Document:

ex10-1.htm

EXHIBIT 10.1

 

THERAGENICS CORPORATION

2012 OMNIBUS INCENTIVE PLAN

 

  

  

  

 

THERAGENICS CORPORATION

2012 OMNIBUS INCENTIVE PLAN

TABLE OF CONTENTS 

   

	  	  	  	
Page

	
 

SECTION I. DEFINITIONS

	
 

1

	  	  	  	  
	  	
1.1

	
Definitions

	
1

	  	  
	
SECTION 2 THE OMNIBUS INCENTIVE PLAN

	
6

	  	  	  	  
	  	
2.1

	
Purpose of the Plan

	
6

	  	
2.2

	
Stock Subject to the Plan

	
7

	  	
2.3

	
Administration of the Plan

	
7

	  	
2.4

	
Eligibility and Limits

	
8

	  	  	  	  
	
SECTION 3 TERMS OF AWARDS

	
8

	  	  	  	  
	  	
3.1

	
Terms and Conditions of All Awards

	
8

	  	
3.2

	
Terms and Conditions of Options

	
10

	  	
3.3

	
Terms and Conditions of Stock Appreciation Rights

	
12

	  	
3.4

	
Terms and Conditions of Other Stock-Based Awards

	
12

	  	
3.5

	
Terms and Conditions of Cash Performance Awards

	
13

	  	
3.6

	
Treatment of Awards on Termination of Service

	
13

	  	  	  	  
	
SECTION 4 RESTRICTIONS ON STOCK

	
14

	  	  	  	  
	  	
4.1

	
Escrow of Shares

	
14

	  	
4.2

	
Restrictions on Transfer

	
14

	  	  	  	  
	
SECTION 5 GENERAL PROVISIONS

	
14

	  	  	  	  
	  	
5.1

	
Withholding

	
14

	  	
5.2

	
Changes in Capitalization; Merger; Liquidation

	
15

	  	
5.3

	
Awards to Non-U.S. Employees

	
16

	  	
5.4

	
Compliance with Code

	
16

	  	
5.5

	
Right to Terminate Employment or Service

	
17

	  	
5.6

	
Non-Alienation of Benefits

	
17

	  	
5.7

	
Restrictions on Delivery and Sale of Shares; Legends

	
17

	  	
5.8

	
Listing and Legal Compliance

	
17

	  	
5.9

	
Termination and Amendment of the Plan

	
17

	  	
5.10

	
Termination of Prior Plans

	
18

	  	
5.12

	
Stockholder Approval

	
18

	  	
5.12

	
Choice of Law

	
18

	  	
5.13

	
Effective Date of Plan

	
18

  

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THERAGENICS CORPORATION

2012 OMNIBUS INCENTIVE PLAN

 

SECTION I.  DEFINITIONS

1.1           Definitions.  Whenever used herein, the masculine pronoun will be deemed to include the feminine, and the singular to include the plural, unless the context clearly indicates otherwise, and the following capitalized words and phrases are used herein with the meaning thereafter ascribed:

(a)           “Affiliate” means:

(1)           Any Subsidiary;

(2)           An entity that directly or through one or more intermediaries controls, is controlled by, or is under common control with the Company, as determined by the Company; or

(3)           Any entity in which the Company has such a significant interest that the Company determines it should be deemed an “Affiliate,” as determined in the sole discretion of the Company.

(b)           “Award Agreement” means any written agreement, contract, or other instrument or document as may from time to time be designated by the Company as evidencing an Award granted under the Plan.

(c)           “Award Program” means a written program established by the Committee, pursuant to which Awards are granted under the Plan under uniform terms, conditions and restrictions set forth in such written program.

(d)           “Awards” means, collectively, Cash Performance Awards, Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, and Other Stock-Based Awards.

 

(e)           “Board of Directors” means the board of directors of the Company.

(f)           “Cash Performance Award” means an Award described in Section 3.5 that is settled in cash and does not have a value that is derivative of the value of, determined by reference to a number of shares of, or determined by reference to dividends payable on, Stock.

(g)           “Code” means the Internal Revenue Code of 1986, as amended.

 

  

  

  

 

(h)           “Committee” means the committee appointed by the Board of Directors to administer the Plan.  Except to the extent that the Board of Directors is acting as the Committee, the Committee shall consist solely of two or more members of the Board of Directors who are both “outside directors” as defined in Treas. Reg. § 1.162-27(e) as promulgated by the Internal Revenue Service and “non-employee directors” as defined in Rule 16b-3(b)(3) as promulgated under the Exchange Act, and if applicable, who satisfy the requirements of the national securities exchange or nationally recognized quotation or market system on which the Stock is then traded.  Notwithstanding the foregoing, with respect to Awards granted by an officer or officers of the Company pursuant to Section 2.3(b), the “Committee” as used in the Plan shall mean such officer or officers, unless the context would clearly indicate otherwise.

(i)           “Company” means Theragenics Corporation, a Delaware corporation.

(j)           “Disability” unless otherwise defined by the Committee in the applicable Award Agreement or Award Program, has the same meaning as provided in the long-term disability plan or policy maintained or, if applicable, most recently maintained, by the Company or, if applicable, any Affiliate of the Company for the Participant.  If no long-term disability plan or policy was ever maintained on behalf of the Participant or, if the determination of Disability relates to an Incentive Stock Option, Disability means that condition described in Code Section 22(e)(3), as amended from time to time.

(k)           “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

(l)           “Exercise Price” means the exercise price per share of Stock purchasable under an Option.

(m)           “Fair Market Value” refers to the determination of the value of a share of Stock as of a date, determined as follows:

(1)           if the shares of Stock are actively traded on any national securities exchange or any nationally recognized quotation or market system (including, without limitation Nasdaq), Fair Market Value shall mean the price at which Stock shall have been sold on such date or on the trading day immediately preceding such date, as reported by any such exchange or system selected by the Committee on which the shares of Stock are then traded;

(2)           if the shares of Stock are not actively traded on any such exchange or system, Fair Market Value shall mean the price for the Stock on such date, or on the trading day immediately preceding such date, as reported by such exchange or system; or

(3)           if the shares of Stock are not actively traded or reported on any exchange or system on such date or on the business day immediately preceding such date, Fair Market Value shall mean the fair market value of a share of Stock as determined by the Committee taking into account such facts and circumstances deemed to be material by the Committee to the value of the Stock in the hands of the Participant.

  

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Notwithstanding the foregoing, for purposes of Paragraph (1), (2), or (3) above, the Committee may use the closing price as of the indicated date, the average price or value as of the indicated date or for a period certain ending on the indicated date, the price determined at the time the transaction is processed, the tender offer price for shares of Stock, or any other method which the Committee determines is reasonably indicative of the fair market value of the Stock; provided, however, that for purposes of granting Nonqualified Stock Options or Stock Appreciation Rights, Fair Market Value of Stock shall be determined in accordance with the requirements of Code Section 409A, and for purposes of granting Incentive Stock Options, Fair Market Value of Stock shall be determined in accordance with the requirements of Code Section 422.

(n)           “Incentive Stock Option” means an incentive stock option within the meaning of Section 422 of the Internal Revenue Code.

(o)           “Nonqualified Stock Option” means a stock option that is not an Incentive Stock Option.

(p)            “Option” means a Nonqualified Stock Option or an Incentive Stock Option.

(q)           “Other Stock-Based Award” means an Award described in Section 3.4 that has a value that is derivative of the value of, determined by reference to a number of shares of, or determined by reference to dividends payable on, Stock and may be settled in cash or in Stock.  Other Stock-Based Awards may include, but not be limited to, grants of Stock, grants of rights to receive Stock in the future, or dividend equivalent rights.

 

(r)            “Over 10% Owner” means an individual who at the time an Incentive Stock Option to such individual is granted owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or one of its Subsidiaries, determined by applying the attribution rules of Code Section 424(d).

(s)           “Participant” means an individual who receives an Award hereunder.

(t)           “Performance Goals” means any one or more of the following performance goals, intended by the Committee to constitute objective goals for purposes of Code Section 162(m), either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Affiliate, either individually, alternatively or in combination, and measured either quarterly, annually or cumulatively over a period of quarters or years, on an absolute basis or relative to a pre-established target, to previous quarters’ or years’ results or to a designated comparison group, in each case as specified by the Committee in the Award:

	
  

	
(i)

	
earnings per share;

	
  

	
(ii)

	
book value per share;

	
  

	
(iii)

	
operating cash flow;

	
  

	
(iv)

	
free cash flow;

	
  

	
(v)

	
cash flow return on investments;

 

  

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(vi)

	
cash available;

	
  

	
(vii)

	
net income (before or after taxes);

	
  

	
(viii)

	
revenue or revenue growth;

	
  

	
(ix)

	
distributor sales performance improvements;

	
  

	
(x)

	
reimbursement relating to Medicare, Medicaid or other federally or state-funded insurance-related programs;

	
  

	
(xi)

	
total shareholder return;

	
  

	
(xii)

	
return on invested capital;

	
  

	
(xiii)

	
return on shareholder equity;

	
  

	
(xiv)

	
return on assets;

	
  

	
(xv)

	
return on common book equity;

	
  

	
(xvi)

	
market share;

	
  

	
(xvii)

	
economic value added;

	
  

	
(xviii)

	
gross margin;

	
  

	
(xix)

	
contribution margin;

	
  

	
(xx)

	
operating margin;

	
  

	
(xxi)

	
profit margin;

	
  

	
(xxii)

	
stock price;

	
  

	
(xxiii)

	
operating income or operating net income (before or after taxes);

	
  

	
(xxiv)

	
EBIT, EBITDA or measures based on EBIT or EBITDA;

	
  

	
(xxv)

	
expenses or operating expenses;

	
  

	
(xxvi)

	
productivity of employees as measured by revenues, costs, or earnings per employee;

	
  

	
(xxvii)

	
working capital;

	
  

	
(xxviii)

	
infrastructure improvements;

	
  

	
(xxix)

	
regulatory affairs;

	
  

	
(xxx)

	
governmental interactions;

	
  

	
(xxxi)

	
insurance coverage adequacy and competitiveness;

	
  

	
(xxxii)

	
recruitment for strategic positions;

	
  

	
(xxxiii)

	
training;

	
  

	
(xxxiv)

	
quality assurance measures relating to manufacturing, including but not limited to reject rate, customer complaints and on-time delivery;

	
  

	
(xxxv)

	
organizational structure improvements;

	
  

	
(xxxvi)

	
performance tracking and appraisal improvements;

	
  

	
(xxxvii)

	
new product(s) and accounts;

	
  

	

(xxxviii)

	

acquisitions and divestitures;

	
  

	
(xxxix)

	
cooperation/consolidations among business units;

	
  

	
(xl)

	
data/information collection and dissemination improvements;

	
  

	
(xli)

	
outsourcing/insourcing/alternative sourcing;

	
  

	
(xlii)

	
supply chain management;

	
  

	
(xliii)

	
succession planning;

	
  

	
(xliv)

	
benefits management;

	
  

	
(xlv)

	
improvements in capital structure;

	
  

	
(xlvi)

	
new marketing initiatives;

	
  

	
(xlvii)

	
cost reduction; or

	
  

	
(xlviii)

	
any combination of the foregoing.

