Document:

Exhibit 10.19

 

On January 24, 2006,
RightNow Technologies, Inc. (the “Company”) appointed Jason Mittelstaedt
as Vice President of Marketing pursuant to the terms of an offer letter which
is substantially the same as the Company’s form of executive officer offer
letter that was filed as Exhibit 10.9 to the Company’s registration
statement on Form S-1 (File No. 333-115331) initially filed with the
Securities and Exchange Commission on May 10, 2004, as amended, and which
form (but not the schedule attached thereto) is incorporated herein by
reference.  Set forth below are the
material terms of the offer letter with Mr. Mittelstaedt that are
different from the Company’s form of executive officer offer letter.

 

	
  Name

  	
   

  	
  Letter

  Date

  	
   

  	
  Salary

  	
   

  	
  Number

  of Option

  Shares

  	
   

  	
  Vesting Acceleration

  	
   

  	
  Bonus

  	
   

  	
  Other Key Terms

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jason Mittelstaedt

  	
   

  	
  1/24/06

  	
   

  	
  $

  	
  160,000

  	
   

  	
  75,000

  	
   

  	
  Acceleration of options in the event of a change of
  control and termination of Mr. Mittelstaedt’s employment within 12
  months following the change of control.

  	
   

  	
  Offer letter states Mr. Mittelstaedt is entitled
  to an on-target bonus potential of $50,000 effective January 1, 2006.

  	
   

  	
  If Mr. Mittelstaedt’s employment is terminated
  for a reason other than cause, he will be paid salary continuation for 6 months
  (based on his salary and bonus) and vesting will accelerate on 12.5% of his
  options.

  Offer letter does not include a discussion of other
  benefit programs or the Company’s Employee Inventions and Proprietary Rights
  Assignment Agreement because Mr. Mittelstaedt was already an employee of
  the Company.Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This
Employment Agreement (the “Agreement”) dated as of April 13, 2006 (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 Peter Lawrence (“Executive”) whose current principal residential address is
29 Fairfield Street, Unit 4-5, Boston, MA 02116.

 

WHEREAS, the
Company desires to employ Executive in a senior executive capacity 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, for a period commencing on April 13, 2006 (the “Effective Date”)
and continuing until terminated in accordance with the provisions of Section 5 (the “Employment Term”).

 

2.             Title;
Duties.  During the Employment Term,
Executive shall serve as Executive Vice President, Chief Business and Legal
Officer, General Counsel and Secretary, reporting directly to the CEO of the
Company.  Executive hereby agrees to
undertake the duties and responsibilities inherent in such position and such
other duties and responsibilities consistent with such position as the CEO
shall from time to time reasonably assign to Executive.

 

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 the Company’s written consent, which consent shall not
be unreasonably withheld, delayed or conditional, 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 his 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 current business
relationships, including, but not limited to, consulting agreements,
confidentiality agreements and non-

 

 

competition agreements
to which Executive is a party as of the Execution Date, to each of 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 $360,000, payable in substantially equal
installments in accordance with the Company’s usual payment practices and
subject to annual review and upward adjustment by the Company in its sole
discretion.  Such amount (as it may be
increased, but not decreased, from time to time in accordance with this Section 4.1)
shall be referred to herein as the “Base Salary.”

 

4.2.          Bonus
Compensation.  Executive shall be
eligible to receive a discretionary annual cash bonus, the target amount of
which shall be 35 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.  For calendar
year 2006, the annual cash bonus awarded to Executive, if any, shall be
prorated based on the number of months Executive works for the Company during
that year.  The annual cash bonus
typically is paid during the first quarter of the following calendar year, and
Executive must be actively employed with the Company as of the payment date in
order to receive the 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 (the “Board”).

 

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
three hundred thousand (300,000) 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”) and in accordance with the
terms, and subject to a vesting schedule pursuant to which twenty-five
percent of the shares shall vest annually commencing on the first anniversary
of the Effective Date, and other conditions, set forth in 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.

 

4.4.          Executive
Benefits.  During the Employment Term
and subject to any contributions therefor generally required of senior executives
of the Company,

 

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Executive shall be
entitled to receive such employee benefits (including fringe benefits, 401(k)
plan participation, and life, health, dental, accident and short and long term
disability insurance) which the Company may, in its sole and absolute
discretion, make available generally to its senior executives or personnel
similarly situated; provided, however, that it is hereby acknowledged and
agreed that any such employee benefit plans may be altered, modified or
terminated by the Company at any time in its sole discretion 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 the Chief Executive Officer of the Company,
or by a Committee of the Board of Directors, or both.

