporate Trustee" shall mean any Trustee that is a bank, trust company, or other legal entity and is duly qualified to act in the capacity of a

Exhibit 10.9 -- Page 7

Trustee hereunder in the State of California, or in any state in which the Trustor is conducting business.

9.2      Individual Trustee. The term "Individual Trustee" shall refer to any Trustee that is a natural person and is not a bank, trust company, or other legal entity.

9.3      Trust Estate. The term "Trust Estate" shall mean all property included in the Trust and subject to the provisions of this Trust Agreement (including any property added to such Trust upon the dissolution of the Trustor), and shall include accrued and undistributed income, whether or not such income is added to principal.

ARTICLE X GOVERNING LAW

All questions relating to the validity, construction and administration of this Trust Agreement shall be determined in accordance with the laws of the State of California.

ARTICLE XI

NAME OF TRUST AND INITIAL ASSETS

The name of the Trust established under and pursuant to this Trust Agreement shall be the "SNOBAR Trust." The trust assets initially held by the Trust are set forth on Schedule A attached hereto.

[Signatures are on the following page]

 

 

 

Exhibit 10.9 -- Page 8

 

 

  

IN WITNESS WHEREOF, the Trustor and the above-named Trustee have executed this Trust Agreement to be effective as of the effective date set forth above.

TRUSTOR: SNOBAR

By: /s/ Shannon Masjedi 

Name: Shannon Masjedi

Title:  Vice President

TRUSTEE:    /s/ Azizollah Masjedi

   Azizollah Masjedi

 

 

Exhibit 10.9 -- Page 9

Schedule A

Description of Initial Trust Property

All of the issued and outstanding shares of stock in International Production Impex Corp., a California Corporation, consisting of          shares of common stock, as evidenced by Stock Certificate No.            dated as of the Effective Date.

 

 

 

 

 

 

 

 

 

Exhibit 10.9 -- Page 10

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