 

  

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The Committee may appropriately adjust any measures under a Performance Goal to fairly represent the results of continuing operations or the ongoing performance that the Performance Goal is intended to measure, to exclude the effect of items that are reported as special items in the Company’s earnings release, or to remove the effect of equity compensation expense under FAS 123R; amortization of acquired technology and intangibles; asset write-downs; litigation or claim judgments or settlements; changes in or provisions under tax law, accounting principles or other such laws or provisions affecting reported results; accruals for reorganization and restructuring programs; discontinued operations; or any items that are extraordinary, unusual in nature, non-recurring or infrequent in occurrence, whether or not any such item fits within such category under GAAP or for reporting purposes, except where any such action would result in the loss of the otherwise available exemption of the Award under Section 162(m) of the Code, if applicable.

(u)           “Performance Period” means, with respect to an Award, a period of time within which the Performance Goals relating to such Award are to be measured. The Performance Period will be established by the Committee at the time the Award is granted.

(v)           “Plan” means the Theragenics Corporation 2012 Omnibus Incentive Plan.

(w)           “Separation from Service” shall mean a termination of a Participant’s employment or other service relationship with the Company, subject to the following requirements:

(1)           in the case of a Participant who is an employee of the Company, a termination of the Participant’s employment where either (A) the Participant has ceased to perform any services for the Company and all affiliated companies that, together with the Company, constitute the “service recipient” within the meaning of Code Section 409A (collectively, the “Service Recipient”) or (B) the level of bona fide services the Participant performs for the Service Recipient after a given date (whether as an employee or as an independent contractor) permanently decreases (excluding a decrease as a result of military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Participant retains a right to reemployment with the Service Recipient under an applicable statute or by contract) to no more than twenty percent (20%) of the average level of bona fide services performed for the Service Recipient (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of service if the Participant has been providing services to the Service Recipient for less than 36 months); or

 

  

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(2)           in the case of a Participant who is an independent contractor engaged by the Service Recipient, a termination of the Participant’s service relationship with the Service Recipient upon the expiration of the contract (or in the case of more than one contract, all contracts) under which services are performed for the Service Recipient if the expiration constitutes a good-faith and complete termination of the contractual relationship; provided, however, that an amount under an Award will be considered to be payable to such Participant upon Separation from Service if pursuant to the terms of the applicable plan (within the meaning of Code Section 409A), (A) no amount will be paid to the Participant before at least twelve (12) months after the day on which the contract expires under which the Participant performs services for the Service Recipient (or, in the case of more than one contract, all such contracts expire) and (B) no amount payable to the Participant on that date will actually be paid to the Participant if, after the expiration of the contract (or contracts) and before that date, the Participant performs services for the Service Recipient as an independent contractor or an employee; or

(3)           in any case, as may otherwise be permitted under Code Section 409A.

(x)           “Stock” means the Company’s common stock.

(y)           “Stock Appreciation Right” means a stock appreciation right described in Section 3.3.

(z)           “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the relevant time, each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.  A “Subsidiary” shall include any entity other than a corporation to the extent permissible under Section 424(f) or regulations or rulings thereunder.

(aa)           “Termination of Employment” means the termination of the employment relationship between a Participant and the Company and its Affiliates, regardless of whether severance or similar payments are made to the Participant for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability or retirement.  The Committee will, in its absolute discretion, determine the effect of all matters and questions relating to a Termination of Employment as it affects an Award, including, but not by way of limitation, the question of whether a leave of absence constitutes a Termination of Employment.

   

SECTION 2  THE OMNIBUS INCENTIVE PLAN

2.1           Purpose of the Plan.  The Plan is intended to (a) provide incentives to certain officers, employees, directors, and consultants of the Company and its Affiliates to stimulate their efforts toward the continued success of the Company and to operate and manage the business in a manner that will provide for the long-term growth and profitability of the Company; (b) encourage stock ownership by certain officers, employees, directors, and consultants by providing them with a means to acquire a proprietary interest in the Company, acquire shares of Stock, or to receive compensation which is based upon appreciation in the value of Stock; and (c) provide a means of obtaining, rewarding and retaining officers, employees, directors, and consultants.

 

  

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2.2           Stock Subject to the Plan.  Subject to adjustment in accordance with Section 5.2, the sum of three million (3,000,000) shares of Stock plus the number of shares of Stock remaining available for issuance under the 1997 Stock Incentive Plan, the 2000 Stock Incentive Plan and 2006 Stock Incentive Plan (the “Prior Plans)” immediately prior to stockholder approval of the Plan as provided in Section 5.11 plus all shares of Stock that would under the terms of the Prior Plans (determined without regard to the termination of the Prior Plans) be added back to the Prior Plans after such stockholder approval of the Plan, whether as a result of forfeiture, tax withholding or otherwise (the “Maximum Plan Shares”) are hereby reserved exclusively for issuance upon exercise, settlement, or payment pursuant to Awards, all or any of which may be pursuant to any one or more Awards, including without limitation, Incentive Stock Options. Shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash.  The shares of Stock attributable to the nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of any Award that is forfeited or cancelled or expires or terminates for any reason without becoming vested, paid, exercised, converted or otherwise settled in full and any shares of Stock withheld to satisfy tax withholding obligations or the Exercise Price any will again be available for purposes of the Plan.

2.3           Administration of the Plan. 

(a)           The Plan is administered by the Committee.  The Committee has full authority in its discretion to determine the officers, employees, directors, consultants, and other service providers of the Company or its Affiliates to whom Awards will be granted and the terms and provisions of Awards, subject to the Plan.  Subject to the provisions of the Plan, the Committee has full and conclusive authority to interpret the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the respective Award Agreements and Award Programs and to make all other determinations necessary or advisable for the proper administration of the Plan.  The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated).  The Committee’s decisions are final and binding on all Participants.  Each member of the Committee shall serve at the discretion of the Board of Directors and the Board of Directors may from time to time remove members from or add members to the Committee.  Vacancies on the Committee shall be filled by the Board of Directors.

(b)           Notwithstanding any other provision of this Plan, the Board of Directors may by resolution authorize one or more officers of the Company to do one or both of the following: (1) designate individuals (other than officers or directors of the Company or any Affiliate who are subject to Section 16 of the Exchange Act) to receive Awards under the Plan, and (2) determine the number of shares of Stock subject to such Awards; provided however, that the resolution shall specify the total number of shares of Stock that may be granted subject to such Awards.

 

  

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2.4           Eligibility and Limits.  Awards may be granted only to officers, employees, directors, and consultants of the Company or any Affiliate of the Company; provided, however, that an Incentive Stock Option may only be granted to an employee of the Company or any Subsidiary.  In the case of Incentive Stock Options, the aggregate Fair Market Value (determined as of the date an Incentive Stock Option is granted) of Stock with respect to which stock options intended to meet the requirements of Code Section 422 become exercisable for the first time by an individual during any calendar year under all plans of the Company and its Subsidiaries may not exceed $100,000; provided further, that if the limitation is exceeded, the Incentive Stock Option(s) which cause the limitation to be exceeded will be treated as Nonqualified Stock Option(s).  To the extent required under Section 162(m) of the Code and the regulations thereunder, as applicable, for compensation to be treated as qualified performance-based compensation, subject to adjustment in accordance with Section 5.2, the maximum number of shares of Stock with respect to which (a) Options, (b) Stock Appreciation Rights, or (c) other Awards (other than Other Stock-Based Awards that are payable in cash or Cash Performance Awards), to the extent they are granted with the intent that they qualify as qualified performance-based compensation under Section 162(m) of the Code, may be granted during any calendar year to any employee may not exceed seven hundred thousand (700,000), and the maximum aggregate dollar amount that may be paid in any calendar year to any employee with respect to Other Stock-Based Awards that are payable in cash and Cash Performance Awards may not exceed two million Dollars ($2,000,000).  If, after grant, an Option is cancelled, the cancelled Option shall continue to be counted against the maximum number of shares for which options may be granted to an employee as described in this Section 2.4.  If, after grant, the exercise price of an Option is reduced or the base amount on which a Stock Appreciation Right is calculated is reduced, the transaction shall be treated as the cancellation of the Option or the Stock Appreciation Right, as applicable, and the grant of a new Option or Stock Appreciation Right, as applicable.  If an Option or Stock Appreciation Right is deemed to be cancelled as described in the preceding sentence, the Option or Stock Appreciation Right that is deemed to be canceled and the Option or Stock Appreciation Right that is deemed to be granted shall both be counted against the maximum number of shares for which Options or Stock Appreciation Rights may be granted to an employee as described in this Section 2.4.

   

SECTION 3  TERMS OF AWARDS

3.1           Terms and Conditions of All Awards.

(a)           Amount of Award.   The number of shares of Stock as to which an Award may be granted or the amount of an Award will be determined by the Committee in its sole discretion, subject to the provisions of Section 2.2 as to the total number of shares available for grants under the Plan and subject to the limits in Section 2.4.