 

5.             Termination.

 

5.1.          Without Cause by the
Company.

 

5.1.1.       The
Severance Package.  The Company may
terminate Executive’s employment hereunder at any time without Cause (as
defined in Section 5.2) upon not less 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 amounts owed to Executive for work
performed prior to the Termination Date, plus the cash

 

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value of any
accrued but unused PTO, as of the Termination Date.  In addition, provided that Executive first
executes a general release in a form and of a scope acceptable to the Company,
the Company shall provide the following severance benefits (the “Severance
Package”):

 

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

 

(i)            An
amount equal to Executive’s Base Salary through the end of the twelve (12)
month period commencing on the Termination Date; plus

 

(ii)           An amount equal to the average bonus,
if any, paid by the Company to Executive with respect to the two (2) years
preceding the year in which the Termination Date occurs, provided that, for
purposes of this paragraph only, Executive shall be deemed to have received his
35 percent bonus target for any year within such 2-year period in which
Executive was not paid a bonus solely because he was not employed by the
Company.  Attached at Exhibit D is a
series of examples of the manner in which this portion of the Severance Payment
shall be calculated.

 

(b)           Immediate
vesting of fifty (50) percent of any unvested portion of the Execution Stock
Option granted pursuant to Section 4.3 of this Agreement;  and

 

(c)           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 (12) 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).

 

(d)           Notwithstanding
the foregoing, to the extent the Company reasonably determines that any portion
of the Severance Package is subject to Section 409A of the Internal
Revenue Code, payment of any such portion of the Severance Package subject to Section 409A
shall (i) to the extent required, be delayed for a period of six months
from the Termination Date, or (ii) to the extent permitted under subsequent
guidance from the Internal Revenue Service, otherwise made to comply with such Section 409A
requirements, provided, however, that any such action under this subsection

 

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(ii) that is more detrimental to
Executive than that in subsection (i) shall only be made with
Executive’s consent.

 

5.1.2.       Deemed
Termination.  For purposes of this Section 5.1,
a “termination without cause” shall be deemed to occur in the event any of the
following occurs and Executive provides to the Company Notice of Termination
(as defined in Section 5.6) within forty-five (45) days thereafter:

 

(a)           The
Company substantially reduces or diminishes Executive’s responsibilities or
title without Cause;

 

(b)           The
Company reduces Executive’s Base Salary or bonus target (other than in
connection with a Company-wide decrease in salary or bonus, respectively);

 

(c)           The
Company materially breaches any of its obligations to Executive pursuant to
this Agreement, and fails to cure such breach within 30 days of receipt of
notice thereof;

 

(d)           The
Company relocates Executive’s place of employment without Executive’s written
consent by a distance of more than fifty (50) miles, excluding any relocation
to the Company’s existing offices in Woburn, MA; or

 

(e)           A
successor in interest to the Company fails to assume the obligations of this
Agreement.

 

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 arbitrary, unreasonable, or willful failure to
follow the reasonable instructions of the CEO or otherwise perform Executive’s
duties hereunder (other than as a result of a Disability (as defined in Section 5.3))
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) Executive’s
willful misconduct that is materially injurious to the Company (whether from a
monetary perspective or otherwise); (iii) Executive’s willful commission
of an act constituting fraud with respect to the Company; (iv) conviction
of Executive for a felony under the laws of the United States or any state
thereof; or (v) Executive’s material breach of Executive’s obligations
under Section 7 hereof.  A final determination
of whether Cause exists shall be made by the Board of Directors.

 

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

 

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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.

 

5.3.          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 amounts owed to Executive for work performed
prior to the Termination Date, (b) provided that Executive first executes
a general release in a form and of a scope acceptable to the Company, Executive
shall be entitled to the Severance Package, except that the lump sum 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, and any Stock Option held as of the Termination Date
shall become immediately exercisable as to all option shares without regard to
the vesting schedule set forth on the applicable Option Certificate.

 

5.4.          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 amounts owed to Executive for work performed
through the last day of Executive’s actual employment by the Company plus the
Severance Package, and (b) any Stock Option held as of the Termination
Date shall become immediately exercisable as to all option shares without
regard to the vesting schedule set forth on the applicable Option
Certificate.

 

5.5.          Termination
by Executive.  Executive’s employment
hereunder may be terminated by Executive at any time upon not less than thirty
(30) days prior written notice from Executive to the Company.  Executive agrees that such notice

 

6

 

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 5.5, 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.