 

  

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(b)           Award Agreement.  Each Award will either be evidenced by an Award Agreement in such form and containing such terms, conditions and restrictions as the Committee may determine to be appropriate, including without limitation, Performance Goals or other performance criteria, if any, that must be achieved as a condition to vesting or settlement of the Award, or be made subject to the terms of an Award Program, containing such terms, conditions and restrictions as the Committee may determine to be appropriate, including without limitation, Performance Goals or other performance criteria, if any, that must be achieved as a condition to vesting or settlement of the Award. Performance Goals, if any, shall be established before twenty-five percent (25%) of the Performance Period has elapsed, but in no event later than within ninety (90) days after the first day of a Performance Period. At the time any Performance Goals are established, the outcome as to whether the Performance Goals will be met must be substantially uncertain. If any Performance Goals are established as a condition to vesting or settlement of an Award and such Performance Goal is not based solely on the increase in the Fair Market Value of the Stock, the Committee shall certify in writing that the applicable Performance Goals were in fact satisfied before such Award is vested or settled, as applicable. Each Award Agreement or Award Program is subject to the terms of the Plan and any provisions contained in the Award Agreement or Award Program that are inconsistent with the Plan are null and void. To the extent an Award is subject to Performance Goals with the intent that the Award constitute performance-based compensation under Code Section 162(m), the Committee shall comply with all applicable requirements under Code Section 162(m) and the rules and regulations promulgated thereunder in granting, modifying, and settling such Award.  The Committee may, but is not required to, structure any Award so as to qualify as performance-based compensation under Code Section 162(m).

(c)           Date of Grant.  The date as of which an Award is granted will be the date on which the Committee has approved the terms and conditions of the Award and has determined the recipient of the Award and the number of shares, if any, covered by the Award, and has taken all such other actions necessary to complete the grant of the Award or such later date as may be specified in the approval of such Award.

(d)           Related Grants.  Any Award may be granted in connection with all or any portion of a previously or contemporaneously granted Award.  Exercise or vesting of an Award granted in connection with another Award may result in a pro rata surrender or cancellation of any related Award, as specified in the applicable Award Agreement or Award Program.

(e)           Awards not Transferrable.  Awards are not transferable or assignable except by will or by the laws of descent and distribution governing the State in which the Participant was domiciled at the time of the Participant’s death, and are exercisable, during the Participant’s lifetime, only by the Participant; or in the event of the Disability of the Participant, by the legal representative of the Participant; or in the event of death of the Participant, by the legal representative of the Participant’s estate or if no legal representative has been appointed within ninety (90) days of the Participant’s death, by the person(s) taking under the laws of descent and distribution governing the State in which the Participant was domiciled at the time of the Participant’s death; except to the extent that the Committee may provide otherwise as to any Awards other than Incentive Stock Options.

 

  

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(f)           Modification after Grant.  After the date of grant of an Award, the Committee may, in its sole discretion, modify the terms and conditions of an Award, except to the extent that such modification would adversely affect the rights of a Participant under the Award (except as otherwise permitted under the Plan or Award) or would be inconsistent with other provisions of the Plan.

3.2           Terms and Conditions of Options.  Each Option granted under the Plan must be evidenced by an Award Agreement.  At the time any Option is granted, the Committee will determine whether the Option is to be an Incentive Stock Option described in Code Section 422 or a Nonqualified Stock Option, and the Option must be clearly identified as to its status as an Incentive Stock Option or a Nonqualified Stock Option.  Incentive Stock Options may only be granted to employees of the Company or any Subsidiary.  At the time any Incentive Stock Option granted under the Plan is exercised, the Company will be entitled to legend the certificates representing the shares of Stock purchased pursuant to the Option to clearly identify them as representing the shares purchased upon the exercise of an Incentive Stock Option.  An Incentive Stock Option may only be granted within ten (10) years from the earlier of the date the Plan is adopted or approved by the Company’s stockholders.

(a)           Option Price.  Subject to adjustment in accordance with Section 5.2 and the other provisions of this Section 3.2, the Exercise Price must be as set forth in the applicable Award Agreement, but in no event may it be less than the Fair Market Value on the date the Option is granted.  With respect to each grant of an Incentive Stock Option to a Participant who is an Over 10% Owner, the Exercise Price may not be less than one hundred and ten percent (110%) of the Fair Market Value on the date the Option is granted.  Except as provided in Section 5.2, without approval of the Company’s stockholders the exercise price of an Option may not be amended or modified after the grant of the Option, and an Option may not be surrendered in consideration of, or in exchange for, the grant of a new Option having an exercise price below that of the Option that was surrendered.

  

(b)           Option Term.  Any Incentive Stock Option granted to a Participant who is not an Over 10% Owner is not exercisable after the expiration of ten (10) years after the date the Option is granted.  Any Incentive Stock Option granted to an Over 10% Owner is not exercisable after the expiration of five (5) years after the date the Option is granted.  The term of any Nonqualified Stock Option shall be as specified in the applicable Award Agreement.

(c)           Payment.  Payment for all shares of Stock purchased pursuant to exercise of an Option will be made in any form or manner authorized by the Committee in the Award Agreement or by amendment thereto, including, but not limited to, cash, cash equivalents, or, if the Award Agreement provides, but in any case subject to such procedures or restrictions as the Committee may impose:

(i)           by delivery to the Company of a number of shares of Stock owned by the holder having an aggregate Fair Market Value of not less than the product of the Exercise Price multiplied by the number of shares the Participant intends to purchase upon exercise of the Option on the date of delivery;

 

  

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(ii)            in a cashless exercise through a broker, except if and to the extent prohibited by law as to officers and directors, including without limitation, the Sarbanes-Oxley Act of 2002, as amended; or

(iii)           by having a number of shares of Stock withheld, the Fair Market Value of which as of the date of exercise is sufficient to satisfy the Exercise Price.

Payment must be made at the time that the Option or any part thereof is exercised, and no shares may be issued or delivered upon exercise of an Option until full payment has been made by the Participant.  The holder of an Option, as such, has none of the rights of a stockholder.

(d)           Conditions to the Exercise of an Option.  Each Option granted under the Plan is exercisable by whom, at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specifies in the Award Agreement; provided, however, that subsequent to the grant of an Option, the Committee, at any time before complete termination of such Option, may modify the terms of an Option to the extent not prohibited by the terms of the Plan, including, without limitation, accelerating the time or times at which such Option may be exercised in whole or in part, including, without limitation, upon a change in control and may permit the Participant or any other designated person to exercise the Option, or any portion thereof, for all or part of the remaining Option term, notwithstanding any provision of the Award Agreement to the contrary.

(e)           Termination of Incentive Stock Option.  With respect to an Incentive Stock Option, in the event of Termination of Employment of a Participant, the Option or portion thereof held by the Participant which is unexercised will expire, terminate, and become unexercisable no later than the expiration of three (3) months after the date of Termination of Employment; provided, however, that in the case of a holder whose Termination of Employment is due to death or Disability, one (1) year will be substituted for such three (3) month period; provided, further that such time limits may be exceeded by the Committee under the terms of the grant, in which case, the Incentive Stock Option will be a Nonqualified Option if it is exercised after the time limits that would otherwise apply. For purposes of this Subsection (e), a Termination of Employment of the Participant will not be deemed to have occurred if the Participant is employed by another corporation (or a parent or subsidiary corporation of such other corporation) which has assumed the Incentive Stock Option of the Participant in a transaction to which Code Section 424(a) is applicable.

(f)           Special Provisions for Certain Substitute Options.  Notwithstanding anything to the contrary in this Section 3.2, any Option issued in substitution for an option previously issued by another entity, which substitution occurs in connection with a transaction to which Code Section 424(a) is applicable, may provide for an exercise price computed in accordance with such Code Section and the regulations thereunder and may contain such other terms and conditions as the Committee may prescribe to cause such substitute Option to contain as nearly as possible the same terms and conditions (including the applicable vesting and termination provisions) as those contained in the previously issued option being replaced thereby.

 

  

11

  

 

(g)           No Reload Grants.   Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of shares of Stock to the Company in payment of the exercise price and/or tax withholding obligation under any other option held by a Participant.

3.3           Terms and Conditions of Stock Appreciation Rights.  Each Stock Appreciation Right granted under the Plan must be evidenced by an Award Agreement.  A Stock Appreciation Right entitles the Participant to receive the excess of (1) the Fair Market Value of a specified or determinable number of shares of the Stock at the time of payment or exercise over (2) a specified or determinable price, which may not be less than the Fair Market Value on the date of grant.  A Stock Appreciation Right granted in connection with an Award may only be exercised to the extent that the related Award has not been exercised, paid or otherwise settled.

(a)           Settlement.  Upon settlement of a Stock Appreciation Right, the Company must pay to the Participant, at the discretion of the Committee, the appreciation in cash or shares of Stock (valued at the aggregate Fair Market Value on the date of payment or exercise) as provided in the Award Agreement or, in the absence of such provision, as the Committee may determine.

(b)           Conditions to Exercise.  Each Stock Appreciation Right granted under the Plan is exercisable or payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specifies in the Award Agreement; provided, however, that subsequent to the grant of a Stock Appreciation Right, the Committee, at any time before complete termination of such Stock Appreciation Right, may accelerate the time or times at which such Stock Appreciation Right may be exercised or paid in whole or in part.

(c)           No Repricing.  Except as provided in Section 5.2, without the approval of the Company’s stockholders the price of a Stock Appreciation Right may not be reduced after the grant of the Stock Appreciation Right, and a Stock Appreciation Right may not be surrendered in consideration of, or in exchange for, the grant of a new Stock Appreciation Right having a price below that of the Stock Appreciation Right that was surrendered.

3.4           Terms and Conditions of Other Stock-Based Awards.  An Other Stock-Based Award shall entitle the Participant to receive, at a specified date, payment of an amount equal to all or a portion of either (i) a specified or determinable number of shares of Stock granted by the Committee, (ii) the value of a specified or determinable number of shares of Stock granted by the Committee, (iii) a percentage or multiple of the value of a specified number of shares of Stock determined by the Committee or (iv) dividend equivalents on a specified, or a determinable number, or a percentage or multiple of specified number, of shares of Stock determined by the Committee.  At the time of the grant, the Committee must determine the specified number of shares of Stock or the percentage or multiple of the specified number of shares of Stock, as may be applicable; and the Performance Goals, if any, applicable to the determination of the ultimate payment value of the Other Stock-Based Award. The Committee may provide for an alternate percentage or multiple under certain specified conditions.

 

  

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(a)           Payment.  Payment in respect of Other Stock-Based Awards may be made by the Company in cash or shares of Stock as provided in the applicable Award Agreement or Award Program or, in the absence of such provision, as the Committee may determine.

(b)           Conditions to Payment.  Each Other Stock-Based Award granted under the Plan shall be payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee may specify in the applicable Award Agreement or Award Program; provided, however, that subsequent to the grant of a Other Stock-Based Award, the Committee, at any time before complete termination of such Other Stock-Based Award, may accelerate the time or times at which such Other Stock-Based Award may be paid in whole or in part, subject to the requirements of Section 3.4(c).

3.5           Terms and Conditions of Cash Performance Awards.  A Cash Performance Award shall entitle the Participant to receive, at a specified date, payment of an amount equal to all or a portion of either (i) the value of a specified or determinable number of units (stated in terms of a designated or determinable dollar amount per unit) granted by the Committee, or (ii) a percentage or multiple of a specified or determinable amount determined by the Committee.  At the time of the grant, the Committee must determine the base value of each unit; the number of units subject to a Cash Performance Award, the specified amount and the percentage or multiple of the specified or determinable amount, as may be applicable; and the Performance Goals, if any, applicable to the determination of the ultimate payment value of the Cash Performance Award. The Committee may provide for an alternate base value for each unit or an alternate percentage or multiple under certain specified conditions.

(a)           Payment.  Payment in respect of Cash Performance Awards shall be made by the Company in cash.

(b)           Conditions to Payment.  Each Cash Performance Award granted under the Plan shall be payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee may specify in the applicable Award Agreement or Award Program; provided, however, that subsequent to the grant of a Cash Performance Award, the Committee, at any time before complete termination of such Cash Performance Award, may accelerate the time or times at which such Cash Performance Award may be paid in whole or in part.

3.6           Treatment of Awards on Termination of Service.  Except as otherwise provided by Plan Section 3.2(e), any Award under this Plan to a Participant who has experienced a Termination of Employment, Separation from Service, or termination of some other service relationship with the Company and its Affiliates may be cancelled, accelerated, paid or continued, as provided in the applicable Award Agreement or Award Program, or, as the Committee may otherwise determine to the extent not prohibited by the Plan.  The portion of any Award exercisable in the event of continuation or the amount of any payment due under a continued Award may be adjusted by the Committee to reflect the Participant’s period of service from the date of grant through the date of the Participant’s Termination of Employment, Separation from Service or termination of some other service relationship or such other factors as the Committee determines are relevant to its decision to continue the Award.

  

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SECTION 4  RESTRICTIONS ON STOCK

4.1           Escrow of Shares.  Any certificates representing the shares of Stock issued under the Plan will be issued in the Participant’s name, but, if the applicable Award Agreement or Award Program so provides, the shares of Stock will be held by a custodian designated by the Committee (the “Custodian”).  Each applicable Award Agreement or Award Program providing for transfer of shares of Stock in certificated form to the Custodian must require a Participant to complete an irrevocable stock power appointing the Custodian or the Custodian’s designee as the attorney-in-fact for the Participant for the term specified in the applicable Award Agreement or Award Program, with full power and authority in the Participant’s name, place and stead to transfer, assign and convey to the Company any shares of Stock held by the Custodian for such Participant, if the Participant forfeits the shares under the terms of the applicable Award Agreement or Award Program.  During the period that the Custodian holds the shares subject to this Section, the Participant is entitled to all rights, except as provided in the applicable Award Agreement or Award Program, applicable to shares of Stock not so held.  Any dividends declared on shares of Stock held by the Custodian must, as provided in the applicable Award Agreement or Award Program, be paid directly to the Participant or, in the alternative, be retained by the Custodian or by the Company until the expiration of the term specified in the applicable Award Agreement or Award Program and shall then be delivered, together with any proceeds, with the shares of Stock to the Participant or to the Company, as applicable.

4.2           Restrictions on Transfer.  The Participant does not have the right to make or permit to exist any disposition of the shares of Stock issued pursuant to the Plan except as provided in the Plan or the applicable Award Agreement or Award Program.  Any disposition of the shares of Stock issued under the Plan by the Participant not made in accordance with the Plan or the applicable Award Agreement or Award Program will be void.  The Company will not recognize, or have the duty to recognize, any disposition not made in accordance with the Plan and the applicable Award Agreement or Award Program, and the shares so transferred will continue to be bound by the Plan and the applicable Award Agreement or Award Program.

 

SECTION 5  GENERAL PROVISIONS

5.1           Withholding.  The Company shall deduct from all cash distributions under the Plan any taxes required to be withheld by federal, state or local government.  Whenever the Company proposes or is required to issue or transfer shares of Stock under the Plan or upon the vesting of any Award, the Company has the right to require the recipient to remit to the Company an amount sufficient to satisfy any federal, state and local tax withholding requirements prior to the delivery of any certificate or certificates for such shares or the vesting of such Award.  A Participant may satisfy the withholding obligation in cash, cash equivalents, or if and to the extent the applicable Award Agreement, Award Program, or Committee procedure so provides, a Participant may elect to have the number of shares of Stock he is to receive reduced by, or tender back to the Company, the smallest number of whole shares of Stock which, when multiplied by the Fair Market Value of the shares of Stock, is sufficient to satisfy federal, state and local, if any, withholding obligation arising from exercise or payment of an Award.

 

  

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5.2           Changes in Capitalization; Merger; Liquidation.

(a)           Equity Restructurings.  The number of shares of Stock reserved for the grant of Options, Stock Appreciation Rights and Other Stock-Based Awards; the number of shares of Stock reserved for issuance upon the exercise, settlement, vesting, grant or payment, as applicable, of each outstanding Option, Stock Appreciation Right, and Other Stock-Based Award (if any); the Exercise Price of each outstanding Option, the threshold price of each outstanding Stock Appreciation Right, the specified number of shares of Stock to which each outstanding Option, Stock Appreciation Right, and Other Stock-Based Award pertains, the total number of shares of Stock that may be subject to Awards granted by one or more officers of the Company, and the maximum number of shares as to which Options, Stock Appreciation Rights, and other Awards may be granted to an employee during any calendar year, shall be proportionately adjusted for any nonreciprocal transaction between the Company and the holders of capital stock of the Company that causes the per share value of the shares of Stock underlying an Award to change, such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend (each, an “Equity Restructuring”).

(b)           Other Transactions.  In the event of a merger, consolidation, reorganization, extraordinary dividend, sale of substantially all of the Company’s assets, other change in capital structure of the Company, tender offer for shares of Stock, or a change in control of the Company (as defined by the Committee in the applicable Award Agreement or Award Program), that in each case does not constitute an Equity Restructuring, the Committee may make such adjustments with respect to Awards and take such other action as it deems necessary or appropriate, including, without limitation, the substitution of new Awards, the assumption of awards not originally granted under the Plan, or the adjustment of outstanding Awards, the acceleration of Awards, the removal of restrictions on outstanding Awards, or the termination of outstanding Awards in exchange for the cash value determined in good faith by the Committee of the vested and/or unvested portion of the Award, all as may be provided in the applicable Award Agreement or Award Program or, if not expressly addressed therein, as the Committee subsequently may determine in its sole discretion. Any adjustment pursuant to this Section 5.2 may provide, in the Committee’s discretion, for the elimination without payment therefor of any fractional shares that might otherwise become subject to any Award, but except as set forth in this Section may not otherwise diminish the then value of the Award.

(c)           409A.           Notwithstanding any other provision of this Plan to the contrary, in taking any action pursuant to Subsection (a) or (b) with respect to a Nonqualified Stock Option or a Stock Appreciation Right, the Committee shall consider any provisions of Code Section 409A and the regulations thereunder that are required to be followed as a condition of the Nonqualified Stock Option and the Stock Appreciation Right not being treated as the grant of a new Option or Stock Appreciation Right or a change in the form of payment.  Any adjustment described in the preceding sentence may include a substitution in whole or in part of other equity securities of the issuer and the class involved in such Equity Restructuring in lieu of the shares of Stock that are subject to the Award.

 

  

15

  

 

(d)           Rights of the Company.  The existence of the Plan and the Awards granted pursuant to the Plan shall not affect in any way the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its business or assets, or any other corporate act or proceeding.

5.3           Awards to Non-U.S. Employees.  The Committee shall have the power and authority to determine which Affiliates shall be covered by this Plan and which employees outside the United States of America shall be eligible to participate in the Plan.  The Committee may adopt, amend or rescind rules, procedures or sub-plans relating to the operation and administration of the Plan to accommodate the specific requirements of local laws, procedures, and practices.  Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules, procedures and sub-plans with provisions that limit or modify rights on death, disability or retirement or on Separation from Service or Termination of Employment; available methods of exercise or settlement of an Award; payment of income, social insurance contributions and payroll taxes; the withholding procedures and handling of any stock certificates or other indicia of ownership which vary with local requirements.  The Committee may also adopt rules, procedures or sub-plans applicable to particular Affiliates or locations.

5.4           Compliance with Code. 

(a)           Code Section 422.  All Incentive Stock Options to be granted hereunder are intended to comply with Code Section 422, and all provisions of the Plan and all Incentive Stock Options granted hereunder must be construed in such manner as to effectuate that intent.

(b)           Code Section 409A.  Except to the extent provided otherwise by the Committee, Awards under the Plan are intended to satisfy the requirements of Section 409A of the Code (and the Treasury Department guidance and regulations issued thereunder) so as to avoid the imposition of any additional taxes or penalties under Code Section 409A.  If the Committee determines that an Award, Award Agreement, Award Program, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Code Section 409A, then unless the Committee provides otherwise, such Award, Award Agreement, Award Program, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan, Award Agreement, and / or Award Program will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Code Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant.

 

  

16

  

 

5.5           Right to Terminate Employment or Service.  Nothing in the Plan or in any Award Agreement confers upon any Participant the right to continue as an officer, employee, director, or consultant of the Company or any of its Affiliates or affects the right of the Company or any of its Affiliates to terminate the Participant’s employment or services at any time.

5.6           Non-Alienation of Benefits.  Other than as provided herein, no benefit under the Plan may be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge; and any attempt to do so shall be void.  No such benefit may, prior to receipt by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the Participant.

5.7           Restrictions on Delivery and Sale of Shares; Legends.  Each Award is subject to the condition that if at any time the Committee, in its discretion, shall determine that the listing, registration or qualification of the shares covered by such Award upon any securities exchange or under any state or federal law is necessary or desirable as a condition of or in connection with the granting of such Award or the purchase or delivery of shares thereunder, the delivery of any or all shares pursuant to such Award may be withheld unless and until such listing, registration or qualification shall have been effected.  If a registration statement is not in effect under the Securities Act of 1933 or any applicable state securities laws with respect to the shares of Stock purchasable or otherwise deliverable under Awards then outstanding, the Committee may require, as a condition of exercise of any Option or as a condition to any other delivery of Stock pursuant to an Award, that the Participant or other recipient of an Award represent, in writing, that the shares received pursuant to the Award are being acquired for investment and not with a view to distribution and agree that the shares will not be disposed of except pursuant to an effective registration statement, unless the Company shall have received an opinion of counsel that such disposition is exempt from such requirement under the Securities Act of 1933 and any applicable state securities laws.  The Company may include on certificates representing shares delivered pursuant to an Award such legends referring to the foregoing representations or restrictions or any other applicable restrictions on resale as the Company, in its discretion, shall deem appropriate.