 

5.6.          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 9
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 Section 7 shall
survive the termination of this Agreement.

 

6.             Accelerated
Vesting in Change of Control.  In the
event 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. 
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 Company’s management; or

 

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(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.

 

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.

 

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

 

8

 

(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.             Specific
Performance.  Executive acknowledges
and agrees that the Company’s remedies at law for a breach or threatened breach
of any of the provisions of Section 7 would be inadequate and, in
recognition of this fact, Executive agrees that, in the event of such a breach
or threatened breach, in addition to any remedies at law, the Company, 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.

 

9

 

9.             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 the 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.

 

10.           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 any successor Person to assume and agree to perform this Agreement;
failure to so assume and agree shall constitute a deemed termination for
purposes of Section 5.1.2(e).

 

11.           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.

 

12.           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, provided, however, that in the event Executive is
the prevailing Party in any judicial or arbitral proceeding relating to this
Agreement, the Company shall reimburse Executive for all reasonable costs, fees
and expenses (including reasonable attorneys’ fees) incurred by Executive in
connection with such proceeding.

 

13.           Arbitration.  In the event any dispute should arise between
the Parties with respect to any of the terms and conditions of this Agreement,
then, at the initiation of either Party, such dispute shall be submitted and
finally settled by arbitration in Boston, Massachusetts under the rules of
the Employment Disputes Rules of the American Arbitration Association by
an arbitrator selected by the American Arbitration Association.  The dispute shall be determined in accordance
with Section 19 of this Agreement, except with respect to issues of
arbitrability, which shall be governed by the Federal Arbitration Act, 9 U.S.C. Secs. 1-16, and not state
law.  The arbitrator shall allow such
discovery as is appropriate to the purposes of arbitration in accomplishing a
fair, speedy and cost-effective resolution of the dispute.  If any Party fails to participate in the arbitration
proceedings, the arbitrator may proceed to decision based on expedited written
submissions by the participating Party. 
The award rendered by the arbitrator shall be nonappealable, final and
binding upon the Parties, and judgment upon the award rendered may be entered
by either Party in any court of competent jurisdiction.  The Parties agree not to institute any
litigation or proceedings against each other in connection with this Agreement
except as provided in this Section 13, provided, however, that either
Party

 

10

 

shall have the
right to seek injunctive relief or other provisional remedies in any federal or
state court of competent jurisdiction in the Commonwealth of Massachusetts.

 

14.           Waivers
and Further Agreements.  Any waiver
of any terms or conditions of this Agreement shall not operate as a waiver of
any other breach of such terms or conditions or any other term or condition,
nor shall any failure to enforce any provision hereof operate as a waiver of
such provision or of any other provision hereof; provided, however, that no
such written 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.

 

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

 

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

 

17.           Counterparts.  This Agreement 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.

 

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

 

19.           Governing
Law.  This Agreement shall be
governed by and construed and enforced in accordance with the law (other than
the law governing conflict of law questions) of the Commonwealth of
Massachusetts.

 

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

 

11

 

	
  ARQULE, INC.

  	
  EXECUTIVE

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name: Steve
  Hill

  	
  Name: Peter
  Lawrence

  
	
  Title:
  President and CEO

  	
   

  
						

 

12

 

EXHIBIT A

 

Business Relationships

 

1.             Director
of Pod Holding, Ltd.

 

2.             Director
of Spherics, Inc.

 

3.             Board
Observer of Paratek Pharmaceuticals, Inc.

 

4.             Director
of Corestreet, Ltd.

 

5.             Director
of Peppercoin, Inc.

 

6.             Vice
Chairman and Director, Greater Boston Food Bank

 

13

 

EXHIBIT B

 

Option Certificate

 

14

 

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 immediately prior to the date of the commencement of Executive’s
employment with the Company.

 

15

 

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:

 

Example #1
– Executive terminated in year one of employment.

 

Bonus
Severance = 35% (average of 35% deemed amount for two-year lookback period
where Executive did not work for the Company).

 

Example #2
– Executive awarded a 30% bonus for year one of employment, terminated during
year 2.

 

Bonus
Severance = 32.5% (average of 30% Year 1 award and 35% deemed amount for the
year during the two-year lookback period where Executive did not work for the
Company).

 

Example #3
– Executive awarded a 30% bonus for year one of employment, a 0% bonus for year
2 of employment, terminated during year 3.

 

Bonus
Severance = 15% (average of year 1 and year 2 bonuses actually awarded).

 

16

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