5.8           Listing and Legal Compliance.  The Committee may suspend the exercise or payment of any Award so long as it determines that securities exchange listing or registration or qualification under any securities laws is required in connection therewith and has not been completed on terms acceptable to the Committee.

5.9           Termination and Amendment of the Plan.  The Board of Directors at any time may amend or terminate the Plan without stockholder approval; provided, however, that the Board of Directors shall obtain stockholder approval for any amendment to the Plan that, except as provided under Section 5.2 of the Plan, increases the number of shares of Stock available under the Plan, materially expands the classes of individuals eligible to receive Awards, materially expands the type of awards available for issuance under the Plan, or would otherwise require stockholder approval under the rules of the applicable exchange. Unless the Award Agreement or Award Program explicitly provides otherwise, no such termination or amendment without the consent of the holder of an Award may adversely affect the rights of the Participant under such Award.

 

  

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5.10           Termination of Prior Plans.  The Prior Plans are terminated as of the date of stockholder approval of the Plan as provided in Section 5.11.  If such approval is not obtained, the termination of the Prior Plans will not occur.

5.11           Stockholder Approval.  The Plan shall be submitted to the stockholders of the Company for their approval within twelve (12) months before or after the adoption of the Plan by the Board of Directors of the Company.  If such approval is not obtained, any Award granted hereunder will be void.

5.12           Choice of Law.  The laws of the State of Delaware shall govern the Plan, to the extent not preempted by federal law, without reference to the principles of conflict of laws.

5.13           Effective Date of Plan.  The Plan shall become effective as of the date the Plan was approved by the Board of Directors, regardless of the date the Plan is signed.

IN WITNESS WHEREOF, the Company has executed this Plan, and the Plan has become effective as of February 24, 2012.

	 	THERAGENICS CORPORATION	 
	 	 	 	 
	
 

	By:	/s/ Bruce W. Smith	 
	 	Title: 	Secretary	 

 

18ex10-21.htm

Exhibit 10.21

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) dated as of November 21, 2008 (the “Execution Date”) is made by and between ArQule, Inc., a Delaware corporation (the “Company”) with its principal offices at 19 Presidential Way, Woburn, Massachusetts  01801, and Thomas Chan (“Executive”) whose current principal residential address is 7 Stoney Brook Road, Hopkinton, MA  01748.

 

WHEREAS, the Company desires to employ Executive as its Chief Scientific Officer (CSO) and to enter into an agreement embodying the terms of such employment; and

 

WHEREAS, Executive desires to accept such employment and enter into such an agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Company and Executive (collectively, the “Parties”) hereby agree as follows:

 

	
1.

	
Term of Employment.  The Company hereby agrees to employ Executive, and Executive hereby accepts such employment with the Company, upon the terms and subject to the conditions set forth in this Agreement.  The Agreement shall continue until November 17, 2012 unless earlier terminated in accordance with the provisions of Section 5 of this Agreement (the “Employment Term”).

 

	
2.

	
Title; Duties.  During the Employment Term, Executive shall serve as the CSO of the Company, reporting directly to its Chief Executive Officer (CEO).  Executive hereby agrees to undertake the duties and responsibilities inherent in such position and such other duties and responsibilities consistent with such position as CEO shall from time to time reasonably assign to Executive.

 

	
3.

	
No Conflict.  During the Employment Term, Executive shall devote substantially all of Executive’s business time and efforts to the performance of Executive’s duties hereunder and shall not, directly or indirectly, engage in any other business, profession or occupation for compensation or otherwise which would conflict with the rendition of such duties.  Notwithstanding the foregoing, Executive may engage in other activities, such as activities involving charitable, educational, religious, trade association, civic and similar types of organizations, speaking engagements and membership on the Board of Directors or equivalent of other organizations (“Outside Activities”), provided that Executive shall obtain CEO’s written consent before engaging in any such Outside Activities and provided further that Executive’s participation in such Outside Activities shall not be in violation of any of Executive’s obligations to the Company, including but not limited to those set forth in the Company’s Code of Conduct.  Executive represents and warrants that Exhibit A attached hereto states all Outside Activities which Executive is participating in as of the Effective Date, and to which the Company hereby consents.

 

  

  

  

 

4.           Compensation and Benefits.

 

	
  

	
4.1.

	
Base Salary.  During the Employment Term, the Company shall pay Executive for Executive’s services hereunder a base salary at the initial annual rate of $309,000.00, payable in substantially equal installments in accordance with the Company’s usual payment practices and subject to annual review and adjustment upward or downward by the Company in its sole discretion; provided, however, that an adjustment downward shall only occur in connection with a percentage decrease in salary affecting all or substantially all senior management employees of the Company.  Such amount (as adjusted from time to time in accordance with this Section 4.1) shall be referred to herein as the “Base Salary.”

 

	
  

	
4.2.

	
Bonus Compensation.  For each calendar year during the Employment Term, Executive shall be eligible to receive a discretionary annual cash bonus, the target amount of which shall be 30 percent of Executive’s Base Salary.  The award of an annual cash bonus, if any, shall be in the Company’s sole discretion and shall be based on Company and individual performance.  The annual cash bonus typically is paid during the first quarter of the following calendar year, and, except as otherwise expressly provided herein, Executive must be actively employed with the Company as of the payment date in order to receive the discretionary annual cash bonus, if any.  Executive shall also be eligible to participate in any and all other bonus plans and packages that are made available to the Company’s executives, on a basis consistent with Executive’s position and then-current Base Salary and in accordance with the policies and practices of the Company and the Company’s Board of Directors.

 

	
  

	
4.3.

	
Stock Option Grant.  As further compensation for Executive’s services hereunder, the Company shall grant to Executive on the Effective Date a stock option (the “Execution Stock Option”) to purchase 100,000 shares of the Company’s Common Stock, $0.01 par value per share (the “Common Stock”), pursuant to the Company’s Amended and Restated 1994 Equity Incentive Plan (the “Plan”) subject to a vesting schedule pursuant to which rights to twenty-five percent of the shares shall vest annually on the next four anniversaries of the Effective Date and the terms and other conditions set forth in substantially the form of Option Certificate attached hereto as Exhibit B.  The method of determining the exercise price of the Execution Stock Option is set forth in the attached Exhibit C.  In its sole discretion, the Company may grant to Executive from time to time other stock options to purchase additional shares of Common Stock, also pursuant to the Plan and such other terms and conditions set forth at the time of such grant (the Execution Stock Option and such other stock options, collectively, the “Stock Options”) and may also grant stock awards.  The Execution Stock Option is intended to be an “incentive stock option” to the extent permissible under Section 422 of the Internal Revenue Code of 1986 (the “Code”), including the $100,000 limitation of Code Section 422(d).

 

  

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4.4.

	
Executive Benefits.  During the Employment Term, Executive shall be eligible to participate in all employee benefit plans and perquisite plans and policies (including fringe benefits, 401(k) plan participation. life, health dental, accident and short and long term disability insurance) which the Company may, in its sole and absolute discretion, make available to its similarly-situated employees, whether such benefits are now in effect or hereafter adopted, subject to the terms and conditions of each such plan or policy.  The Company may alter, modify, add to or delete its employee benefit plans and its perquisite plans and policies at any time as it, in its sole judgment, determines to be appropriate, without recourse by Executive.

 

	
  

	
4.5.

	
Paid Time Off.  Executive shall be entitled to four weeks (20 working days) of paid time off (“PTO”) per annum during the Employment Term, which will accrue pursuant to the Company’s policies and practices and is to be taken at such time or times as shall be mutually convenient for the Company and Executive; provided, however, that the Company may elect to increase the annual time to which Executive shall be entitled to PTO.  Unused PTO shall be allocated pursuant to the Company’s policies and practices.

 

	
  

	
4.6.

	
Business Expenses and Perquisites.  Upon delivery of adequate documentation of expenses incurred in accordance with the policies and practices of the Company, Executive shall be entitled to reimbursement by the Company for reasonable travel, entertainment and other business expenses incurred by Executive in the performance of Executive’s duties hereunder in accordance with such policies as the Company may from time to time have in effect.

 

	
  

	
4.7.

	
Deductions and Withholdings.  Notwithstanding any other provision of this Agreement, any payments or benefits hereunder shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions, as the Company reasonably determines it should withhold pursuant to any applicable law or regulation.

 

	
  

	
4.8.

	
Annual Review.  Executive shall receive an annual review of his performance by CEO of the Company.

5.           Termination.

 

	
  

	
5.1.

	
Without Cause by the Company. The Company may terminate Executive’s employment hereunder at any time without Cause (as defined in Section 5.2) upon not fewer than fourteen (14) days prior written notice from the Company to Executive.  The effective date of Executive’s termination shall be referred to herein as the “Termination Date.”  If Executive’s employment is terminated by the Company pursuant to this Section 5.1, all compensation and benefits provided to Executive by the Company pursuant to this Agreement or otherwise shall cease as of the Termination Date, except that the Company shall pay Executive all Base Salary owed to Executive for work performed prior to the Termination Date, plus the cash value of any accrued but unused PTO, as of the Termination Date.

 

  

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For purposes of clarity, a termination of Executive’s employment by reason of the expiration of the Employment Term as set forth in Section 1 shall not be considered a termination without Cause.

 

	
  

	
5.1.1.

	
The Severance Package.  In the event the Company terminates Executive’s employment without Cause, and provided that Executive first executes a general release in a form and of a scope reasonably acceptable to the Company within sixty (60) days of the Termination Date, the Company shall provide the following severance benefits to Executive (the “Severance Package”):

 

	
  

	
(a)

	
A payment (the “Severance Payment”) in the following amount:

 

	
  

	
(i)

	
An amount equal to Executive’s Base Salary through the end of the twelve-month period commencing on the Termination Date; plus

 

	
  

	
(ii)

	
An amount equal to the average annual discretionary bonus, if any, paid by the Company to Executive with respect to the two years preceding the year in which the Termination Date occurs.  Bonus amounts paid to Executive by the Company prior to the Effective Date shall be included in the calculation set forth in the preceding sentence. Attached at Exhibit D is a series of examples of the manner in which this portion of the Severance Payment shall be calculated.

 

	
  

	
(b)

	
Payment of the costs associated with continuing the benefits which Executive is entitled to receive pursuant to Section 4.4 of this Agreement at the level in effect as of the Termination Date (subject to any employee contribution requirements applicable to Executive on the Termination Date) through the twelve-month period commencing on the Termination Date, to the extent such benefits may continue beyond the Termination Date (for example, among other things, Executive’s coverage under the Company’s life and disability insurance policies will terminate as of the Termination Date).

 

	
  

	
(c)

	
The Severance Payment shall be paid to Executive in substantially equal installments, according to the Company’s regular payroll schedule over a twelve-month period, beginning on the first regular payroll date following the effective date of the general release executed by Executive as provided above, subject to Section 5.8 below.

 

  

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5.1.2.

	
Deemed Termination.  For purposes of this Section 5.1, a “termination without Cause” by the Company shall be deemed to have occurred where Executive has complied with the “Deemed Termination Process” (hereinafter defined) following the occurrence of any of the following events (a “Deemed Termination Condition”) without the Executive’s prior written consent:

 

	
  

	
(a)

	
A diminution of Executive’s Base Salary below $309,000 on an annualized basis (other than in connection with a Company-wide decrease in salary affecting all or substantially all senior management employees of the Company);

 

	
  

	
(b)

	
A diminution in Executive’s authority, duties, responsibilities without Cause;

 

	
  

	
(c)

	
A material change in the geographic location of Executive’s place of employment (for purposes of this paragraph, a “material change” shall be deemed to occur only if the Company relocates Executive’s place of employment by a distance of more then fifty (50) miles, excluding any relocation to the Company’s existing offices in Woburn, MA); or

 

	
  

	
(d)

	
The Company materially breaches any of its obligations to Executive pursuant to this Agreement.

 

	 	
 

	“Deemed Termination Process” shall mean that (i) the Executive reasonably determines in good faith that a Deemed Termination Condition has occurred; (ii) the Executive provides written notice to the Company of the occurrence of the Deemed Termination Condition within 45 days of the initial occurrence of such condition; (iii) the Executive cooperates in good faith with the Company’s efforts, for a period not fewer than 30 days following such notice (the “Cure Period”), to remedy the Deemed Termination Condition; (iv) notwithstanding such efforts, the Deemed Termination Condition continues to exist; and (v) the Executive provides the Company with a Notice of Termination, which establishes a Termination Date within 30 days after the end of the Cure Period.  If the Company cures the Deemed Termination Condition during the Cure Period, a “termination without Cause” shall be deemed not to have occurred.

 

	
  

	
5.2.

	
For Cause by the Company.  Notwithstanding any other provision of this Agreement, Executive’s employment hereunder may be terminated by the Company at any time for Cause.  For purposes of this Agreement, “Cause” shall mean: (i) Executive’s failure to follow the reasonable instructions of CEO or otherwise perform Executive’s duties hereunder for thirty (30) days after a written demand for performance is delivered to Executive on behalf of the Company, which demand specifically identifies the manner in which the Company alleges that Executive has not substantially followed such instructions or otherwise performed Executive’s duties; (ii) material violation by Executive of the Company’s Code of Conduct; (iii) Executive’s willful misconduct that is materially injurious to the Company (whether from a monetary perspective or otherwise); (iv) Executive’s willful commission of an act constituting fraud with respect to the Company; (v) conviction of Executive for a felony under the laws of the United States or any state thereof; or (vi) Executive’s material breach of Executive’s obligations under Sections 7 or 8 hereof.

 

  

5

  

 

	 	
 

	
If Executive’s employment is terminated by the Company for Cause, all compensation and benefits provided to Executive by the Company pursuant to this Agreement or otherwise shall cease as of the Termination Date, except that the Company shall pay Executive all Base Salary owed to Executive for work performed prior to the Termination Date, plus the cash value of any accrued but unused PTO, as of the Termination Date.

 

	
  

	
5.3.

	
Termination by Executive.  Executive’s employment hereunder may be terminated by Executive at any time upon not fewer than 30 days prior written notice from Executive to the Board.  Executive agrees that such notice period is reasonable and necessary in light of the duties assumed by Executive pursuant to this Agreement and fair in light of the consideration Executive is receiving pursuant to this Agreement.  If Executive terminates Executive’s employment with the Company pursuant to this Section 5.3, all compensation and benefits provided to Executive by the Company pursuant to this Agreement or otherwise shall cease as of the Termination Date, except that the Company shall pay Executive all amounts owed to Executive for work performed prior to the Termination Date, plus the cash value of any accrued but unused PTO as of the Termination Date.

 

	
  

	
5.4.

	
Disability.  Subject to the requirements of the Americans with Disabilities Act, Massachusetts General Laws Chapter 151B and any other applicable laws, Executive’s employment hereunder may be terminated by the Company at any time in the event of the Disability of Executive.  For purposes of this Agreement, “Disability” shall mean the inability of Executive to perform the essential functions of Executive’s position, with or without reasonable accommodation, due to physical or mental disablement which continues for a period of four (4) consecutive months during the Employment Term, as determined by an independent qualified physician mutually acceptable to the Company and Executive (or Executive’s personal representative) or, if the Company and Executive (or such representative) are unable to agree on an independent qualified physician, as determined by a panel of three physicians, one designated by the Company, one designated by Executive (or such representative) and one designated by the two physicians so designated.  If Executive’s employment is terminated by the Company for Disability, all compensation and benefits provided to Executive by the Company pursuant to this Agreement or otherwise shall cease as of the Termination Date, except that (a) the Company shall pay Executive all Base Salary owed to Executive for work performed prior to the Termination Date, plus the cash value of any accrued but unused PTO, as of the Termination Date; (b) in the event the Company terminates Executive by reason of Disability after a calendar year has been completed but before the discretionary annual cash bonus, if any, relating to that calendar year as provided in Section 4.2 above has been paid, the Company shall pay Executive such discretionary annual cash bonus amount, if awarded; and (c) provided that Executive first executes a general release in a form and of a scope reasonably acceptable to the Company within sixty (60) days of the Termination Date, Executive shall be entitled to the Severance Package, except that the portion of the Severance Payment based on Executive’s Base Salary paid as a part of the Severance Package shall be reduced by the amount of Base Salary, salary continuation (short-term disability), and cash disability benefits (long-term disability) paid to Executive for the corresponding period under the Company’s employee benefit plans as then in effect.

 

  

6

  

 

	
  

	
5.5.

	
Death.  Executive’s employment hereunder shall automatically terminate in the event of Executive’s death.  If Executive’s employment is terminated by the death of Executive, all compensation and benefits provided to Executive by the Company pursuant to this Agreement or otherwise shall cease as of the Termination Date, except that (a) the Company shall pay to Executive’s estate or legal representative all Base Salary owed to Executive for work performed prior to the Termination Date, plus the cash value of any accrued but unused PTO, as of the Termination Date; (b) in the event the Company terminates Executive by reason of Death after a calendar year has been completed but before the discretionary annual cash bonus, if any, relating to that calendar year as provided in Section 4.2 above has been paid, the Company shall pay Executive such discretionary annual cash bonus amount, if awarded; and (c) provided that Executive’s estate first executes a general release in a form and of a scope reasonably acceptable to the Company within ninety (90) days of the Termination Date, Executive shall be entitled to the Severance Package.

 

	
  

	
5.6.

	
Notice of Termination.  Any purported termination of employment by the Company or by Executive shall be communicated by written Notice of Termination to the other Party in accordance with Section 11 hereof.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated.

 

	
  

	
5.7.

	
Survival.  The provisions of Sections 7, 8 and 9 shall survive the termination of this Agreement.

 

	
  

	
5.6

	
Section 409A of the Code.  It is the intention of the parties to this Agreement that, to the extent possible, no payment or entitlement pursuant to this Agreement will give rise to any adverse tax consequences to Executive under Section 409A of the Internal Revenue Code (“Code”) and Department of Treasury regulations and other interpretive guidance issued thereunder, including that issued after the date hereof (collectively, “Section 409A”).  The Agreement shall be interpreted to that end and consistent with that objective.  Notwithstanding any other provision herein, if Executive is a “specified employee” as defined in, and pursuant to, Treas. Reg. Section 1.409A-1(i) on the Termination Date, no payment of compensation under this Agreement shall be made to Executive during the period lasting six (6) months from the Termination Date.  If any payment to Executive is delayed pursuant to the foregoing sentence, such payment instead shall be made in a lump sum payment on the first business day following the expiration of the six-month period referred to in the prior sentence, and, as of the first business day following the expiration of such six-month period, all such payments shall resume in accordance with the schedule for such payments.

 

  

7

  

 

	
  

	
Each payment under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code.  To the extent any reimbursement or in-kind benefit due to Executive under this Agreement constitutes “deferred compensation” under Section 409A of the Code, any such reimbursement or in-kind benefit shall be paid to Executive in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv).

	
6.

	
Accelerated Vesting in Change of Control.  In the event that both (i) a Change of Control occurs and (ii) the Company terminates Executive’s employment without Cause (or is deemed to terminate Executive’s employment without Cause) within the period commencing three months prior to the latest possible date of a Change of Control and ending one year after the latest possible date of a Change of Control, any Stock Option held by Executive shall become immediately exercisable as to all option shares without regard to the vesting schedule set forth on the applicable Option Certificate, and any shares of Restricted Stock previously granted shall immediately be free and clear of any restrictions.  For purposes of this Agreement, any one of the following events shall be considered a “Change of Control” of the Company:

 

	
  

	
(a)

	
Acquisition by any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934) of any amount of the Company’s Common Stock so that such person holds or controls fifty percent (50%) or more of the Company’s Common Stock;

 

	
  

	
(b)

	
Merger or consolidation of the Company with or into any other entity in which the holders of the Company’s outstanding shares of capital stock immediately before such merger or consolidation do not, immediately after such merger or consolidation, retain capital stock representing a majority of the voting power of the surviving entity of such merger or consolidation;

 

	
  

	
(c)

	
Sale of all or substantially all of the assets of the Company to a third party;

 

	
  

	
(d)

	
Within any twenty-four (24) month period, the election by the stockholders of the Company of twenty percent (20%) or more of the directors of the Company other than pursuant to nomination by the Board, or its designated committee; or

 

	
  

	
(e)

	
Execution of a legally binding, definitive agreement approved by the Board of Directors providing for any of the events set forth in (a), (b), (c) or (d) above.

 

  

8

  

 

7.           Confidentiality.

 

	
  

	
7.1.

	
Definitions.  As used herein, the term “Confidential Information” shall mean any and all ideas, inventions, information, know-how, compounds, materials and other items (whether patentable or not) that are confidential or proprietary to the Company (or to its affiliates, collaborators, consultants, suppliers, or customers) whether disclosed in written, oral, tangible or other form and whether or not labeled or otherwise identified as confidential or proprietary.  Confidential Information shall include, without limitation, the following to the extent proprietary to the Company (or to its affiliates, collaborators, consultants, suppliers or customers) and not publicly available:

 

	
  

	
(a)

	
inventions, trade secrets, discoveries and computer programs, and any improvements or modifications thereto;

 

	
  

	
(b)

	
engineering, research, development and design projects, data, designs, drawings and specifications;

 

	
  

	
(c)

	
manufacturing, development and other technical processes, applications, methods, apparatus and equipment;

 

	
  

	
(d)

	
business information such as lists of approved components and sources, price lists, product costs, production schedules, business plans, sales information, profit and loss information, and customer and collaborator lists;

 

	
  

	
(e)

	
any and all reagents, substances, chemical compounds, subcellular constituents, cells or cell lines, organisms and progeny, and mutants, as well as any and all derivatives or replications derived from or relating to such materials; and

 

	
  

	
(f)

	
any and all information, materials and other items supplied by third parties to the Company (or generated by the Company for third parties) under an obligation of confidentiality.

 

	
  

	
7.2.

	
Non-Disclosure.  Executive shall not at any time (whether during or after Executive’s employment with the Company) disclose or use any Confidential Information for Executive’s own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other organization, entity or enterprise (a “Person”) other than the Company.

 

  

9

  

 

	
  

	
7.3.

	
Exceptions.  Notwithstanding any other provision in the Agreement, Confidential Information shall not include any information or material which:

 

	
  

	
(a)

	
is or becomes generally available to the public other than as a result of disclosure thereof by Executive;

 

	
  

	
(b)

	
is lawfully received by Executive on a non-confidential basis from a third party that is not itself under an obligation of confidentiality or non-disclosure to the Company with respect to such information;

 

	
  

	
(c)

	
can be shown by Executive to have been independently developed by Executive;

 

	
  

	
(d)

	
Executive establishes by competent proof was in Executive’s possession at the time of disclosure by the Company and was not acquired, directly or indirectly from the Company; or

 

	
  

	
(e)

	
is required to be publicly disclosed by law or by regulation; provided, however, that in such event Executive shall provide the Company with prompt advance notice of such disclosure so that the Company has the opportunity if it so desires to seek a protective order or other appropriate remedy.

 

	
  

	
7.4.

	
Return of Company Property.  Executive agrees that upon termination of Executive’s employment hereunder, Executive shall return immediately to the Company any proprietary materials, any materials containing Confidential Information and any other Company property then in Executive’s possession or under Executive’s control, including, without limitation all notes, drawings, lists, memoranda, magnetic disks or tapes, or other recording media containing such Confidential Information, whether alone or together with non-confidential information, all documents, reports, files, memoranda, records, software, credit cards, door and file keys, telephones, PDAs, computers, computer access codes, disks and instructional manuals, or any other physical property that Executive received, prepared, or helped prepare in connection with Executive’s employment under this Agreement.  Upon termination, Executive shall not retain any copies, duplicates, reproductions, or excerpts of Confidential Information, nor shall Executive show or give any of the above to any third party.  Executive further agrees that Executive shall not retain or use for Executive’s account at any time any trade name, trademark, service mark, logo or other proprietary business designation used or owned in connection with the business of the Company.

 

	
8.

	
Non-Competition; Non-Solicitation.

 

	
  

	
8.1

	
Non-Competition.  During Executive’s employment with the Company or any of its affiliates and for a period of one year after the termination or cessation of such employment for any reason, Executive shall not directly or indirectly, alone or through any other organization or entity, including without limitation becoming an employee, investor (except as provided below), officer, agent, partner, member or director of any such organization or entity, engage or prepare to engage in any Competitive Activity.  For purposes of this Agreement, the term “Competitive Activity” means any area of business that the Company or any of its affiliates worldwide (which affiliates shall not include any entity that purchases the Company or otherwise acquires all or substantially all of the Company’s assets and any of such purchasing or acquiring entity’s affiliates) conducted or actively planned to conduct at any time during Executive’s employment, including but not limited to oncological drug development and kinase platform drug development.  Notwithstanding the foregoing, Executive shall not be deemed to be engaged directly or indirectly in any Competitive Activity if Executive participates in any such business solely as a passive investor in up to one percent (1%) of the equity securities of a company or partnership.  For purposes of this Section, Executive shall be deemed to be engaging in Competitive Activity as of the date that Executive accepts employment or consulting engagement with any other person or entity, regardless of when Executive actually begins providing services under such employment or consulting engagement, but only if Executive is preparing to engage in Competitive Activity during such period.  Nothing in this Section shall be construed to affect in any way Executive’s confidentiality obligations as set forth in Section 7 of this Agreement.  Nothing in this Section shall be construed to prohibit Executive from seeking permission from the Company to engage in any activity which may otherwise fall within the definition of Competitive Activity as set forth in this Section, provided that a grant of permission from the Company, if any, must be in writing.

 

  

10

  

 

	
  

	
8.2

	
Non-Solicitation.  During Executive’s employment with the Company or any of its affiliates and for a period of one year after the termination or cessation of such employment for any reason thereafter, Executive will not directly or indirectly: (a) solicit, divert or take away, or attempt to divert or take away, the business or patronage of any of the clients, customers or accounts, or prospective clients, customers or accounts of the Company or its affiliates with whom the Company or its affiliates has or is actively negotiating a written agreement as of the Termination Date; (b) recruit, solicit or hire any person who is, or within the six (6) month period preceding the Termination Date was, an officer, director or employee of the Company or any of its affiliates or was a scientific consultant with an exclusive arrangement with the Company or any of its affiliates; or (c) induce or attempt to induce any officer, director, employee consultant, agent or representative of the Company or any of its affiliates to discontinue his or her relationship with the Company or any of its affiliates or to commence an employment or other business relationship with another entity.

	
9.

	
Other Agreements.  Executive hereby represents to the Company that Executive is not bound by any agreement or any other previous or existing business relationship which conflicts with or prevents the full performance of Executive’s duties and obligations to the Company (including Executive’s duties and obligations under this or any other agreement with the Company).  Executive understands that the Company does not desire to acquire from Executive any trade secrets or confidential business information Executive may have acquired from others.  Therefore, Executive agrees that during the Employment Term and thereafter, Executive will not improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer, or any other person or entity with whom Executive has an agreement or to whom Executive owes a duty to keep such information in confidence.

 

  

11

  

 

	
10.

	
Injunctive Relief.  Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Sections 7 and 8 would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining orders, temporary or permanent injunctions or any other equitable remedy which may then be available.  In addition, in the event that Executive breaches any provision of Sections 7 or 8 of this Agreement, the applicable time periods set forth in such Sections, shall be extended for a period of time equal to the period of time during which Executive was in breach of the Agreement, up to a maximum of twelve months, and if the Company is required to seek relief from such breach in any judicial proceedings, then such time limitations shall extend for a period of time equal to the pendency of any such proceedings, including all appeals, up to a maximum of twenty-four months.  In connection with the restrictions in Sections 7 and 8, Executive represents that his economic means are such that those provisions will not prevent him from providing for himself and his family on a basis satisfactory to Executive. .  Further, in addition to any other remedies available to the Company, in the event Executive breaches any of the provisions of this Agreement, including but not limited to Sections 7 or 8, Executive agrees that any post-termination payments and benefits flowing to Executive from the Company, including but not limited to the Severance Package, shall be subject to disgorgement by the Employee and/or may be terminated, reduced, or cancelled by the Company.

	
11.

	
Notices.  Any notice hereunder by either Party to the other shall be given in writing by personal delivery, telex, facsimile, overnight courier or certified mail, return receipt requested, addressed, if to the Company, to the attention of CEO at the Company’s executive offices or to such other address as the Company may designate in writing at any time or from time to time to Executive, and if to Executive, to Executive’s most recent address on file with the Company.  Notice shall be deemed given, if by personal delivery or by overnight courier, on the date of such delivery or, if by telex or facsimile, on the business day following receipt of answer back or facsimile information or, if by certified mail, on the date shown on the applicable return receipt.

 

	
12.

	
Assignment.  This Agreement may not be assigned by either Party without the prior written consent of the other Party, provided, however, that the Company may assign this Agreement without Executive’s consent in the event of a merger, acquisition, or transfer of all or substantially all of the assets of the Company with or to a third party (a “Merger”).  In the event of a Merger, the Company shall require in writing any successor Person to assume and agree to perform this Agreement; failure to so assume and agree shall constitute a Deemed Termination Condition for purposes of Section 5.1.2(d).

 

  

12

  

 

	
13.

	
Entire Agreement.  This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and there have been no oral or other agreements of any kind whatsoever as a condition precedent or inducement to the signing of this Agreement or otherwise concerning this Agreement or the subject matter hereof.

 

  

13

  

 

	
14.

	
Expenses.  The Parties shall each pay their own respective expenses incident to the enforcement or interpretation of, or dispute resolution with respect to, this Agreement, including all fees and expenses of their counsel for all activities of such counsel undertaken pursuant to this Agreement.

 

	
15.

	
Waivers and Further Agreements.  Any waiver of any terms or conditions of this Agreement shall not operate as a waiver of any other breach of such terms or conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof; provided, however, that no such written waiver, unless it, by its own terms, explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provision being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the Party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision.  Each of the Parties agrees to execute all such further instruments and documents and to take all such further action as the other Party may reasonably require in order to effectuate the terms and purposes of this Agreement.

 

	
16.

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

 

	
17.

	
Severability.  If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.

 

	
18.

	
Counterparts.  This Agreement maybe executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

	
19.

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

 

  

14

  

 

	
20.

	
Governing Law and Forum.  This Agreement shall in all events and for all purposes be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts without regard to any choice of law principle that would dictate the application of the laws of another jurisdiction.  Any action, suit or other legal proceeding which may be commenced to resolve any matter arising under or relating to any provision of this Agreement shall be commenced only in a court of the Commonwealth of Massachusetts (or, if appropriate, a federal court located within Massachusetts), and the parties hereby consent to the jurisdiction of such court with respect to any action, suit or proceeding commenced in such court.

 

IN WITNESS WHEREOF, the Parties have executed or caused to be executed this Agreement as of the Execution Date.

 

	ARQULE, INC.	 	EXECUTIVE	 
	By: 	
/s/ Paolo Pucci

	 	By:  	/s/ Thomas C. Chan	 
	Name: Paolo Pucci	 	Name: Thomas C. Chan	 
	Title: Chief Executive Officer	 	 	 

 

  

15

  

 

EXHIBIT A

 

Outside Activities

 

	
  

	
1.

	
National Institutes of Health-National Cancer Institute:  Chair and Study Section member

 

	
  

	
2.

	
Department of Defense – U.S. Army Prostate and Breast Cancer Scientific Advisory Panels:  Chair and Panel member

 

	
  

	
3.

	
Hope Funds for Cancer Research:  Study Section member

 

	
  

	
4.

	
University of Massachusetts:  Scientific Advisory Board member

 

	
  

	
5.

	
Longy School of Cambridge:  Board of Trustee member

 

  

16

  

 

EXHIBIT B

 

ARQULE, INC. AMENDED AND RESTATED 1994 EQUITY INCENTIVE PLAN

Stock Option Terms And Conditions

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES 

WHICH HAVE BEEN ISSUED UNDER THE 1994 EQUITY INCENTIVE PLAN

AND REGISTERED UNDER THE SECURITIES ACT OF 1933.

	
1.

	
Plan Incorporated by Reference.  This Option is issued pursuant to the terms of the Plan and may be amended as provided in the Plan.  Capitalized terms used and not otherwise defined in this certificate have the meanings given to them in the Plan.  This certificate does not set forth all of the terms and conditions of the Plan, which are incorporated herein by reference.  The Committee administers the Plan and its determinations regarding the operation of the Plan are final and binding.  Copies of the Plan may be obtained upon written request without charge from the Company.  This Option is intended to be an “incentive stock option” to the extent permissible under Section 422 of the Internal Revenue Code of 1986 (the “Code”), including the $100,000 limitation of Code Section 422(d).

	
2.

	
Option Price.  The price to be paid for each share of Common Stock issued upon exercise of the whole or any part of this Option is the Option Price set forth on the face of this certificate.

	
3.

	
Vesting Schedule.  This Option may be exercised at any time and from time to time over the number of shares and in accordance with the vesting schedule set forth on the face of this certificate, but only for the purchase of whole shares, provided that if Option Holder’s employment is terminated by the Company pursuant to Section 5.1 (including 5.1.2),  5.3 or 5.4 of the Employment Agreement between the Company and Option Holder dated April 15, 2008  (“Employment Agreement”),  then this Option may be exercised at any time and from time to time over the number of shares and in accordance with the vesting schedule set forth in the applicable Section of the Employment Agreement and subject to the terms and conditions of such applicable Section of the Employment Agreement.  Notwithstanding the foregoing, this Option may not be exercised as to any shares after the Expiration Date.

	
4.

	
Method of Exercise.  To exercise this Option, the Optionholder shall deliver written notice of exercise to the Company specifying the number of shares with respect to which the Option is being exercised accompanied by payment of the Option Price for such shares in cash, by certified check or in such other form, including shares of Common Stock of the Company valued at their Fair Market Value on the date of delivery, as the Committee may approve.  Promptly following such a notice, the Company will deliver to the Optionholder a certificate representing the number of shares with respect to which the Option is being exercised.

 

  

17

  

 

	
5.

	
Rights as a Stockholder or Employee.  The Option Holder shall not have any rights in respect of shares as to which the Option shall not have been exercised and payment made as provided above.  The Option Holder shall not have any rights to continued employment by the Company or any group company by virtue of the grant of this Option.

	
6.

	
Recapitalization, Mergers, Etc.  As provided in the Plan, in the event of a corporate transaction affecting the Company's outstanding Common Stock, the Committee shall equitably adjust the number and kind of shares subject to this Option and the exercise price hereunder or make provision for a cash payment.  If such transaction involves a consolidation or merger of the Company with another entity, the sale or exchange of all or substantially all of the assets of the Company or a reorganization or liquidation of the Company, then in lieu of the foregoing, the Committee may upon written notice to the Option Holder provide that this Option shall terminate on a date not less than 20 days after the date of such notice unless theretofore exercised.  In connection with such notice, the Committee may in its discretion accelerate or waive any deferred exercise period.

	
7.

	
Option Not Transferable.  This Option is not transferable by the Option Holder other than upon the death of the Option Holder, in accordance with the Plan.

	
8.

	
Exercise of Option After Termination of Employment  Except as expressly set forth in this Paragraph 9 of this Agreement, if the Option Holder’s employment with (a) the Company, (b) a corporation (or parent or subsidiary corporation of such corporation) issuing or assuming a stock option in a transaction to which section 424(a) of the Code applies, is terminated for any reason, the Option Holder may exercise the rights which were available to the Option Holder at the time of such termination only within three months from the date of termination.  Upon the death of the Option Holder, his or her Designated Beneficiary shall have the right, at any time within twelve months after the date of death, to exercise in whole or in part any rights that were available to the Option Holder at the time of death.  It is understood and agreed,  however,  that any part of the Option intended to be an “incentive stock option” that is not exercised within three months following the date of termination will lose incentive stock option qualification and automatically convert to a Nonstatutory Stock Option for the remainder of the applicable exercise period.  Notwithstanding the foregoing, no rights under this Option may be exercised after the Expiration Date.

	
9.

	
Exercise of Option Upon Retirement.  Upon Retirement, as defined below, any unvested shares set forth on the face of this certificate shall vest, and this Option may be exercised in whole or part until the earlier of up to two years from the date of Retirement or the Expiration Date.  “Retirement” as to any Option Holder shall mean such person’s leaving the employment of the Company or an Affiliate after reaching age 55 with ten (10) years of full-time continuous service with the Company; provided, that the sum of the Option Holder’s age plus the number of years of continuous service equals or exceed seventy (70).

 

  

18

  

 

	
10.

	
Compliance with Securities Laws.  It shall be a condition to the Option Holder's right to purchase shares of Common Stock hereunder that the Company may, in its discretion, require (a) that the shares of Common Stock reserved for issue upon the exercise of this Option shall have been duly listed, upon official notice of issuance, upon any national securities exchange or automated quotation system on which the Company's Common Stock may then be listed or quoted, (b) that either (i) a registration statement under the Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in the opinion of counsel for the Company, the proposed purchase shall be exempt from registration under that Act and the Option Holder shall have made such undertakings and agreements with the Company as the Company may reasonably require, and (c) that such other steps, if any, as counsel for the Company shall consider necessary to comply with any law applicable to the issue of such shares by the Company shall have been taken by the Company or the Option Holder, or both.  The certificates representing the shares purchased under this Option may contain such legends as counsel for the Company shall consider necessary to comply with any applicable law.

	
11.

	
Payment of Taxes.  To the extent applicable: The Option Holder shall pay to the Company, or make provision satisfactory to the Company for payment of, any taxes required by law to be withheld with respect to the exercise of this Option.  The Committee may, in its discretion, require any other Income taxes imposed on the sale of the shares to be paid by the Option Holder.  In the Committee's discretion, such tax obligations may be paid by entering into some other arrangements to ensure that such amount is available to them or it (whether by authorizing the sale of some or all of the shares and payment to the Company or the member of the Group (as the case may be) of the requisite amount of the proceeds of sale or otherwise). The Company and any group company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Option Holder.

 

	
12.

	
Transfer of Personal Data.  By acknowledging and accepting this award, you understand that, in order to perform its requirements under the Plan, the Company may transfer and process personal data and/or sensitive personal data about you.  Such data may include but is not limited to personal and financial data about you and sale of shares purchased under the Plan from time to time.  You also hereby give explicit consent to the Company to transfer and process any such personal data and/or sensitive data outside the country in which you work or are employed including countries which may be outside the European Economic Area where there may be no legislation in relation to an individual's rights concerning personal data.  This may also apply to other companies in the Company group, third party advisers and administrators or regulatory authorities.

  

19

  

 

	
13.

	
Special Tax Consequences.  The Option Holder acknowledges that, to the extent the aggregate Fair Market Value of stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code), including this Option, are exercisable for the first time by the Option Holder during any calendar year (under the Plan and all other incentive stock option plans of the Company, any Subsidiary and any parent corporation thereof (within the meaning of Section 422 of the Code)) exceeds $100,000, such options shall be treated as Nonstatutory Options to the extent required by Section 422 of the Code.  The Option Holder further acknowledges that the rule set forth in the preceding sentence shall be applied by taking options into account in the order in which they were granted.  For purposes of these rules, the Fair Market Value of stock shall be determined as of the time the Option with respect to such stock is granted.

 

  

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 EXHIBIT C

 

Determination of Option Price

 

The exercise price of the Execution Stock Option is the Fair Market Value of ArQule’s Common Stock (as defined below) as of the Effective Date as defined in Section 1 of the Employment Agreement between the Company and Executive.

 

The Fair Market Value of ArQule’s Common Stock shall be the closing price of the Common Stock as reported by the NASDAQ National Market on the trading day of the commencement of Executive’s employment with the Company as its Chief Scientific Officer.

 

  

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 EXHIBIT D

 

Calculation of the Severance Payment

 

Pursuant to Section 5.1.1(a)(ii), the portion of Executive’s Severance Payment based on bonuses (“Bonus Severance”) awarded to Executive, if any, would be calculated in the following manner:

 

These calculations are for illustrative purposes only and the following assumptions are utilized knowing that going forward exact numbers will change the calculation of the bonus payments:

 

2008 Salary:                                      $286,000

2008 Bonus Target:                         25%

2009 Salary:                                      $325,000

2009 Bonus Target:                         30%

 

Example #1:  Executive terminated in 2009

 

Bonus Severance = $68,750 (average of 25% for 2008 and 24% for 2007).

 

Example #2:  Executive awarded a 25% bonus for 2008 and 30% for 2009, terminated during 2010

 

Bonus Severance = $84,500 (average of 2008 and 2009)

 

Example #3:  Executive awarded a 25% bonus for 2008, 0% bonus for 2009, terminated during 2010

 

Bonus Severance = $35,750 (average of year 1 and year 2 bonuses actually awarded)

 

 

 

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